-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PA+umioRgm26L4FbUpx6T+/7bh3sABwaeGLGAaQj0eA6GCb8JTanPaqNs73bgcfG 2lTLvIGergtpaLzBeqS5ow== 0000950131-96-000217.txt : 19960201 0000950131-96-000217.hdr.sgml : 19960201 ACCESSION NUMBER: 0000950131-96-000217 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960131 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIPSCO INDUSTRIES INC CENTRAL INDEX KEY: 0000823392 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 351719974 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-65285 FILM NUMBER: 96509596 BUSINESS ADDRESS: STREET 1: 5265 HOHMAN AVE CITY: HAMMOND STATE: IN ZIP: 46320 BUSINESS PHONE: 2198535200 MAIL ADDRESS: STREET 1: 5265 HOHMAN AVENUE CITY: HAMMOND STATE: IN ZIP: 46320-1775 S-3/A 1 PRE-EFFECTIVE AMEMDMENT NO. 1 TO FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1996 REGISTRATION NO. 33-65285 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- NIPSCO CAPITAL MARKETS, INC. NIPSCO INDUSTRIES, INC. AS ISSUER AND REGISTRANT OF AS ISSUER AND REGISTRANT OF SERIES A JUNIOR SUBORDINATED OBLIGATIONS DEBENTURES PURSUANT TO THE SUPPORT AGREEMENT (EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) IN ITS CHARTER) ---------------- INDIANA INDIANA (STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION) 35-1762940 35-1719974 (I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.) 5265 HOHMAN AVENUE HAMMOND, INDIANA 46320 (219) 853-5200 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES) ---------------- JERRY M. SPRINGER NIPSCO INDUSTRIES, INC. 5265 HOHMAN AVENUE HAMMOND, INDIANA 46320 (219) 853-5353 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPIES OF COMMUNICATIONS TO: ROBERT J. MINKUS MITCHELL L. HOLLINS SCHIFF HARDIN & WAITE SONNENSCHEIN NATH & ROSENTHAL 7200 SEARS TOWER 8000 SEARS TOWER CHICAGO, ILLINOIS 60606 CHICAGO, ILLINOIS 60606 (312) 876-1000 (312) 876-8144 ---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, 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. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, 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, 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. [_] ---------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS 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 THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +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 JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE + +WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES + +LAWS OF ANY SUCH JURISDICTION. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ PROSPECTUS (Subject to Completion, Issued January 31, 1996) $75,000,000 NIPSCO Capital Markets, Inc. % QUARTERLY DEBT CAPITAL SECURITIES (JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, SERIES A) Entitled to the Benefit of a Support Agreement Providing for the Payment of Principal and Interest by NIPSCO Industries, Inc. ---------- The Junior Subordinated Deferrable Interest Debentures, Series A (the "Subordinated Debentures"), of NIPSCO Capital Markets, Inc. ("Capital") will mature on March 31, 2026. Interest on the Subordinated Debentures is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning March 31, 1996, provided that, so long as an Event of Default (as defined herein) has not occurred and is not continuing, Capital has the right to extend the interest payment period at any time and from time to time on the Subordinated Debentures to a period not exceeding 20 consecutive quarters. The Subordinated Debentures will be redeemable at the option of Capital, in whole or in part, on or after March 31, 2001 at 100% of the principal amount redeemed together with unpaid interest accrued to the redemption date. See "Description of the Subordinated Debentures -- Optional Redemption." The Subordinated Debentures will be represented by a Global Security or Securities that will be deposited with, or on behalf of, The Depository Trust Company ("DTC"). The Subordinated Debentures will be available for purchase in denominations of $25 and any integral multiple thereof. See "Description of the Subordinated Debentures." The Subordinated Debentures are unsecured debt obligations of Capital and are entitled to the benefits of a Support Agreement, dated as of April 4, 1989, as amended (the "Support Agreement"), between Capital and its parent company, NIPSCO Industries, Inc. ("Industries"), providing for the payment of principal of and interest on the Subordinated Debentures in the event of default of Capital. Payment of the principal of and interest on the Subordinated Debentures is subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness of Capital. As of September 30, 1995, outstanding Senior Indebtedness of Capital aggregated approximately $131.7 million. ---------- The Subordinated Debentures have been approved for listing on the New York Stock Exchange, subject to official notice of issuance. ---------- SEE "RISK FACTORS" ON PAGE 4 FOR CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE SUBORDINATED DEBENTURES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF INTEREST ON THE SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL. ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- PRICE % AND ACCRUED INTEREST, IF ANY ----------
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC (1) COMMISSIONS (2) CAPITAL (1)(3) ---------- --------------- -------------- Per Series A Junior Subordinated Deferrable Interest Debenture....... % % % Total................................ $ $ $
- ----- (1)Plus accrued interest, if any, from the date of initial issue. (2) Capital and Industries have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3)Before deducting estimated expenses of $218,000 payable by Capital. ---------- The Subordinated Debentures are offered, subject to prior sale, when, as and if accepted by the Underwriters and subject to approval of certain legal matters by Sonnenschein Nath & Rosenthal, counsel for the Underwriters. It is expected that delivery of the Subordinated Debentures will be made on or about February , 1996 through the book-entry facilities of DTC against payment therefor in immediately available funds. ---------- MORGAN STANLEY & CO. Incorporated DEAN WITTER REYNOLDS, INC. A.G. EDWARDS & SONS, INC. GOLDMAN, SACHS & CO. SMITH BARNEY INC. February , 1996 AVAILABLE INFORMATION Capital and Industries have filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (including any amendments thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Subordinated Debentures. This Prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto, certain portions of which have been omitted pursuant to the rules of the Commission. Statements made in this Prospectus as to the contents of any contract, agreement or other document are not necessarily complete. With respect to each such contract, agreement or other document filed or incorporated by reference as an exhibit to the Registration Statement, reference is made to such exhibit for a more complete description of the matter involved, and each such statement is qualified in its entirety by such reference. Industries 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 Commission. Reports, proxy statements and other information filed by Industries with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and at Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such materials may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements and other information concerning Industries may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104, on which exchanges certain of Industries' securities are listed. On September 25, 1992, the staff of the Commission informed Industries and Capital by letter that it would not recommend enforcement action to the Commission if Capital did not file periodic reports pursuant to Sections 13 and 15(d) of the Exchange Act, subject to Industries' compliance with the conditions set forth therein. In reliance upon such letter, no documents have been filed or will be filed by Capital under the Exchange Act. Capital does not intend to issue any periodic or other reports to holders of the Subordinated Debentures. Capital has been advised by the Commission's staff that financial information regarding Capital need not be included in any registration statement on Form S-3 filed by Capital and Industries with respect to the Subordinated Debentures and the Support Agreement. DOCUMENTS INCORPORATED BY REFERENCE The following documents filed by Industries with the Commission are incorporated herein by reference: (a) Industries' Annual Report on Form 10-K for the year ended December 31, 1994; and (b) Industries' Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and September 30, 1995. All documents subsequently filed by Industries pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Subordinated Debentures shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 2 INDUSTRIES WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THE PROSPECTUS INCORPORATES. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO NINA M. RAUSCH, SECRETARY, NIPSCO INDUSTRIES, INC., 5265 HOHMAN AVENUE, HAMMOND, INDIANA 46320, TELEPHONE NUMBER (219) 853-5199. ---------------- IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SUBORDINATED DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 3 RISK FACTORS Prospective purchasers of Subordinated Debentures should carefully review the information contained elsewhere in this Prospectus and should particularly consider the following matters: RIGHT OF CAPITAL TO DEFER PAYMENT OF INTEREST So long as Capital shall not be in default in the payment of interest on the Subordinated Debentures, Capital shall have the right under the Indenture (as defined below) to extend the interest payment period at any time and from time to time for a period not exceeding 20 consecutive calendar quarters. No interest shall be due and payable during an Extension Period (as defined below), but on the interest payment date occurring at the end of each Extension Period, Capital shall pay to the holders of record on the record date for such interest payment date (regardless of who the holders of record may have been on other dates during the Extension Period) all accrued and unpaid interest on the Subordinated Debentures, together with interest thereon, compounded quarterly at the rate of interest on the Subordinated Debentures. In the event that Capital exercises such right to extend, neither Capital nor Industries may declare or pay dividends on, or, subject to certain limited exceptions, redeem, purchase or acquire, any shares of its capital stock until deferred interest on the Subordinated Debentures is paid in full. Upon the termination of any Extension Period and the payment of all interest then due, Capital may commence a new Extension Period. Capital may also prepay at any time all or a portion of the interest accrued during an Extension Period. Consequently, there could be multiple Extension Periods of varying lengths throughout the term of the Subordinated Debentures. See "Description of the Subordinated Debentures--Option to Extend Interest Payment Period." Capital has no present intention of exercising its right to defer payments of interest by extending the interest payment period on the Subordinated Debentures. NO CASH PAYMENTS DURING EXTENSION PERIOD TO PAY ACCRUED TAX LIABILITY In the event an Extension Period occurs, holders of the Subordinated Debentures would continue, under the original issue discount rules, to accrue income on the Subordinated Debentures for United States federal income tax purposes. As a result, a holder that is subject to United States federal income tax ordinarily would include such amounts in gross income in advance of the receipt of cash. A holder that disposes of its Subordinated Debentures prior to the record date for payment of interest at the end of an Extension Period will not receive cash from Capital related to such interest because such interest will be paid to the holder of record on such record date, regardless of who the holders of record may have been on other dates during the Extension Period. The extent to which such a holder will receive a return on the Subordinated Debentures for the period it held such Subordinated Debentures will depend on the market for the Subordinated Debentures at the time of such disposition. See "Differences in Timing and Amount Between Interest Payments and Taxable Income" below and "Certain Federal Income Tax Considerations." CERTAIN TRADING CHARACTERISTICS The Subordinated Debentures are expected to trade in the market as equity securities. Accordingly, the Subordinated Debentures are expected to trade "flat"; thus, purchasers of Subordinated Debentures will not pay and sellers will not receive any accrued and unpaid interest thereon that is not included in the trading price. However, for United States federal income tax purposes, interest on the Subordinated Debentures is included in income as it accrues, rather than when it is paid. See "Certain Federal Income Tax Considerations." DIFFERENCES IN TIMING AND AMOUNT BETWEEN INTEREST PAYMENTS AND TAXABLE INCOME Because the original issue discount rules apply to the Subordinated Debentures, even if an Extension Period does not occur there may be differences in timing and amount between the gross income recognized with respect 4 to a Subordinated Debenture and the interest payable on such Subordinated Debenture. An owner of a Subordinated Debenture that does not use a calendar year for tax accounting may be required to include in income in each tax year original issue discount corresponding to a portion of the interest payable during such owner's next succeeding tax year. An owner that disposes of its Subordinated Debentures may be required to include in income original issue discount corresponding to interest payable after the disposition. See "Certain Federal Income Tax Considerations." POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD As described above, Capital has the right to extend an interest payment period from time to time for a period not exceeding 20 consecutive calendar quarters. In the event Capital determines to extend an interest payment period, or in the event Capital thereafter extends an Extension Period or prepays interest accrued during an Extension Period as described above, the market price of the Subordinated Debentures is likely to be adversely affected. In addition, as a result of such rights, the market price of the Subordinated Debentures may be more volatile than other debt instruments with original issue discount that do not have such rights. A holder that disposes of its Subordinated Debentures during an Extension Period, therefore, may not receive the same return on its investment as a holder that continues to hold its Subordinated Debentures. See "Description of the Subordinated Debentures-- Option to Extend Interest Payment Period." SUBORDINATION OF SUBORDINATED DEBENTURES The Subordinated Debentures are senior to the capital shares of Capital, but will be unsecured obligations of Capital and subordinate to all existing and future Senior Indebtedness of Capital. On September 30, 1995, approximately $131.7 million of such Senior Indebtedness was outstanding. There are no terms of the Subordinated Debentures that limit Capital's ability to incur additional indebtedness, including indebtedness that would rank senior to the Subordinated Debentures. The Indenture does not contain any cross-defaults to any other indebtedness of Capital or Industries and, therefore, a default with respect to, or the acceleration of, any such other indebtedness will not constitute an Event of Default (as defined in the Indenture) with respect to the Subordinated Debentures. Moreover, because the obligor under the Support Agreement is Industries, the rights of the holders of the Subordinated Debentures under the Support Agreement effectively will be subordinate to all obligations of Industries' subsidiaries other than Capital. See "Description of the Subordinated Debentures--Subordination." CAPITAL Capital was incorporated in Indiana in 1989. Capital was organized by Industries to engage in financing activities that provide funds for use in Industries' business operations and those of its direct and indirect wholly- owned subsidiaries, excluding Northern Indiana Public Service Company ("Northern Indiana"). Industries owns all of the 1,000 authorized capital shares of Capital. Capital and Industries have entered into the Support Agreement, dated April 4, 1989, and amended as of May 15, 1989, December 10, 1990, and February 14, 1991, in which Industries has agreed, among other things, to ensure the timely payment of principal, premium, if any, and interest owed on any debt securities issued by Capital, with the limitation that no holder of such debt securities will have recourse to or against the stock or assets of Northern Indiana, or any interest of Industries or Capital therein. See "Description of the Support Agreement." On March 27, 1991 the Commission issued an order pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), granting an exemption to Capital from all of the provisions of the Investment Company Act, subject to Capital's compliance with the conditions set forth therein. The principal executive offices of Capital are located at 5265 Hohman Avenue, Hammond, Indiana 46320. Its telephone number is (219) 853-5200. 5 INDUSTRIES Industries is an Indiana corporation, incorporated in 1987, which serves as the holding company for a number of wholly-owned subsidiaries, including three public utility operating companies: Northern Indiana, Kokomo Gas and Fuel Company ("Kokomo Gas") and Northern Indiana Fuel and Light Company, Inc. ("NIFL"). In addition to Capital, Industries has two other major non-utility subsidiaries, NIPSCO Development Company, Inc. and NIPSCO Energy Services, Inc. The principal executive offices of Industries are located at 5265 Hohman Avenue, Hammond, Indiana 46320, and its telephone number is (219) 853-5200. Northern Indiana, Industries' largest and dominant subsidiary, was incorporated in Indiana in 1912 and supplies electricity and natural gas to the public in 30 counties in the northern part of Indiana, serving an area of about 12,000 square miles with a population of approximately 2,188,000. At September 30, 1995, it supplied approximately 405,100 customers with electricity and approximately 632,100 customers with natural gas. For the twelve months ended September 30, 1995, about 63% of its revenues were derived from the sale of electricity and about 37% from the sale and transportation of natural gas. Kokomo Gas, which was incorporated in Indiana in 1917, and NIFL, which was incorporated in Indiana in 1906, are both engaged in supplying natural gas to the public in service territories contiguous to Northern Indiana's service territory. At September 30, 1995, Kokomo Gas and NIFL served approximately 31,400 and 30,400 customers, respectively. USE OF PROCEEDS Capital will advance the net proceeds of this offering to Industries promptly after completion of the offering. In the interim, Capital will invest any funds held by it only in the manner permitted by Rule 3a-5 under the Investment Company Act. Industries will use the funds advanced to it to repay earlier advances made to Industries out of a portion of the proceeds of Capital's short-term bank borrowings and commercial paper issuances, which Capital will then repay. These bank and commercial paper borrowings had an average interest rate of 6.02% per annum at September 30, 1995. $35,000,000 of the proceeds of these short-term borrowings were used by Industries to pay for the mandatory redemption of all of its 8.75% Cumulative Preferred Shares on January 12, 1996, and the balance was used for general corporate purposes, including the purchase of Industries' Common Shares pursuant to Industries' share repurchase program. 6 SELECTED FINANCIAL INFORMATION The financial information presented below should be read in conjunction with Industries' historical financial statements and the notes thereto, which are incorporated by reference herein. The consolidated financial statements of Industries for each of the five years ended December 31, 1990 through 1994, and for the twelve months ended September 30, 1995, have been audited by Arthur Andersen LLP, independent public accountants.
12 MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------------- 1995 1994 1993 1992 1991 1990 ------------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) CONSOLIDATED STATEMENT OF INCOME DATA Operating Revenues...... $1,681,582 $1,676,401 $1,677,872 $1,582,356 $1,535,161 $1,520,995 Operating Income........ 271,832 261,149 262,045 246,217 254,354 247,777 Interest Charges (Net).. 102,186 99,378 103,835 111,053 109,533 115,491 Net Income.............. 172,570 163,987 156,140 136,648 133,388 125,361 Ratio of Earnings to Fixed Charges(a)....... 3.23x 3.16x 3.12x 2.74x 2.54x 2.41x
(DOLLARS IN CONSOLIDATED BALANCE SHEET DATA AT SEPTEMBER 30, 1995: THOUSANDS) (PERCENT) Long-Term Debt (excluding amounts due within one year)(b) First Mortgage Bonds....................................... $ 135,756 5.5% Unsecured.................................................. 1,040,465 42.0 ---------- ------ Total.................................................... 1,176,221 47.5 ---------- ------ Cumulative Preferred Shares: Series with mandatory redemption provisions................ 99,207 4.0 Series without mandatory redemption provisions............. 81,525 3.3 Common Shareholders' Equity.................................. 1,117,182 45.2 ---------- ------ Total Capitalization..................................... $2,474,135 100.00% ========== ======
- -------- (a) For the purpose of calculating the ratios of earnings to fixed charges, "earnings" consist of income from continuing operations before income taxes, and "fixed charges" consist of interest on all indebtedness, amortization of debt expense, the percentage of rental expense on operating leases deemed representative of the interest factor, and preferred stock dividend requirements of majority-owned subsidiaries. (b) Short-term debt outstanding at September 30, 1995 was $263.3 million, including the current portion of long-term debt ($93.0 million). RECENT FINANCIAL RESULTS On January 30, 1996, Industries reported 1995 net income of $175.5 million or earnings of $2.72 per average common share compared to net income of $164.0 million or earnings of $2.48 per average common share in 1994. Revenues for the twelve-month period ended December 31, 1995 were $1.722 billion compared to $1.676 billion for the same period a year earlier. Operating margin, the difference between operating revenues and cost of energy, for the twelve-month period increased $43.9 million to $1,037.2 million. Electric operating margin for the twelve-month period increased $30.1 million, reflecting increased sales to residential and commercial customers due to warmer weather in the third quarter of 1995 and increased sales to wholesale customers, partially offset by transitional rate adjustments to industrial customers signing 5-year contracts. Gas operating margin increased $13.8 million, reflecting colder weather in the fourth quarter. 7 Earnings for the three-month period ended December 31, 1995 were 81 cents per average common share compared to 75 cents per average common share for the same period in 1994. Revenues for the three months ended December 31, 1995 were $469.0 million compared to $428.2 million a year earlier. Operating margin for the three- month period increased $24.4 million. Electric operating margin increased $6.6 million reflecting increased sales to residential, commercial and industrial customers, partially offset by transitional rate adjustments to industrial customers signing 5-year contracts. Gas operating margin increased $17.8 million due to colder weather and increased deliveries of gas transported for others.
TWELVE MONTHS ENDED THREE MONTHS ENDED DECEMBER 31, DECEMBER 31. --------------------- --------------------- 1995 1994 1995 1994 ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Operating Revenues: Gas Sales.......................... $ 627,147 $ 647,932 $ 202,448 $ 178,205 Transport...................... 64,255 33,977 15,837 10,688 Electric......................... 1,030,923 994,492 250,701 239,350 ---------- ---------- ---------- ---------- Total........................ $1,722,325 $1,676,401 $ 468,986 $ 428,243 ========== ========== ========== ========== Operating Margins: Gas.............................. $ 292,289 $ 278,472 $ 94,731 $ 76,908 Electric......................... 744,905 714,855 179,251 172,636 ---------- ---------- ---------- ---------- Total........................ $1,037,194 $ 993,327 $ 273,982 $ 249,544 ========== ========== ========== ========== Net Income......................... $ 175,465 $ 163,987 $ 51,828 $ 48,933 Dividend Requirements on Preferred Shares............................ 3,063 3,063 766 766 ---------- ---------- ---------- ---------- Balance Available for Common Shareholders...................... $ 172,402 $ 160,924 $ 51,062 $ 48,167 ========== ========== ========== ========== Average Common Shares Outstanding.. 63,281,177 64,820,039 62,535,137 64,020,303 Earnings per Average Common Share.. $2.72 $2.48 $0.81 $0.75 Dividends Declared per Common Share............................. $1.59 $1.47 $0.42 $0.39 Gas Sales (MDth)................... 124,365 118,592 43,977 33,393 Gas Transported (MDth)............. 191,571 188,583 53,064 50,966 Electric Sales (Mwh)............... 16,924,353 15,536,394 4,202,337 3,811,831
DESCRIPTION OF THE SUBORDINATED DEBENTURES The Subordinated Debentures will be issued under an Indenture, dated as of February 1, 1996 (the "Indenture"), among Capital, Industries and Chemical Bank, as trustee (the "Trustee"), which shall act as indenture trustee for the purposes of the Trust Indenture Act of 1939, as amended. The forms of the Indenture and the Subordinated Debentures are filed as exhibits to the Registration Statement. Capitalized terms used in this section which are not otherwise defined in this Prospectus shall have the meanings set forth in the Indenture. The following summaries of certain provisions of the Subordinated Debentures and the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by express reference to, all the provisions of the Subordinated Debentures and the Indenture, including the definitions therein of certain terms. GENERAL The Subordinated Debentures will be unsecured, subordinated obligations of Capital. The Subordinated Debentures are not subject to a sinking fund provision. The entire principal amount of the Subordinated Debentures will mature and become due and payable, together with any accrued and unpaid interest thereon, on March 31, 2026. 8 The Indenture does not limit the aggregate principal amount of Subordinated Debentures that may be issued thereunder and provides that Subordinated Debentures may be issued thereunder from time to time in one or more series. The Subordinated Debentures are issuable in one or more series pursuant to an indenture supplement to the Indenture or a resolution of the Company's Board of Directors or a special committee thereof (each, a "Supplemental Indenture"). The Subordinated Debentures will initially be issued as a Global Security (as defined below). As described herein, under certain limited circumstances, Subordinated Debentures may be issued in certificated form in exchange for a Global Security. See "Global Securities" below. In the event that Subordinated Debentures are issued in certificated form, such Subordinated Debentures will be in denominations of $25 or any integral multiple thereof and may be transferred or exchanged at the offices described below. No service charge will be made for any transfer or exchange of Subordinated Debentures, but Capital may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Payments on Subordinated Debentures issued as a Global Security will be made to DTC, a successor depositary or, in the event that no depositary is used, to a Paying Agent for the Subordinated Debentures. In the event the Subordinated Debentures are issued in certificated form, principal and interest will be payable, the transfer of the Subordinated Debentures will be registrable and Subordinated Debentures will be exchangeable for Subordinated Debentures of other denominations of a like aggregate principal amount at the corporate trust office of the Trustee in New York, New York; provided that payment of interest may be made at the option of Capital by check mailed to the address of the persons entitled thereto as they appear in the Security Register. The Indenture does not contain any provisions that may afford the Holders of Subordinated Debentures protection in the event of a highly leveraged transaction or other transaction involving Capital or Industries that may occur in connection with a takeover attempt resulting in a decline in the credit rating of the Subordinated Debentures. The Indenture also does not contain any provisions that would limit the ability of Capital or Industries to incur indebtedness. SUBORDINATION The Indenture provides that the Subordinated Debentures are subordinated and junior in right of payment to all Senior Indebtedness of Capital. No payment of principal of or interest on the Subordinated Debentures may be made (i) if any Senior Indebtedness of Capital is not paid when due, (ii) if any applicable grace period with respect to such default has ended and such default has not been cured or waived or ceased to exist, or (iii) if the maturity of any Senior Indebtedness of Capital has been accelerated because of a default and such acceleration has not been revoked in accordance with the instrument evidencing such Senior Indebtedness or such Senior Indebtedness has not been paid in full. Upon any distribution of assets of Capital to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due on all Senior Indebtedness of Capital must be paid in full before the holders of Subordinated Debentures are entitled to receive or retain any payment. Upon satisfaction of all claims of all Senior Indebtedness then outstanding, the rights of the holders of the Subordinated Debentures will be subrogated to the rights of the holders of Senior Indebtedness of Capital to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on the Subordinated Debentures are paid in full. "Senior Indebtedness" means the principal of, and premium, if any, and interest on and any other payment due pursuant to any of the following, whether outstanding at the date of execution of the Indenture or thereafter incurred, created or assumed: (i) all indebtedness of Capital evidenced by notes, debentures, bonds or other securities sold by Capital for money, (ii) all indebtedness of others of the kinds described in the preceding clause (i) assumed by or guaranteed in any manner by Capital or in effect guaranteed by Capital through an agreement to purchase, contingent or otherwise, and (iii) all renewals, extensions or refundings of indebtedness of the kinds described in either of the preceding clauses (i) and (ii) unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the 9 same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Subordinated Debentures. Such Senior Indebtedness will continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions set forth in Article Fourteen of the Indenture irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness. The Indenture does not limit the aggregate amount of Senior Indebtedness that may be issued by Capital. As of September 30, 1995, Senior Indebtedness of Capital aggregated approximately $131.7 million. The Indenture does not contain any cross-defaults to any other indebtedness of Capital or Industries and, therefore, a default with respect to, or the acceleration of, any such other indebtedness will not constitute an Event of Default with respect to the Subordinated Debentures. Because the obligor under the Support Agreement is Industries, the rights of the holders of the Subordinated Debentures under the Support Agreement effectively will be subordinate to all obligations of Industries' subsidiaries other than Capital. OPTIONAL REDEMPTION The Subordinated Debentures will be redeemable at the option of Capital, in whole or in part, at any time on or after March 31, 2001 and prior to maturity, upon not less than 30 nor more than 60 days' notice, at 100% of the principal amount redeemed together with unpaid interest accrued to the redemption date. If less than all of the Subordinated Debentures are to be redeemed, the particular Subordinated Debentures to be redeemed will be selected by the Trustee, not more than 60 days prior to the redemption date, by such method as the Trustee shall deem fair and appropriate. INTEREST Each Subordinated Debenture shall bear interest at the rate per annum shown on the front cover of this Prospectus from the original date of issuance until the principal becomes due and payable. Such interest shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (each, an "Interest Payment Date"), commencing March 31, 1996, to the person in whose name such Subordinated Debenture is registered, at the close of business on the Business Day next preceding such Interest Payment Date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. The amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. OPTION TO EXTEND INTEREST PAYMENT PERIOD Capital shall have the right at any time, and from time to time, during the term of the Subordinated Debentures, so long as an Event of Default has not occurred and is not continuing, to defer payments of interest by extending the interest payment period for a period not exceeding 20 consecutive quarters (the "Extension Period"), at the end of which Extension Period Capital shall pay all interest then accrued and unpaid together with interest thereon compounded quarterly at the rate specified for the Subordinated Debentures to the extent permitted by applicable law. Capital shall give the Trustee and the holders of the Subordinated Debentures notice of its selection of any Extension Period 10 Business Days prior to the earlier of (i) the next Interest Payment Date or (ii) the date upon which Capital is required to give notice to the holders of the Subordinated Debentures (or, if applicable, to the New York Stock Exchange or other applicable self-regulatory organization) of the record or payment date of such related interest payment. During any such Extension Period, neither Capital nor Industries shall (i) declare or pay any dividends on, make any distribution with respect to, or, subject to certain 10 limited exceptions, redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, (ii) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by Capital or Industries that rank pari passu with or junior to the Subordinated Debentures or (iii) make any guarantee payments with respect to any of the foregoing. Prior to the termination of any such Extension Period, Capital may further defer payments of interest by extending the interest payment period; provided, however, that such Extension Period, including all such previous and further extensions, may not exceed 20 consecutive quarters. Upon the termination of any Extension Period and the payment of all amounts then due, Capital may commence a new Extension Period, subject to the terms set forth in this section. No interest during an Extension Period, except at the end thereof, shall be due and payable other than with respect to a Subordinated Debenture redeemed by Capital during such Extension Period. Capital has no present intention of exercising its right to defer payments of interest by extending the interest payment period on the Subordinated Debentures. GLOBAL SECURITIES The Subordinated Debentures will be issued in the form of one or more Global Securities, which will have an aggregate principal amount equal to that of the Subordinated Debentures. The Global Security or Securities will be deposited with, or on behalf of, DTC and registered in the name of DTC or its nominee. DTC has advised Capital, Industries and the Underwriters that DTC is (i) a limited-purpose trust company organized under the New York Banking Law, (ii) a "banking organization" within the meaning of the New York Banking Law, (iii) a member of the Federal Reserve System, (iv) a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and (v) a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participating organizations ("participants") and to facilitate the clearance and settlement among its participants of securities transactions, such as transfers and pledges, in such securities through electronic computerized book- entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. Participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear transactions through or maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own securities held by DTC only through participants. As long as DTC, or its nominee, is the registered owner of the Global Security or Securities representing the Subordinated Debentures, DTC or such nominee, as the case may be, will be considered the sole owner and holder of such Global Security and the Subordinated Debentures represented thereby for all purposes under the Indenture. Owners of beneficial interests in such Global Security will not be entitled to have such Global Security or, except in limited circumstances, the Subordinated Debentures represented thereby registered in their names, will not receive or be entitled to receive physical delivery of Subordinated Debentures in certificated form and will not be considered the holders thereof for any purposes under the Indenture. All payments of principal of and interest on a Global Security will be made to DTC or its nominee, as the case may be, as the holder thereof. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in certificated form. The foregoing limitations and such laws may impair the ability to transfer beneficial interests in such Global Securities. In connection with the issuance of the Global Security or Securities representing the Subordinated Debentures, DTC will credit on its book-entry registration and transfer system the respective principal amounts of the Subordinated Debentures represented by such Global Securities to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by DTC (with respect to participants' interests) or any such participant (with respect to interests of persons held by such participants on their behalf). Payments, transfers, exchanges and other matters relating to beneficial interests in a Global Security may be subject to 11 various policies and procedures adopted by DTC from time to time. None of Capital, Industries or the Trustee, or any agent of any of the foregoing, will have any responsibility or liability for any aspect of DTC's or any participant's records relating to, or for payments made on account of, beneficial ownership interests in a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial interests. DTC may discontinue providing its services as securities depositary with respect to the Subordinated Debentures at any time by giving reasonable notice to Capital. Under such circumstances, in the event that a successor securities depositary is not obtained, Subordinated Debentures in certificated form are required to be printed and delivered. DISCONTINUANCE OF THE DEPOSITARY'S SERVICES A Global Security shall be exchangeable for Subordinated Debentures registered in the names of persons other than the depositary or its nominee only if (i) the depositary notifies Capital that it is unwilling or unable to continue as a depositary for such Global Security and no successor depositary shall have been appointed, (ii) the depositary, at any time, ceases to be a clearing agency registered under the Exchange Act at which time the depositary is required to be so registered to act as such depositary and no successor depositary shall have been appointed, (iii) Capital, in its sole discretion, determines that such Global Security shall be so exchangeable or (iv) there shall have occurred an Event of Default with respect to such Subordinated Debentures. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Subordinated Debentures registered in such names as the depositary shall direct. It is expected that such instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in such Global Security. CONSOLIDATION, MERGER AND SALE Under the terms of the Indenture, neither Capital nor Industries may merge or consolidate with or into any other Corporation, or sell or convey substantially all of its assets or otherwise engage in restructuring transactions unless (i) the Corporation formed by any such consolidation or into which it is merged or the Person which acquires by conveyance or transfer, or which leases, its properties and assets substantially as an entirety shall be a Corporation organized and existing under the laws of any domestic jurisdiction and shall expressly assume, in the case of Capital, its obligations under the Subordinated Debentures and the Indenture and, in the case of Industries, its obligations under the Indenture and the Support Agreement, (ii) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, would become an Event of Default, shall have occurred and be continuing, and (iii) Capital or Industries, as applicable, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease complies with the Indenture and that all conditions precedent therein provided for relating to such transaction have been complied with. EVENTS OF DEFAULT The Indenture provides that any one or more of the following events that has occurred and is continuing shall constitute an Event of Default with respect to the Subordinated Debentures: (i) default in the payment of any interest upon any Subordinated Debenture when the same becomes due and payable and continues for 30 days; provided, however, that a valid extension of the interest payment period by Capital for the Subordinated Debentures shall not constitute a default in the payment of interest for this purpose; (ii) default in the payment of principal of any Subordinated Debenture when due; (iii) default in the performance or breach of any covenant or warranty of Capital or Industries in the Indenture or the Support Agreement (other than a covenant or warranty included in or pursuant to the Indenture solely for the benefit of one or more series of debt securities other than the Subordinated Debentures), and continuance thereof for 30 days after written notice to Capital and Industries as provided in the Indenture; and (iv) certain events in bankruptcy, insolvency or reorganization of Capital, Industries or Northern Indiana. 12 If an Event of Default with respect to the Subordinated Debentures occurs and is continuing, either the Trustee or the Holders of at least 33 percent in principal amount of the outstanding Subordinated Debentures may declare all such Subordinated Debentures due and payable immediately. At any time after the declaration of acceleration with respect to the Subordinated Debentures has been made, but before a judgment or decree based on acceleration has been obtained, the Holders of a majority in principal amount of the outstanding Subordinated Debentures may, under certain circumstances, rescind and annul such acceleration. The Indenture provides that, subject to the duty of the Trustee during default to act with the required standard of care, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in principal amount of the outstanding Subordinated Debentures will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Subordinated Debentures. The right of a Holder of any Subordinated Debenture to institute a proceeding with respect to the Indenture is subject to certain conditions precedent, but each Holder has an absolute and unconditional right to receive payment of principal when due and to institute suit for the enforcement of any such payment. The Indenture provides that the Trustee, within 90 days after the occurrence of a default with respect to the Subordinated Debentures, is required to give the Holders of the Subordinated Debentures notice of such default, unless cured or waived; provided that, except in the case of default in the payment of principal on any Subordinated Debenture, the Trustee may withhold such notice if it determines in good faith that it is in the interest of such Holders to do so. Each of Capital and Industries will be required to furnish annually to the Trustee a statement as to the performance by it of certain of its obligations under the Indenture and as to any default in such performance. The Holders of not less than a majority in principal amount of the Subordinated Debentures may, on behalf of the Holders of all the Subordinated Debentures, waive any past default under the Indenture with respect to the Subordinated Debentures and its consequences, except a default (i) in the payment of the principal of or interest on any Subordinated Debenture or (ii) in respect of a covenant or provision that cannot be modified or amended without the consent of the Holder of each outstanding Subordinated Debenture affected thereby. MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting Capital, Industries and the Trustee to execute supplemental indentures, with the consent of the holders of not less than a majority in principal amount of the outstanding securities of each series then outstanding under the Indenture affected by such supplemental indenture, adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or modifying in any manner the rights of the holders of securities of each such series, except that no such supplemental indenture, without the consent of the holders of all such securities so affected, may, among other things, (i) change the stated maturity of any securities outstanding under the Indenture, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the method of calculating the rate of interest thereon, or reduce the amount of principal of the securities due at maturity or upon a declaration of acceleration of maturity thereof pursuant to the Indenture, or (ii) reduce the aforesaid percentage of securities of any series outstanding under the Indenture, the holders of which are required to consent to any such supplemental indenture. See also "Description of the Support Agreement." The Indenture also permits Capital, Industries and the Trustee to amend the Indenture in certain circumstances without the consent of the holders of the securities then outstanding under the Indenture to evidence the merger of Industries or Capital or the replacement of the Trustee with respect to the securities of one or more series and for certain other purposes. 13 DESCRIPTION OF THE SUPPORT AGREEMENT The Support Agreement between Capital and Industries provides that, during the term thereof, (i) Industries will own all of the voting stock of Capital, (ii) Industries will cause Capital to have at all times a positive net worth (net assets less intangible assets, if any), as determined in accordance with generally accepted accounting principles, and (iii) if Capital is unable to make timely payment of principal of or any premium or interest on any Debt (as defined below) issued by Capital, Industries will, at the request of Capital or any Lender (as defined below), provide funds to Capital to make such payments. The Support Agreement also provides that any Lender to Capital shall have the right to demand that Capital enforce its rights against Industries under the Support Agreement as described in the previous sentence, and, in the event that Capital fails to require Industries to perform such obligations or Capital defaults in the timely payment of principal of or any premium or interest on any Debt owed to a Lender, such Lender may proceed directly against Industries to enforce Capital's rights against Industries under the Support Agreement or to obtain payment of such defaulted principal, premium or interest owed to such Lender. The Support Agreement provides that in no event may any Lender, on default of Capital or Industries or upon failure by Capital or Industries to comply with the Support Agreement, have recourse to or against the stock or assets of Northern Indiana, or any interest of Capital or Industries therein. Notwithstanding this limitation, the Support Agreement provides that funds available to Industries to satisfy any obligations under the Support Agreement will include cash dividends paid by Northern Indiana to Industries. In addition to the cash dividends paid to Industries by any of its subsidiaries, the assets of Industries other than the stock and assets of Northern Indiana are available as recourse to holders of Capital's Debt. The carrying value of such assets reflected in Industries' consolidated balance sheet at September 30, 1995 is approximately $345.6 million. The term "Debt" is defined in the Support Agreement as debt securities or other obligations, and includes the Subordinated Debentures. The term "Lender" is defined in the Support Agreement as any person, firm or corporation to which Capital is indebted for money borrowed or to which Capital otherwise owes any Debt or which is acting as trustee or authorized representative on behalf of such person, firm or corporation. The Indenture provides that each Holder of a Subordinated Debenture, as well as the Trustee, shall be considered a "Lender" for purposes of the Support Agreement. Funds to pay the principal of, and premium, if any, and interest on, the Subordinated Debentures pursuant to the Support Agreement would come from earnings in the form of dividends paid to Industries by Northern Indiana, Kokomo Gas and NIFL, the earnings of other businesses of Industries and its subsidiaries or the proceeds of refinancing transactions. During the next few years, it is expected that the majority of Industries' earnings that would ultimately be available to pay the principal of and interest on the Subordinated Debentures will depend upon dividends paid to Industries by Northern Indiana. Northern Indiana's Indenture of Mortgage provides that Northern Indiana will not declare or pay any dividends on any class of capital stock (other than preferred or preference stock) except out of earned surplus or net profits of Northern Indiana. At September 30, 1995, Northern Indiana had approximately $139.5 million of retained earnings (earned surplus) available for the payment of dividends. Future dividends payable by Northern Indiana to Industries will depend upon adequate retained earnings, adequate future earnings and the absence of adverse developments. In addition, since Industries is a holding company, the right of its creditors, including holders of the Subordinated Debentures pursuant to the Support Agreement, to participate in any distribution of the assets of any subsidiary other than Capital upon its liquidation or reorganization or otherwise is necessarily subject to the prior claims of creditors of the subsidiary, except to the extent claims of Industries as a creditor may be recognized. The Indenture does not limit the amount of indebtedness that Capital, Industries or any of Industries' other subsidiaries may incur. The Support Agreement may be amended or terminated at any time by agreement of Industries and Capital, provided that (i) no amendment regarding the terms described above may be made unless all Lenders consent in advance and in writing to such amendment; (ii) no amendment regarding any other term of the Support Agreement may be made in a manner that adversely affects the rights of Lenders unless all affected Lenders consent in advance and in writing to such amendment; and (iii) no termination shall be effective until such time as all Debt (including the Subordinated Debentures) shall have been paid in full. 14 UNITED STATES TAX CONSIDERATIONS GENERAL The following is a summary of certain of the material United States federal income tax consequences of the purchase, ownership and disposition of Subordinated Debentures and represents the opinion of Schiff Hardin & Waite, counsel to Capital and Industries, insofar as it relates to matters of law and legal conclusions. Unless otherwise stated, this summary deals only with Subordinated Debentures held as capital assets by holders who purchase the Subordinated Debentures upon original issuance ("Initial Holders"). It does not deal with special classes of holders such as banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax-exempt investors, or persons that will hold the Subordinated Debentures as a position in a "straddle," as part of a "synthetic security" or "hedge," as part of a "conversion transaction" or other integrated investment, or as other than a capital asset. This summary also does not address the tax consequences to persons whose functional currency is other than the U.S. Dollar or the tax consequences to shareholders, partners or beneficiaries of a holder of Subordinated Debentures. Further, it does not include any description of any alternative minimum tax consequences or the tax laws of any state or local government or of any foreign government that may be applicable to the Subordinated Debentures. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations thereunder and administrative and judicial interpretations thereof, as of the date hereof, all of which are subject to change, possibly on a retroactive basis. ORIGINAL ISSUE DISCOUNT Because Capital has the option, under the terms of the Subordinated Debentures, to defer payments of interest by extending interest payment periods for up to 20 quarters, all payments in respect of the Subordinated Debentures will be treated as "original issue discount" ("OID"). Holders of debt instruments issued with OID must include that discount in income on an economic accrual basis whether or not cash attributable to the interest has yet been received, regardless of their method of tax accounting. Generally, all of a holder's taxable interest income with respect to the Subordinated Debentures will be accounted for as OID, and actual distributions of stated interest will not be separately reported as taxable income. The amount of OID that accrues in any month will approximately equal the amount of the interest that accrues on the Subordinated Debentures in that month at the stated interest rate. In the event that the interest payment period is extended, holders will continue to accrue OID approximately equal to the amount of the interest payment due at the end of the Extension Period on an economic accrual basis over the length of the extended interest period. MARKET DISCOUNT AND BOND PREMIUM Holders of Subordinated Debentures other than Initial Holders may be considered to have acquired their Subordinated Debentures with market discount or acquisition premium as such phrases are defined for United States federal income tax purposes. Such holders are advised to consult their tax advisors as to the income tax consequences of the acquisition, ownership and disposition of the Subordinated Debentures. SALES OF SUBORDINATED DEBENTURES A holder that sells Subordinated Debentures will recognize gain or loss equal to the difference between its adjusted tax basis in the Subordinated Debentures and the amount realized on the sale of such Subordinated Debentures. A holder's adjusted tax basis in the Subordinated Debentures generally will be its initial purchase price increased by OID previously includible in such holder's gross income to the date of disposition and decreased by payments received on the Subordinated Debentures. Such gain or loss generally will be a capital gain or loss and generally will be a long-term capital gain or loss if the Subordinated Debentures have been held for more than one year. 15 The Subordinated Debentures may trade at a price that does not accurately reflect the value of accrued but unpaid interest thereon. A holder who disposes of his Subordinated Debentures between record dates for payments of interest thereon will be required to include accrued but unpaid interest on the Subordinated Debentures through the date of disposition in income as ordinary income, and to add such amount to his adjusted tax basis in the Subordinated Debentures disposed of. To the extent the selling price is less than the holder's adjusted tax basis (which will include, in the form of OID, all accrued but unpaid interest) a holder will recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. UNITED STATES ALIEN HOLDERS For purposes of this discussion, a "United States Alien Holder" is any corporation, individual, partnership, estate or trust that is, as to the United States, a foreign corporation, a non-resident alien individual, a foreign partnership, or a non-resident fiduciary of a foreign estate or trust. Under present United States federal income tax law: (i) payments by Capital or Industries to any holder of a Subordinated Debenture that is a United States Alien Holder will not be subject to United States federal withholding tax; provided that (a) the beneficial owner of the Subordinated Debenture does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Industries entitled to vote, (b) the beneficial owner of the Subordinated Debenture is not a controlled foreign corporation that is related to Industries through stock ownership, and (c) either (A) the beneficial owner of the Subordinated Debenture certifies to Capital or its agent, under penalties of perjury, that it is not a United States holder and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution"), and holds the Subordinated Debenture in such capacity, certifies to Capital or its agent, under penalties of perjury, that such statement has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and furnishes Capital or its agent with a copy thereof; and (ii) a United States Alien Holder of a Subordinated Debenture will generally not be subject to United States federal income or withholding tax on any gain realized upon the sale or other disposition of a Subordinated Debenture, except that a United States Alien Holder will be subject to United States income tax on any gain if such United States Alien Holder (a) is engaged in a trade or business in the United States and such gain is effectively connected to the conduct of such trade or business or (b) is an individual present in the United States for 183 days or more during the taxable year, and certain other conditions are met. INFORMATION REPORTING TO HOLDERS Subject to the qualifications discussed below, income on the Subordinated Debentures will be reported to holders on Forms 1099, which forms should be mailed to holders of Subordinated Debentures by January 31 following each calendar year. Capital will be obligated to report annually to Cede & Co., as holder of record of the Subordinated Debentures, the OID related to the Subordinated Debentures that accrued during the year. Capital currently intends to report such information on Form 1099 prior to January 31 following each calendar year. The Underwriters have indicated to Capital that, to the extent that they hold Subordinated Debentures as nominees for beneficial holders, they currently expect to report to such beneficial holders on Forms 1099 by January 31 following each calendar year. Under current law, holders of Subordinated Debentures who hold as nominees for beneficial holders will not have any obligation to report information regarding the beneficial holders to Capital. Capital, moreover, will not have any obligation to report to beneficial holders who are not also record holders. Thus, beneficial holders of Subordinated Debentures who hold their Subordinated Debentures through the Underwriters will receive Forms 1099 reflecting the income on their Subordinated Debentures from such nominee holders rather than Capital. BACKUP WITHHOLDING Payments made in respect of, and proceeds from the sale of, the Subordinated Debentures may be subject to a "backup" withholding tax of 31% unless the holder complies with certain identification requirements. Any withheld amounts will be allowed as a credit against the holder's United States federal income tax, provided the required information is provided to the Internal Revenue Service. 16 THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE SUBORDINATED DEBENTURES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS. UNDERWRITING Under the terms and subject to the conditions contained in an Underwriting Agreement dated the date hereof, the Underwriters named below, for whom Morgan Stanley & Co. Incorporated, Dean Witter Reynolds, Inc., A.G. Edwards & Sons, Inc., Goldman, Sachs & Co. and Smith Barney Inc. are acting as representatives (the "Representatives"), have severally agreed to purchase, and Capital has agreed to sell to such Underwriters, the respective principal amounts of Subordinated Debentures set opposite their names below:
PRINCIPAL AMOUNT OF SUBORDINATED NAME DEBENTURES ---- ------------ Morgan Stanley & Co. Incorporated............................ $ Dean Witter Reynolds, Inc.................................... A.G. Edwards & Sons, Inc..................................... Goldman, Sachs & Co.......................................... Smith Barney Inc............................................. ----------- Total.................................................... $75,000,000 ===========
The Underwriting Agreement provides that the obligations of the several Underwriters to pay for and accept delivery of the Subordinated Debentures are subject to the approval of certain legal matters by their counsel and to certain other conditions. The Underwriters are committed to take and pay for all of the Subordinated Debentures if any are taken. The Underwriters initially propose to offer all or part of the Subordinated Debentures directly to the public at the public offering price set forth on the cover page hereof this Prospectus, and all or part to certain dealers at a price that represents a concession not in excess of % of the principal amount of the Subordinated Debentures. Any Underwriter may allow, and such dealers may reallow, a concession not in excess of % of the principal amount of the Subordinated Debentures to certain other dealers. After the initial public offering, the public offering price and concession and discount to dealers may be changed by the Underwriters. The Subordinated Debentures are a new issue of securities with no established trading market. The Subordinated Debentures have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, and trading on the New York Stock Exchange is expected to commence within a 30-day period after the initial delivery of the Subordinated Debentures. However, there can be no assurance that an active trading market for the Subordinated Debentures will develop or be sustained. Accordingly, no assurance can be given as to the liquidity of the trading market for the Subordinated Debentures. Capital and Industries have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. Certain of the Underwriters and dealers and their associates may be engaged in transactions with and perform services for Capital and Industries and their affiliates in the ordinary course of business. 17 LEGAL MATTERS The validity of the Subordinated Debentures and the Support Agreement and certain matters relating thereto will be passed upon for Capital and Industries by Schiff Hardin & Waite, Chicago, Illinois. Certain legal matters will be passed upon for the Underwriters by Sonnenschein Nath & Rosenthal, Chicago, Illinois. In giving their opinion, Sonnenschein Nath & Rosenthal may rely as to all matters of Indiana law on the opinion of Schiff Hardin & Waite. The statements as to matters of law and legal conclusions made in this Prospectus under the caption "United States Tax Considerations" have been passed upon by Schiff Hardin & Waite, counsel to Capital and Industries, and are stated herein on their authority as experts. EXPERTS The consolidated financial statements and schedules incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto and are incorporated by reference herein in reliance upon the authority of said firm as experts in auditing and accounting in giving such reports. Reference is made to said reports which include an explanatory paragraph with respect to changes in the methods of accounting for income taxes and postretirement benefits other than pensions, as discussed in the notes to the consolidated financial statements. 18 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth all expenses in connection with the issuance and distribution of the Subordinated Debentures being registered, other than underwriting discounts and commissions. All the amounts shown are estimates, except the registration fee. Securities and Exchange Commission registration fee............. $ 25,863 New York Stock Exchange listing fee............................. 36,900 Printing and engraving expenses................................. 35,000 Blue sky fees and expenses (including legal fees)............... 23,000 Trustee's fees and expenses..................................... 3,500 Accounting fees and expenses.................................... 20,000 Legal fees and expenses......................................... 50,000 Fees for rating agencies........................................ 20,000 Miscellaneous................................................... 3,737 -------- Total....................................................... $218,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The By-Laws of Industries provide for indemnification by Industries of each director and officer of Industries and Capital to the fullest extent permitted by law for liability of such director or officer arising by reason of his or her status as a director or officer of Industries or Capital. Under the By- Laws of Industries as well as the Indiana Business Corporation Law (the "Indiana BCL"), Industries is required to indemnify the directors and officers of Industries and Capital against expenses, judgments, decrees, fines, penalties and settlements actually and reasonably incurred by such person in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which such person is a party by reason of his or her connection with Industries and Capital, provided that such person acted in good faith and in a manner he or she reasonably believed to be in the best interest of Industries and Capital, or, with respect to a criminal proceeding, has no reasonable cause to believe that his or her conduct was unlawful. The By-Laws of Industries provide that except where a director or officer is substantially and finally successful on the merits, Industries may not indemnify a director or officer (unless ordered by a court) until after a determination has been made that indemnification of the director or officer is permissible because he or she met the applicable standards of conduct. Industries also may not advance expenses prior to the disposition of an action, suit or proceeding until: (a) the director or officer provides Industries with a written affirmation of his or her good faith belief that he or she has met the applicable standards of conduct and an undertaking to repay the advance if it is ultimately determined that he or she did not meet the applicable standards of conduct, and (b) a determination has been made, that, based on the facts then known to those making the determination, the director or officer met the applicable standards of conduct. The determination that a director or officer has met the applicable standards of conduct may be made by a majority vote of a quorum consisting of disinterested directors, a majority vote of a committee designated by the board of directors consisting of two or more disinterested directors (only if a quorum of the board cannot be obtained), special legal counsel or a majority vote of disinterested shareholders. As authorized under the By-Laws of Industries and the Indiana BCL, Industries and its subsidiaries, including Capital, have insurance which insures directors and officers for acts committed as such directors or officers which are determined not to be indemnifiable under Industries' indemnity provisions. Section 8 of the Underwriting Agreement filed as Exhibit 1 to this Registration Statement provides for the Underwriters to indemnify Capital and Industries and their respective officers and directors and each person, if II-1 any, who controls Capital or Industries within the meaning of the Securities Act, against certain liabilities in connection with the offering described herein, including liabilities under the federal securities laws, under certain circumstances. ITEM 16. LIST OF EXHIBITS. The exhibits filed herewith are set forth on the Exhibit Index included as part of this Registration Statement. ITEM 17. UNDERTAKINGS. (a) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of Industries' annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement 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. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933, may be permitted to directors, officers and controlling persons of either registrant pursuant to the foregoing provisions, or otherwise, each registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by either registrant of expenses incurred or paid by a director, officer or controlling person of either 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, each 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 Act and will be governed by the final adjudication of such issue. (c) The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus 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. II-2 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS DULY CAUSED THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HAMMOND, STATE OF INDIANA, ON THE 31ST DAY OF JANUARY, 1996. NIPSCO Industries, Inc. (Registrant) /s/ Gary L. Neale By __________________________________ Gary L. Neale Chairman, President and Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS PRE- EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Gary L. Neale Chairman, President, January 31, 1996 ____________________________________ Principal Executive Gary L. Neale Officer and Director /s/ Stephen P. Adik Executive Vice President, January 31, 1996 ____________________________________ Principal Financial Stephen P. Adik Officer and Treasurer /s/ Jerry M. Springer Controller, Assistant January 31, 1996 ____________________________________ Secretary and Principal Jerry M. Springer Accounting Officer /s/ Steven C. Beering* Director January 31, 1996 ____________________________________ Steven C. Beering /s/ Arthur J. Decio* Director January 31, 1996 ____________________________________ Arthur J. Decio /s/ Ernestine M. Raclin* Director January 31, 1996 ____________________________________ Ernestine M. Raclin /s/ Denis E. Ribordy* Director January 31, 1996 ____________________________________ Denis E. Ribordy /s/ Ian M. Rolland* Director January 31, 1996 ____________________________________ Ian M. Rolland /s/ Edmund A. Schroer* Director January 31, 1996 ____________________________________ Edmund A. Schroer /s/ John W. Thompson* Director January 31, 1996 ____________________________________ John W. Thompson /s/ Robert J. Welsh, Jr.* Director January 31, 1996 ____________________________________ Robert J. Welsh, Jr.
/s/ Jerry M. Springer *By____________________________ Jerry M. Springer attorney-in-fact II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS DULY CAUSED THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HAMMOND, STATE OF INDIANA, ON THE 31ST DAY OF JANUARY, 1996. NIPSCO Capital Markets, Inc. (Registrant) /s/ Stephen P. Adik By___________________________________ Stephen P. Adik President and Principal Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS PRE- EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Gary L. Neale Director January 31, 1996 ____________________________________ Gary L. Neale /s/ Stephen P. Adik President, Director and January 31, 1996 ____________________________________ Principal Executive Stephen P. Adik Officer /s/ John W. Dunn* Director January 31, 1996 ____________________________________ John W. Dunn /s/ Jerry M. Springer Vice President, Director and January 31, 1996 ____________________________________ Principal Financial Jerry M. Springer Officer /s/ Arthur A. Paquin Comptroller and Principal January 31, 1996 ____________________________________ Accounting Officer Arthur A. Paquin /s/ Patrick J. Mulchay* Director January 31, 1996 ____________________________________ Patrick J. Mulchay
/s/ Jerry M. Springer *By ______________________ Jerry M. Springer attorney-in-fact II-4 EXHIBIT INDEX
EXHIBIT PAGE NUMBER EXHIBIT NUMBER ------- ------- ------ 1 Form of Underwriting Agreement among NIPSCO Capital Mar- kets, Inc., NIPSCO Industries, Inc. and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co., as representa- tives of the several Underwriters 4.1 Form of Indenture among NIPSCO Capital Markets, Inc., NIPSCO Industries, Inc. and Chemical Bank, as Trustee 4.2 Resolutions of the Board of Directors of NIPSCO Capital Markets, Inc. establishing the terms and approving the form of the Junior Subordinated Deferrable Interest Deben- tures, Series A 4.3 Support Agreement dated April 4, 1989 as amended as of May 15, 1989, December 10, 1990 and February 14, 1991, between NIPSCO Industries, Inc. and NIPSCO Capital Markets, Inc. (incorporated by reference to Exhibit 4.2 to the Registra- tion Statement on Form S-3 filed by Capital and Industries on November 13, 1992 (Registration No. 33-54516)) -- 4.4 Form of Subordinated Debenture 5 Opinion of Schiff Hardin & Waite as to the legality of the Subordinated Debentures 8 Opinion of Schiff Hardin & Waite as to certain federal in- come tax matters* 12 Statement re Computation of Ratio of Earnings to Fixed Charges* 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Schiff Hardin & Waite (contained in their opin- ions filed as Exhibits 5 and 8) -- 24.1 Powers of Attorney of the directors of NIPSCO Capital Mar- kets, Inc.* 24.2 Powers of Attorney of the directors of NIPSCO Industries, Inc.* 25 Form T-1, Statement of Eligibility of Chemical Bank*
- -------- *Previously filed. EX-1 2 UNDERWRITING AGREEMENT EXHIBIT 1 NIPSCO CAPITAL MARKETS, INC. $75,000,000 ____% QUARTERLY DEBT CAPITAL SECURITIES ----------------- (Junior Subordinated Deferrable Interest Debentures, Series A) UNDERWRITING AGREEMENT ---------------------- February __, 1996 Morgan Stanley & Co. Incorporated Dean Witter Reynolds, Inc. A.G. Edwards & Sons, Inc. Goldman, Sachs & Co. Smith Barney Inc. As Representatives of the several Underwriters c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Dear Sirs: NIPSCO Capital Markets, Inc., an Indiana corporation (the "Company") and a wholly-owned subsidiary of NIPSCO Industries, Inc., an Indiana corporation ("Industries"), proposes, subject to the terms and conditions stated herein, to issue and sell to the several Underwriters named in Schedule I hereto (the "Underwriters"), an aggregate of $75,000,000 principal amount of the _____% Quarterly Debt Capital Securities of the Company (Junior Subordinated Deferrable Interest Debentures, Series A) specified above (the "Securities") in the respective principal amounts designated in Schedule I hereto. 1. The Company and Industries jointly and severally represent and warrant to, and agree with, each of the several Underwriters that: (a) A registration statement on Form S-3 in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement in the form heretofore delivered to you has been declared effective by the Commission; no other document with respect to such registration statement or document incorporated by reference therein has heretofore been filed with the Commission; and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), being hereinafter called a "Preliminary Prospectus"; the various parts of such registration statement, including all exhibits thereto but excluding Form T-1 and including (i) the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the registration statement at the time it was declared effective and (ii) the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective, each as amended at the time such part of the registration statement became effective, being hereinafter called the "Registration Statement"; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the time of filing of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of Industries filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement); (b) No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder, 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, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to Industries or the Company by any Underwriter through you expressly for use therein; -2- (c) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus, or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will 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; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to Industries or the Company by any Underwriter through you expressly for use therein; (d) Giving effect to the interpretations of the requirements of the Act reflected in the Company's letter requesting "no-action" submitted to the staff of the Commission (the "Staff"), dated April 27, 1992, as supplemented by letters dated July 9, 1992 and September 21, 1992 (the "No- Action Request") and the Staff's response thereto dated September 25, 1992 (the "Staff Response"), the Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects, to the requirements of the Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, 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; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to Industries or the Company by any Underwriter through you expressly for use therein; (e) Neither Industries nor any of its subsidiaries has sustained since the date of the latest audited consolidated -3- financial statements included or incorporated by reference in the Prospectus 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, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the consolidated share capital or long-term debt of Industries and its subsidiaries or the consolidated share capital or long-term debt of either the Company or Northern Indiana Public Service Company, a wholly-owned subsidiary of Industries ("Northern Indiana"), or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company, Northern Indiana or Industries and its other subsidiaries, otherwise than as set forth or contemplated in the Prospectus; (f) Each of Industries, Northern Indiana and the Company has good and marketable title in fee simple to such of its fixed assets as are real property and good and marketable title to its other assets reflected in the most recent consolidated balance sheet incorporated by reference in the Prospectus, except properties and assets sold or otherwise disposed of in the ordinary course of business after the date of said balance sheet, subject to no mortgages, liens, charges or encumbrances of any kind whatsoever other than liens of current mortgages and minor defects and encumbrances customarily found in the case of properties of like size and character which do not impair the use of such properties by Industries, Northern Indiana or the Company, respectively; (g) Each of Industries, Northern Indiana and the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Indiana, with respective power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each other subsidiary of Industries has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; -4- (h) Each of Industries, Northern Indiana and the Company has an authorized capitalization as set forth in the Prospectus; all of the issued capital shares of Industries and each wholly-owned subsidiary of Industries have been duly and validly authorized and issued and are fully paid and non- assessable; and all of the issued common shares of Northern Indiana and all the issued capital shares of the Company and each other subsidiary of Industries (other than Northern Indiana, Elm Energy Recycling (UK) Ltd. ("Elm Energy"), Triumph Natural Gas, Inc. ("Triumph"), NESI Energy Marketing, L.L.C. ("NESI Energy") and Analytic Systems Laboratories, Inc. ("Analytic Systems")) are owned directly or indirectly by Industries, free and clear of all liens, encumbrances, equities or claims; and all capital shares of Elm Energy Triumph, NESI Energy and Analytic Systems owned directly or indirectly by Industries, which constitute a majority of each such corporation's outstanding capital shares, are owned free and clear of all liens, encumbrances, equities or claims; (i) The Securities have been duly authorized and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by (i) the Support Agreement, dated April 4, 1989, as amended as of May 15, 1989, December 10, 1990 and February 14, 1991, between Industries and the Company (the "Support Agreement"), which will be substantially in the form filed as an exhibit to the Registration Statement and (ii) the Indenture to be dated as of February 1, 1996 (the "Indenture") among the Company, Industries and Chemical Bank, as Trustee (the "Trustee"), under which the Securities are to be issued, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, when executed and delivered by the Company, Industries and the Trustee, the Indenture will constitute, and the Support Agreement has been duly authorized, executed and delivered by each of Industries and the Company and constitutes, a valid and legally binding instrument, enforceable against Industries and the Company, as the case may be, in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Securities, the Support Agreement and the Indenture will conform to the descriptions thereof in the Prospectus; (j) Industries' obligations under the Support Agreement will rank prior to the equity securities of Industries and equal with all other unsecured and unsubordinated -5- indebtedness of Industries, whether now or hereafter outstanding; (k) This Agreement has been duly authorized, executed and delivered by each of Industries and the Company and constitutes a valid and legally binding obligation, enforceable against Industries and the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (l) None of Industries, Northern Indiana or the Company is in violation of its Articles of Incorporation or By-Laws or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material contract, indenture, mortgage, loan agreement, note, lease, or any other instrument to which it is a party or by which it may be bound. The issue and sale of the Securities, the compliance by the Company with all of the provisions of the Securities, the Indenture, the Support Agreement and this Agreement, the compliance by Industries with all of the provisions of the Securities, the Indenture, the Support Agreement and this Agreement, and the consummation of the transactions herein and therein contemplated, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Industries or any of its subsidiaries is a party or by which Industries or any of its subsidiaries is bound or to which any of the property or assets of Industries or any of its subsidiaries is subject, nor will any such action result in any violation of the provisions of the Articles of Incorporation or By-laws of Industries or any of its subsidiaries, or any statute, rule or regulation, or any order of any court or governmental agency or body having jurisdiction over Industries or any of its subsidiaries or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by Industries and the Company of the transactions contemplated by this Agreement, the Support Agreement or the Indenture, except the registration under the Act of the Securities, such as have been obtained under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the several Underwriters; -6- (m) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which Industries or any of its subsidiaries is a party or to which any property of Industries or any of its subsidiaries is subject which, if determined adversely to Industries or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of Industries and its subsidiaries; and, to the best of each of Industries' and the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (n) The accountants who have certified certain financial statements of Industries and its subsidiaries included or incorporated by reference in the Registration Statement and Prospectus are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (o) Except for Industries, as and to the extent described in the Prospectus, no person or corporation which is a "holding company" or a "subsidiary of a holding company" within the meaning of such terms as defined in the Public Utility Holding Company Act of 1935, as amended (the "1935 Act") directly or indirectly owns, controls or holds with power to vote 10% or more of the outstanding voting securities of Northern Indiana; Industries is exempt from all provisions of the 1935 Act except Section 9(a)(2); and neither Northern Indiana nor the Company is a "holding company" as so defined; (p) The Company will apply the proceeds of the sale of the Securities in the manner described in the Prospectus and in accordance with the provisions of Rule 3a-5 under the Investment Company Act of 1940, as amended (the "1940 Act"); (q) The Commission has issued an order (the "Order") exempting the Company from all of the provisions of the 1940 Act; the Order is in full force and effect; and the Company will continue to comply with the terms and conditions of the Order, or otherwise remain exempt from all of the provisions of the 1940 Act, so long as any Securities are outstanding; (r) The Prospectus accurately describes the most restrictive of the existing limitations on the payment of dividends by Northern Indiana on its common shares held by Industries; (s) Each of Industries, Northern Indiana and the Company has statutory authority, franchises and consents free from -7- burdensome restrictions and adequate for the conduct of the business in which it is engaged; (t) Industries, the Company and each other subsidiary of Industries is in compliance with all provisions of Section 1 of Laws of Florida, Chapter 92- 198, An Act Relating to Disclosure of Doing Business with Cuba, and if Industries, the Company or any other subsidiary of Industries commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba after the date the Registration Statement becomes or has become effective with the Commission or with the Florida Department of Banking and Finance (the "Department"), whichever date is later, or if the information reported in the Prospectus, if any, concerning business conducted with Cuba or with any person or affiliate located in Cuba by Industries, the Company or any other subsidiary of Industries changes in any material way, Industries or the Company will provide the Department notice of such business or change, as appropriate, in a form acceptable to the Department; (u) None of Industries, Northern Indiana or the Company has any material contingent liability which is not disclosed in the Prospectus; and (v) The financial statements included or incorporated by reference in the Prospectus present fairly the financial position of Industries and its subsidiaries as at the dates indicated and the results of their operations for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and, with respect to financial statements included in periodic reports filed by Industries pursuant to Sections 13 or 15(d) of the Exchange Act with the Commission on and after September 25, 1992, contain the information requested by the Staff in the Staff Response to be so included; and the supporting schedules included or incorporated by reference in the Prospectus present fairly the information required to be stated therein. 2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the several Underwriters, and the Underwriters agree, severally and not jointly or jointly and severally, to purchase from the Company, at a purchase price of _____% of the principal amount thereof, plus accrued interest, if any, from February __, 1996 to the Time of Delivery hereunder, the Securities. 3. Upon the authorization by you of the release of the Securities, the Underwriters propose to offer their respective -8- portions of the Securities for sale upon the terms and conditions set forth in the Prospectus. 4. Securities to be purchased by the several Underwriters hereunder, in definitive form, and in such authorized denominations and registered in such names as each Underwriter may request through you upon at least forty-eight hours' prior notice to the Company, shall be delivered by or on behalf of the Company to you for the respective accounts of the several Underwriters, against payment by the several Underwriters or on their behalf of the purchase price therefor by certified or official bank check or checks, payable to the order of the Company in New York Clearing House funds, all at the office of Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036, at 10:00 A.M., New York City time, on February __, 1996 or at such other time and date as you and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery." Such certificates will be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery at the office of the Trustee located at 450 W. 33rd St., New York, New York 10001. 5. Industries and the Company jointly and severally agree with each of the several Underwriters: (a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or Prospectus prior to the Time of Delivery which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when the Registration Statement, or any amendment thereto, has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish you with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by Industries or the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Securities; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or prospectus, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any -9- proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; (b) Promptly from time to time to take such action as you may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith neither Industries nor the Company shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) To furnish you copies of the Prospectus in such quantities as you may from time to time reasonably request, and, if the delivery of a prospectus is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify you and upon your request to file such document and to prepare and furnish without charge to you and to any dealer in securities as many copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case you are required to deliver a prospectus in connection with sales of any of the Securities at any time nine months or more after the time of issue of the Prospectus, upon your request but at your expense, to prepare and deliver to each Underwriter as many copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act; -10- (d) To make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), earning statements of Industries and its subsidiaries and of the Company (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including at the option of Industries Rule 158); (e) During the period beginning from the date hereof and continuing to and including the earlier of (i) the termination of trading restrictions on the Securities, as notified to the Company by you, and (ii) the Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of any debt securities of Industries or the Company which mature more than one year after the Time of Delivery and which are substantially similar to the Securities, without your prior written consent; (f) To furnish to the holders of the Securities as soon as practicable after the end of each fiscal year Industries' annual report (including a balance sheet and statements of income, shareholders' equity and cash flow of Industries and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), consolidated summary financial information of Industries and its subsidiaries for such quarter in reasonable detail; and (g) During a period of five years from the effective date of the Registration Statement, to furnish to you copies of all reports or other communications (financial or other) furnished to shareholders, and deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which the Securities or any class of securities of Industries or the Company is listed; and (ii) such additional information concerning the business and financial condition of Industries or the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of Industries and its subsidiaries are consolidated in reports furnished to Industries' shareholders generally or to the Commission). 6. The Company and Industries jointly and severally covenant and agree with each of the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of Industries' and the Company's -11- counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the several Underwriters and dealers; (ii) the cost of printing or producing this Agreement, the Indenture, the Blue Sky Memorandum and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the several Underwriters in connection with such qualification and in connection with the Blue Sky Memorandum; (iv) any fees charged by securities rating services for rating the Securities; (v) the filing fees incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of preparing the Securities; (vii) the fees and expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities; (viii) the fees, disbursements and expenses of counsel in connection with preparing the Indenture; (ix) any transfer taxes payable in connection with the sale of the Securities to the several Underwriters; and (x) all other costs and expenses incident to the performance of their respective obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, Section 8 and Section 10 hereof, the several Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by any of them, and any advertising expenses connected with any offers any of them may make. 7. The several obligations of the Underwriters hereunder shall be subject, in their discretion, to the condition that all representations and warranties and other statements of Industries and the Company herein are, at and as of the Time of Delivery, true and correct, the condition that Industries and the Company shall have performed all of their respective obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all -12- requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction; (b) Sonnenschein Nath & Rosenthal, counsel for the Underwriters, shall have furnished to you such opinion or opinions, dated the Time of Delivery, with respect to the incorporation of Industries and the Company, this Agreement, the Support Agreement, the validity of the Indenture, the Securities, the Registration Statement, the Prospectus, and other related matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; (c) (i) Schiff Hardin & Waite, counsel for Industries and the Company, shall have furnished to you their written opinion, dated the Time of Delivery, in form and substance satisfactory to you, to the effect that: (1) Each of Industries, Northern Indiana and the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Indiana, with respective power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; (2) Each of Industries, Northern Indiana and the Company has an authorized capitalization as set forth in the Prospectus; all of the issued capital shares of Industries and each wholly-owned subsidiary of Industries have been duly and validly authorized and issued and are fully paid and non-assessable; and all of the issued common shares of Northern Indiana and all the issued capital shares of the Company and each other subsidiary of Industries (other than Northern Indiana, Elm Energy, Triumph, NESI Energy and Analytic Systems) are owned directly or indirectly by Industries, free and clear of all liens, encumbrances, equities or claims; and all capital shares of Elm Energy, Triumph, NESI Energy and Analytic Systems owned directly or indirectly by Industries, which constitute a majority of each such corporation's outstanding capital shares, are owned free and clear of all liens, encumbrances, equities or claims; (3) Each of Industries, Northern Indiana and the Company has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any -13- business, so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each other subsidiary of Industries has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of Industries or its subsidiaries, provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates); (4) To the best of such counsel's knowledge, other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which Industries or any of its subsidiaries is a party or to which any property of Industries or any of its subsidiaries is subject which, if determined adversely to Industries or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of Industries and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (5) Each of this Agreement and the Support Agreement has been duly authorized, executed and delivered by each of Industries and the Company and constitutes a valid and legally binding obligation, enforceable against each in accordance with its terms, subject, as to enforcement, (a) in the case of both this Agreement and the Support Agreement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles and (b) in the case of this Agreement, to any limitations by reason of public policy considerations on the enforcement under certain circumstances of the indemnity provisions thereof; (6) The Securities have been duly authorized, executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Support Agreement and the Indenture; and the Securities, the Support Agreement and the Indenture conform to the descriptions thereof in the Prospectus; -14- (7) The Indenture has been duly authorized, executed and delivered by the Company and Industries and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture has been duly qualified under the Trust Indenture Act; (8) The issue and sale of the Securities, the compliance by each of the Company and Industries with all of the provisions of the Securities, the Indenture, the Support Agreement and this Agreement, and the consummation of the transactions herein and therein contemplated, will not conflict with or result in a breach or violation of any the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which Industries or any of its subsidiaries is a party or by which Industries or any of its subsidiaries is bound or to which any of the property or assets of Industries or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the Articles of Incorporation or the By-Laws of Industries or any of its subsidiaries, or any statute, rule or regulation, or any order known to such counsel of any court or governmental agency or body having jurisdiction over Industries or any of its subsidiaries or any of their properties; (9) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by Industries or the Company of the transactions contemplated by this Agreement, the Support Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the several Underwriters; (10) The documents incorporated by reference in the Prospectus or any further amendment or supplement thereto made by Industries or the Company prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or -15- were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and they have no reason to believe that any of such documents, when such documents became effective or were so filed, as the case may be, contained, in the case of a registration statement which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made when such documents were so filed, not misleading; (11) Giving effect to the interpretations of the requirements of the Act reflected in the No-Action Request and the Staff Response, the Registration Statement and the Prospectus and any further amendments and supplements thereto made by Industries or the Company prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by Industries or the Company prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus or any further amendment or supplement thereto made by Industries or the Company prior to the Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or that, as of the Time of Delivery either the Registration Statement or the Prospectus or any further amendment or supplement thereto made by Industries or the Company prior to the -16- Time of Delivery (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required; and (12) The statements made in the Prospectus which are stated therein to have been made on the basis of the opinion of such counsel have been reviewed by such counsel and, as to matters of law and legal conclusions, are correct; (ii) Schiff Hardin & Waite shall also have furnished to you a letter, in form and substance satisfactory to you, authorizing the several Underwriters to rely on their opinion filed as Exhibit 8 to the Registration Statement as if such opinion were addressed to the several Underwriters and dated the Time of Delivery; (d) On the date of this Agreement and also at the Time of Delivery, Arthur Andersen & Co. shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, to the effect set forth in Annex I hereto; (e) (i) Neither Industries nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus, and (ii) since the respective dates as of which information is given in the Prospectus there shall not have been any change in the consolidated share capital or long-term debt of Industries or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of Industries and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the effect of which, in any such case -17- described in Clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in the Prospectus; (f) The Securities shall have been approved for listing on the New York Stock Exchange, subject to official notice of issuance. (g) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded any of Industries', Northern Indiana's or the Company's debt securities by any "nationally recognized statistical rating organization," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of Industries', Northern Indiana's or the Company's debt securities; (h) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally or in trading in securities of Industries on the New York Stock Exchange; (ii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; or (iii) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war if the effect of any such event specified in this Clause (iii) in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in the Prospectus; and (i) Each of Industries and the Company shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of Industries and of the Company satisfactory to you as to the accuracy of the representations and warranties of Industries and the Company herein at and as of such Time of Delivery, as to the performance by Industries and the Company of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a), (e) and (g) of this Section and as to such other matters as you may reasonably request. 8. (a) Industries and the Company will jointly and severally indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration -18- Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor Industries shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to Industries or the Company by any Underwriter through you expressly for use therein. (b) Each Underwriter, severally and not jointly or jointly and severally, will indemnify and hold harmless Industries and the Company against any losses, claims, damages or liabilities to which Industries or the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to Industries or the Company by such Underwriter through you expressly for use therein; and will reimburse Industries or the Company, as the case may be, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to subsection (a) or (b) above, such person (the "indemnified party") shall promptly notify the person or persons against whom such indemnity may be sought (singly or collectively, as the case may be, the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may -19- designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to subsection (a) above and by Industries, in the case of parties indemnified pursuant to subsection (b) above. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there shall be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this subsection (c), the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall -20- contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by Industries and the Company, on the one hand, and the Underwriters, on the other, from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of Industries and the Company, on the one hand, and the Underwriters, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by Industries and the Company, on the one hand, and the Underwriters, on the other, shall be deemed to be in the same proportion as the total 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 cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by Industries or the Company, on the one hand, or the Underwriters, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amounts of Securities they have purchased and not joint or joint and several. Industries and the Company, on the one hand, and the Underwriters, on the other, agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include 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 subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or -21- alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The obligations of Industries and the Company under this Section 8 shall be in addition to any liability which they may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of Industries and of the Company and to each person, if any, who controls Industries or the Company within the meaning of the Act. 9. The respective indemnities, agreements, representations, warranties and other statements of Industries, the Company and the Underwriters, as set forth in this Agreement or made by them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by any Underwriter or any controlling person of such Underwriter, or Industries or the Company, or any officer or director or controlling person of Industries or the Company, and shall survive delivery of and payment for the Securities. 10. If for any reason the Securities are not delivered by or on behalf of the Company as provided herein, Industries and the Company will reimburse the Underwriters for all out-of-pocket expenses approved in writing by you, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Securities, but Industries and the Company shall then be under no further liability to the Underwriters except as provided in Section 6 and Section 8 hereof. 11. All statements, requests, notices, and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to Morgan Stanley & Co. Incorporated at 1585 Broadway, New York, New York 10036, Attention: Managing Director - Debt Syndicate Department, facsimile no. (212) 761-0785; and if to Industries or the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of Industries or the Company set forth in the Registration Statement, Attention: Treasurer, facsimile no. (219) 853-5352. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. -22- 12. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, Industries and the Company and, to the extent provided in Section 8 and Section 9 hereof, the officers and directors of Industries and of the Company and each person who controls Industries or the Company or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from the Underwriter shall be deemed a successor or assign by reason merely of such purchase. 13. Time shall be of the essence of this Agreement. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business. 14. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. -23- 15. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. If the foregoing is in accordance with your understanding, please sign and return to us four counterparts hereof, and upon the acceptance hereof by you, this letter and such acceptance hereof shall constitute a binding agreement between the Underwriter, on the one hand, and Industries and the Company, on the other. Very truly yours, NIPSCO CAPITAL MARKETS, INC. By: _____________________________ Name: Title: NIPSCO INDUSTRIES, INC. By: _____________________________ Name: Title: Accepted as of the date hereof: MORGAN STANLEY & CO. INCORPORATED DEAN WITTER REYNOLDS, INC. A.G. EDWARDS & SONS, INC. GOLDMAN, SACHS & CO. SMITH BARNEY INC. Acting severally on behalf of themselves and the several Underwriters named herein. By: MORGAN STANLEY & CO. INCORPORATED By: ______________________________ -24- ANNEX I ------- Pursuant to Section 7(d) of the Underwriting Agreement, the accountants shall furnish letters to the Underwriters to the effect that: (i) They are independent certified public accountants with respect to Industries within the meaning of the Act and the applicable published rules and regulations thereunder, and as such certified public accountants, audit the books of Industries and its subsidiaries; (ii) In their opinion, the financial statements and schedules audited by them and included or incorporated by reference in the Registration Statement or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act or the Exchange Act, as applicable, and the related published rules and regulations thereunder; (iii) In their opinion, any of the unaudited selected financial information with respect to the consolidated results of operations and financial position of Industries and its subsidiaries for the five most recent fiscal years that is included in the Prospectus or included or incorporated by reference in Item 6 of Industries' Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after restatement where applicable) in the audited consolidated financial statements for such five fiscal years which were included or incorporated by reference in Industries' Annual Reports on Form 10-K for such fiscal years; (iv) On the basis of limited procedures, not constituting an audit in accordance with generally accepted auditing standards, consisting of procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in Statement of Auditing Standards No. 71, "Interim Financial Information" of the unaudited financial statements and a reading of other information referred to below, inspection of the minute books of Industries and its subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of Industries and its subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: I-1 (A) any unaudited income statement data and balance sheet items included or incorporated by reference in the Prospectus do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included or incorporated by reference in Industries' Annual Report on Form 10-K for the most recent fiscal year or Quarterly Report on 10-Q for the most recent quarter; (B) any unaudited pro forma condensed financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder; (C) as of a specified date not more than five days prior to the date of such letter, except as occasioned by the declaration of dividends, the repurchase of common shares or the purchase of outstanding long-term debt for sinking fund purposes, there have been any changes in the consolidated share capital (other than issuances of capital shares upon exercise of options and share appreciation rights, amortization of compensation cost for restricted shares, charges in components of foreign currency translation and upon conversions of convertible securities, in each case which were outstanding on the date of the latest balance sheet included or incorporated by reference in the Prospectus) or any increase in consolidated long-term debt of Industries and its subsidiaries, or any decreases in consolidated net assets or other items specified by the Underwriters, or any increases in any items specified by the Underwriters, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (D) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the specified date referred to in Clause (C) there were any decreases in consolidated operating revenues or operating income or the total or per share amounts of consolidated net income or other items specified by the Underwriters, or any increases in any items specified by the I-2 Underwriters, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Underwriters, except in each case for increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter. (v) In addition to the audit referred to in their report(s) included or incorporated by reference in the Prospectus and the inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (iv) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Underwriters which are derived from the general accounting records of Industries and its subsidiaries, which appear in the Prospectus (excluding documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Underwriters or in documents incorporated by reference in the Prospectus specified by the Underwriters, and have compared certain of such amounts, percentages and financial information with the accounting records of Industries and its subsidiaries or analyses prepared by management of the Company and have found them to be in agreement. All references in this Annex I or the Prospectus shall be deemed to refer to the Prospectus as amended or supplemented (including the documents incorporated by reference therein) as of the date of the amendment, supplement or incorporation. I-3 SCHEDULE I
Principal Amount of Securities to Underwriter be Purchased - ----------- ---------------- Morgan Stanley & Co. Incorporated $ Dean Witter Reynolds, Inc. A.G. Edwards & Sons, Inc. Goldman, Sachs & Co. Smith Barney Inc. ----------- Total........................ $75,000,000 ===========
EX-4.1 3 FORM OF INDENTURE EXHIBIT 4.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NIPSCO CAPITAL MARKETS, INC. AND NIPSCO INDUSTRIES, INC. TO CHEMICAL BANK, Trustee ____________________ INDENTURE Dated as of February 1, 1996 ____________________ Providing for Issuance of Subordinated Debt Securities in Series - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NIPSCO Capital Markets, Inc. NIPSCO Industries, Inc. Reconciliation and Tie between Trust Indenture Act of 1939, as amended, and Indenture, dated as of February 1, 1996
Trust Indenture Indenture Act Section Section(s) - --------------- ---------- (S)310(a)(1).......................................... 609 (a)(2).......................................... 609 (a)(3).......................................... Not Applicable (a)(4).......................................... Not Applicable (a)(5).......................................... 609 (b)............................................. 608, 610 (c)............................................. Not Applicable (S)311(a)............................................. 613 (b)............................................. 613 (c)............................................. 613 (S)312(a)............................................. 701, 702(a) (b)............................................. 702(a) (c)............................................. 702(b) (S)313(a)............................................. 703(a) (b)............................................. 703(b) (c)............................................. 703(c) (d)............................................. 703(c) (S)314(a)............................................. 704 (a)(4).......................................... 101, 1009 (b)............................................. Not Applicable (c)(1).......................................... 102 (c)(2).......................................... 102 (c)(3).......................................... Not Applicable (d)............................................. Not Applicable (e)............................................. 102 (f)............................................. Not Applicable (S)315(a)............................................. 601 (b)............................................. 602 (c)............................................. 601 (d)............................................. 601 (e)............................................. 514 (S)316(a)(1)(A)....................................... 502, 512 (a)(1)(B)....................................... 513 (a)(2).......................................... Not Applicable (b)............................................. 508 (c)............................................. 104 (S)317(a)(1).......................................... 503 (a)(2).......................................... 504 (b)............................................. 1003 (S)318(a)............................................. 108
- ------- NOTE: This Reconciliation and Tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS ________________
Page ---- RECITALS OF THE COMPANY AND INDUSTRIES..................................... 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions.............................................. 2 SECTION 102. Compliance Certificates and Opinions..................... 9 SECTION 103. Form of Documents Delivered to Trustee................... 9 SECTION 104. Acts of Holders; Record Dates............................ 10 SECTION 105. Notices, etc., to Trustee, Company and Industries........ 12 SECTION 106. Notice to Holders of Securities; Waiver.................. 13 SECTION 107. Language of Notices, etc................................. 14 SECTION 108. Conflict with Trust Indenture Act........................ 14 SECTION 109. Effect of Headings and Table of Contents................. 14 SECTION 110. Successors and Assigns................................... 14 SECTION 111. Separability Clause...................................... 14 SECTION 112. Benefits of Indenture.................................... 14 SECTION 113. Governing Law............................................ 14 SECTION 114. Legal Holidays........................................... 15 SECTION 115. Appointment of Agent for Service......................... 15 SECTION 116. No Adverse Interpretation of Other Agreements............ 15 SECTION 117. Execution in Counterparts................................ 16 ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally.......................................... 16 SECTION 202. Form of Trustee's Certificate of Authentication.......... 17 SECTION 203. Securities in Global Form................................ 17 SECTION 204. Form of Legend for Global Securities..................... 17 SECTION 205. Form of Legend for Bearer Securities..................... 18
- ---------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. -i- ARTICLE THREE THE SECURITIES AND THE SUPPORT AGREEMENT
SECTION 301. Amount Unlimited; Issuable in Series........................... 18 SECTION 302. Denominations.................................................. 21 SECTION 303. Execution, Authentication, Delivery and Dating................. 21 SECTION 304. Temporary Securities........................................... 24 SECTION 305. Registration, Registration of Transfer and Exchange............ 25 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities............... 28 SECTION 307. Payment of Interest; Interest Rights Preserved................. 29 SECTION 308. Persons Deemed Owners.......................................... 31 SECTION 309. Cancellation................................................... 32 SECTION 310. Computation of Interest........................................ 32 SECTION 311. Form of Certification by a Person Entitled to Receive a Bearer Security..................................................... 32 SECTION 312. Support Agreement.............................................. 33 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture........................ 34 SECTION 402. Application of Trust Money..................................... 35 ARTICLE FIVE REMEDIES SECTION 501. Events of Default.................................................. 36 SECTION 502. Acceleration of Maturity; Rescission and Annulment................. 37 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.......................................................... 39 SECTION 504. Trustee May File Proofs of Claim................................... 39 SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons....................................................... 40 SECTION 506. Application of Money Collected..................................... 41 SECTION 507. Limitation on Suits................................................ 41 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest..................................................... 42 SECTION 509. Restoration of Rights and Remedies................................. 42 SECTION 510. Rights and Remedies Cumulative..................................... 42
n - ---------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. -ii- SECTION 511. Delay or Omission Not Waiver................................ 43 SECTION 512. Control by Holders of Securities............................ 43 SECTION 513. Waiver of Past Defaults..................................... 43 SECTION 514. Undertaking for Costs....................................... 44 SECTION 515. Waiver of Stay or Extension Laws............................ 44 ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities......................... 44 SECTION 602. Notice of Defaults.......................................... 46 SECTION 603. Certain Rights of Trustee................................... 46 SECTION 604. Not Responsible for Recitals or Issuance of Securities...... 47 SECTION 605. May Hold Securities......................................... 47 SECTION 606. Money Held in Trust......................................... 48 SECTION 607. Compensation and Reimbursement.............................. 48 SECTION 608. Disqualification; Conflicting Interests..................... 49 SECTION 609. Corporate Trustee Required; Eligibility..................... 49 SECTION 610. Resignation and Removal; Appointment of Successor........... 49 SECTION 611. Acceptance of Appointment by Successor...................... 51 SECTION 612. Merger, Conversion, Consolidation or Succession to Business. 52 SECTION 613. Preferential Collection of Claims Against Company........... 52 SECTION 614. Appointment of Authenticating Agent......................... 52 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND INDUSTRIES SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.................................................................. 54 SECTION 702. Preservation of Information; Communications to Holders...... 55 SECTION 703. Reports by Trustee.......................................... 55 SECTION 704. Reports by Company and Industries........................... 55 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company and Industries May Consolidate, Etc., Only on Certain Terms............................................................ 56 SECTION 802. Successor Corporation Substituted........................... 57
- ---------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. -iii- SECTION 803. Assumption by Industries............................. 57 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders... 58 SECTION 902. Supplemental Indentures with Consent of Holders...... 59 SECTION 903. Execution of Supplemental Indentures................. 60 SECTION 904. Effect of Supplemental Indentures.................... 61 SECTION 905. Conformity with Trust Indenture Act.................. 61 SECTION 906. Reference in Securities to Supplemental Indentures... 61 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest.......... 61 SECTION 1002. Maintenance of Office or Agency..................... 62 SECTION 1003. Money for Securities Payments to be Held in Trust... 63 SECTION 1004. Additional Amounts.................................. 64 SECTION 1005. Corporate Existence................................. 65 SECTION 1006. Maintenance of Properties........................... 65 SECTION 1007. Payment of Taxes and Other Claims................... 66 SECTION 1008. Limitations on Dividends, Repurchases and Sinking Fund Payments..................................... 66 SECTION 1009. Statement by Officers as to Default................. 66 SECTION 1010. Waiver of Certain Covenants......................... 67 SECTION 1011. Support Agreement................................... 67 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article............................ 67 SECTION 1102. Election to Redeem; Notice to Trustee............... 68 SECTION 1103. Selection by Trustee of Securities to Be Redeemed... 68 SECTION 1104. Notice of Redemption................................ 68 SECTION 1105. Deposit of Redemption Price......................... 69 SECTION 1106. Securities Payable on Redemption Date............... 70 SECTION 1107. Securities Redeemed in Part......................... 70
- ---------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. -iv- ARTICLE TWELVE SINKING FUNDS
SECTION 1201. Applicability of Article................................ 71 SECTION 1202. Satisfaction of Sinking Fund Payments with Securities... 71 SECTION 1203. Redemption of Securities for Sinking Fund............... 72 ARTICLE THIRTEEN MEETINGS OF HOLDERS OF SECURITIES SECTION 1301. Purposes for Which Meetings May be Called............... 72 SECTION 1302. Call Notice and Place of Meeting........................ 72 SECTION 1303. Persons Entitled to Vote at Meetings.................... 73 SECTION 1304. Quorum; Action.......................................... 73 SECTION 1305. Determination of Voting Rights; Conduct and Adjournment of Meetings........................................... 74 SECTION 1306. Counting Votes and Recording Action of Meetings......... 75 SECTION 1307. Action Without Meeting.................................. 75 ARTICLE FOURTEEN SUBORDINATION OF SECURITIES SECTION 1401. Securities Subordinated to Senior Indebtedness.......... 75 SECTION 1402. Payment Over of Proceeds Upon Default on Senior Indebtedness.......................................... 76 SECTION 1403. Payment Over of Proceeds Upon Dissolution; Bankruptcy; Liquidation........................................... 76 SECTION 1404. Subrogation............................................. 77 SECTION 1405. Trustee to Effectuate Subordination..................... 78 SECTION 1406. Notice to the Trustee................................... 79 SECTION 1407. Rights of Trustee as Holder of Senior Indebtedness...... 79 SECTION 1408. Trustee Not Fiduciary for Holders of Senior Indebtedness 80 SECTION 1409. Rights of Holders of Senior Indebtedness Not Impaired... 80 SECTION 1410. Effect of Satisfaction and Discharge of the Indenture... 80
- ---------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. -v- ARTICLE FIFTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES SECTION 1501. Liability Solely Corporate................. 81 Signatures................................................. 82 Support Agreement......................................... Exhibit A - ---------------- NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the Indenture. -vi- INDENTURE, dated as of February 1, 1996 among NIPSCO Capital Markets, Inc., a corporation duly organized and existing under the laws of the State of Indiana (herein called the ``Company''), having its principal office at 5265 Hohman Avenue, Hammond, Indiana 46320, NIPSCO Industries, Inc., a corporation duly organized and existing under the laws of the State of Indiana (herein called ``Industries''), having its principal office at 5265 Hohman Avenue, Hammond, Indiana 46320 and Chemical Bank, a corporation duly organized and existing under the laws of the State of New York, having its principal corporate trust office at 450 West 33rd Street, 15th Floor, New York, New York 10001, as Trustee (herein called the ``Trustee''). RECITALS OF THE COMPANY AND INDUSTRIES The Company has duly authorized the execution and delivery of this Indenture, to provide for the issuance from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness (herein called the ``Securities''), to be issued in one or more series as in this Indenture provided. Industries has duly authorized the execution and delivery of this Indenture and has previously entered into a Support Agreement, dated April 4, 1989, as amended as of May 15, 1989, December 10, 1990 and February 14, 1991 (as such Agreement may be hereafter amended, modified or supplemented from time to time in accordance with its terms and the provisions of this Indenture, the ``Support Agreement''), with the Company, a copy of which is attached hereto as Exhibit A, pursuant to which Industries has agreed to ensure the timely payment of principal of and premium, if any, and interest on Debt (as defined in the Support Agreement), provided that no holder of such Debt shall have recourse against the stock or assets of Northern Indiana Public Service Company, an Indiana corporation (``Northern Indiana''), or any interest of the Company or Industries therein. All things necessary to make this Indenture a valid agreement of the Company and Industries, in accordance with its terms, have been done. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation; (4) the words "herein," "hereof," "hereto" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (5) the word "or" is always used inclusively (for example, the phrase "A or B" means "A or B or both," not "either A or B but not both"). Certain terms used principally in certain Articles are defined in those Articles. "Act," when used with respect to any Holder of a Security, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. -2- "Authenticating Agent" means any Person or Persons authorized by the Trustee to act on behalf of the Trustee to authenticate one or more series of Securities. "Authorized Newspaper" means a newspaper, in an official language of the country of publication or in the English language, customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays, and of general circulation in the place in connection with which the term is used or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day in the place of publication. "Bearer Security" means any Security in the form for Bearer Securities established pursuant to Section 201 which is payable to bearer and shall bear the legend specified in Section 205. "Board of Directors" means the board of directors of the Company or Industries, as the case may be, or any duly authorized committee thereof. "Board Resolution" means a copy of a resolution certified by the Corporate Secretary or an Assistant Corporate Secretary of the Company or Industries, as the case may be, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day," when used with respect to a particular location specified in the Securities or this Indenture, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which state or national banks in such location are authorized or obligated by law or executive order to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter ``Company'' shall mean such successor corporation. "Corporate Trust Office" means the office of the Trustee in the Borough of Manhattan, The City of New York, at which at any particular time its corporate trust business shall be principally administered, which office at the date of the execution of this Indenture is located at 450 West 33rd Street, 15th Floor, New York, New York 10001. -3- "Corporation" includes any corporation, association, company or business trust. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Securities Exchange Act of 1934, as amended, specified for that purpose as contemplated by Section 301 or any successor clearing agency registered under such Act as contemplated by Section 305, and if at any time there is more than one such Person, "Depositary" as used with respect to the Securities of any series shall mean the Depositary with respect to the Securities of such series. "Dollar" or "$" means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts. "Event of Default" has the meaning specified in Section 501. "Global Security" means a Security bearing the legend specified in Section 204 evidencing all or part of a series of Securities, issued to the Depositary for such series or its nominee, and registered in the name of such Depositary or nominee. "Holder," when used with respect to any Security, means in the case of a Registered Security the Person in whose name the Security is registered in the Security Register and in the case of a Bearer Security the bearer thereof and, when used with respect to any coupon, means the bearer thereof. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of particular series of Securities established as contemplated by Section 301. "Industries" means the Person named as "Industries" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter ``Industries'' shall mean such successor corporation. "Interest," when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date," when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. -4- "Maturity," when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Northern Indiana" has the meaning stated in the second recital of this Indenture. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Corporate Secretary or an Assistant Corporate Secretary, of the Company or Industries, as the case may be, that complies with the requirements of Section 314(c) of the Trust Indenture Act and is delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company or Industries, as the case may be, who shall be acceptable to the Trustee, that complies with the requirements of Section 314(c) of the Trust Indenture Act. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities and any coupons thereto appertaining, provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (c) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; -5- provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have been given any request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders of Securities for quorum purposes, Securities owned by the Company, Industries or any other obligor upon the Securities or any Affiliate of the Company, Industries or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company, Industries or any other obligor upon the Securities or any Affiliate of the Company, Industries or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment," when used with respect to the Securities of any series, means the place or places where the principal of (and premium, if any) and interest on the Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Security" means any Security established pursuant to Section 201 which is registered in the Security Register. "Regular Record Date" for the interest payable on any Interest Payment Date on the Registered Securities of any series means the date specified for that purpose as contemplated by Section 301. -6- "Request" or "Order" means a written request or order signed in the name of the Company or Industries, as the case may be, by its Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Controller, an Assistant Controller, its Corporate Secretary or an Assistant Corporate Secretary, and delivered to the Trustee. "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any Vice President, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, "Securities," with respect to any such Person, shall mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" means the principal of, and premium, if any, and interest on and any other payment due pursuant to any of the following, whether outstanding at the date of execution of this Indenture or thereafter incurred, created or assumed: (a) all indebtedness of the Company evidenced by notes, debentures, bonds or other securities sold by the Company for money (other than the indebtedness evidenced by the Securities) , (b) all indebtedness of others of the kinds described in the preceding clause (a) assumed by or guaranteed in any manner by the Company or in effect guaranteed by the Company through an agreement to purchase, contingent or otherwise, and (c) all renewals, extensions or refundings of indebtedness of the kinds described in either of the preceding clauses (a) and (b) unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness and entitled to the benefits of the subordination provisions set forth in Article Fourteen of this Indenture irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness, other than an amendment or modification to the instrument creating or evidencing the same in order expressly to -7- provide that such indebtedness, renewal, extension or refunding or the assumption or guarantee of the same is no longer superior in right of payment to or is pari passu with the Securities. "Special Record Date" for the payment of any Defaulted Interest on the Registered Securities of any series means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by Industries or by one or more other Subsidiaries, or by Industries and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Support Agreement" has the meaning stated in the second recital of this Indenture. "Support Obligations" means the obligations of Industries under the Support Agreement. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Act or provision, as the case may be, as amended or replaced from time to time or as supplemented from time to time by rules or regulations adopted by the Commission under or in furtherance of the purposes of such Act or provision, as the case may be. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such with respect to one or more series of Securities pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "United States" means the United States of America (including the States and the District of Columbia), its territories and possessions and other areas subject to its jurisdiction. "United States Alien" means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members -8- of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. "Vice President," when used with respect to the Company, Industries or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company or Industries, as the case may be, to the Trustee to take any action under any provision of this Indenture, the Company or Industries, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some -9- matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company or Industries may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or Industries, as the case may be, stating that the information with respect to such factual matters is in the possession of the Company or Industries, as the case may be, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders; Record Dates. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If Securities of a series are issuable as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders may, alternatively, be embodied in and evidenced by the record of Holders of Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities duly called and held in accordance with the provisions of Article Thirteen, or a combination of such instrument or instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record are delivered to the Trustee and, where it is hereby expressly required, to the Company and Industries. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or writing, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee, the Company and Industries, if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 1306. -10- Without limiting the generality of this Section 104, unless otherwise provided in or pursuant to this Indenture, a Holder, including a Depositary that is a Holder of a Global Security, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders, and a Depositary that is a Holder of a Global Security may give its proxy or proxies to the Depositary's participants or the beneficial owners of interests in any such Global Security, as the case may be, through such Depositary's standing instructions and customary practices. Subject to the next succeeding paragraph, the Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders of Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders of Securities of such series. If not set by the Company prior to the first solicitation of a Holder of Securities of such series made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day prior to such first solicitation or vote, or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701, as the case may be. With regard to any record date for action to be taken by the Holders of one or more series of Securities, only the Holders of Securities of such series on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action. The Trustee shall fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any permanent Global Security held by a Depositary and who are entitled under the procedures of such Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any reasonable manner which the Trustee deems sufficient. (c) The principal amount and serial numbers of Bearer Securities held by any Person executing any such instrument or writing as a Holder of Securities, and the date of his holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, -11- or exhibited to it, the Bearer Securities therein described; or such facts may be proved by the certificate or affidavit of the Person executing such instrument or writing as a Holder of Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee, the Company and Industries may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. (d) The fact and date of execution of any such instrument or writing, the authority of the Person executing the same, the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other reasonable manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section. (e) The principal amount and serial numbers of Registered Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (f) Any request, demand, authorization, direction, notice, consent, election, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or Industries in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 105. Notices, etc., to Trustee, Company and Industries. Any request, demand, authorization, direction, notice, consent, election, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder of a Security or by the Company or Industries shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Department, or (2) the Company or Industries, as the case may be, by the Trustee or by any Holder of a Security shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company or Industries, as the case may be, addressed to the attention of its Corporate Secretary, at 5265 Hohman Avenue, Hammond, Indiana 46320, or at any other address previously furnished in writing to the Trustee by the Company or Industries, as the case may be. -12- SECTION 106. Notice to Holders of Securities; Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of Securities of any event: (1) such notice shall be sufficiently given to Holders of Registered Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Registered Security affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such Notice; and (2) such notice shall be sufficiently given to Holders of Bearer Securities if published in an Authorized Newspaper in The City of New York and, if the Securities of such series are then listed on The Stock Exchange of the United Kingdom and the Republic of Ireland and such stock exchange shall so require, in London and, if the Securities of such series are then listed on the Luxembourg Stock Exchange and such stock exchange shall so require, in Luxembourg and, if the Securities of such series are then listed on any other stock exchange outside the United States and such stock exchange shall so require, in any other required city outside the United States or, if not practicable, in Europe on a Business Day at least twice, the first such publication to be not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Registered Security shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice by publication to Holders of Bearer Securities given as provided above. In case by reason of the suspension of publication of any Authorized Newspaper or Authorized Newspapers or by reason of any other cause it shall be impracticable to publish any notice to Holders of Bearer Securities as provided above, then such notification to Holders of Bearer Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder. Neither failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to Holders of Registered Securities as provided above. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of -13- Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 107. Language of Notices, etc. Any request, demand, authorization, direction, notice, consent, election or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 108. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with any duties under any required provision of the Trust Indenture Act imposed hereon by Section 318(c) thereof, such required provision shall control. SECTION 109. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 110. Successors and Assigns. All covenants and agreements in this Indenture by the Company and Industries shall bind their respective successors and assigns, whether so expressed or not. SECTION 111. Separability Clause. In case any provision in this Indenture or the Securities or coupons 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. SECTION 112. Benefits of Indenture. Nothing in this Indenture or the Securities or coupons, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder and the Holders of Securities and coupons, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 113. Governing Law. THIS INDENTURE AND THE SECURITIES AND COUPONS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. -14- SECTION 114. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities or coupons) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be. SECTION 115. Appointment of Agent for Service. By the execution and delivery of this Indenture, the Company and Industries hereby appoint the Trustee as their agent upon which process may be served in any legal action or proceeding which may be instituted in any Federal or State court in the Borough of Manhattan, The City of New York, arising out of or relating to the Securities, the coupons or this Indenture. Service of process upon such agent at the office of such agent at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention: Corporate Trust Department (or such other address in the Borough of Manhattan, The City of New York, as may be the Corporate Trust Office of the Trustee), and written notice of said service to the Company and Industries by the Person serving the same addressed as provided in Section 105, shall be deemed in every respect effective service of process upon the Company and Industries in any such legal action or proceeding, and the Company and Industries hereby submit to the jurisdiction of any such court in which any such legal action or proceeding is so instituted. Such appointment shall be irrevocable so long as the Holders of Securities or coupons shall have any rights pursuant to the terms thereof or of this Indenture until the appointment of a successor by the Company and Industries with the consent of the Trustee and such successor's acceptance of such appointment. The Company and Industries further agree to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of such agent or successor. By the execution and delivery of this Indenture, the Trustee hereby agrees to act as such agent and undertakes promptly to notify the Company and Industries of receipt by it of service of process in accordance with this Section. SECTION 116. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, Industries or any Affiliate of either. No such indenture, loan or debt agreement may be used to interpret this Indenture. -15- SECTION 117. Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. The Registered Securities, if any, of each series, the Bearer Securities, if any, of each series and related coupons and the Global Securities, if any, issued pursuant to this Indenture shall be in such form as shall be established by or pursuant to a Board Resolution of the Company or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities or coupons, as evidenced by their execution of the Securities or coupons. If the forms of Securities or coupons of any series are established by action taken pursuant to a Board Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Corporate Secretary or an Assistant Corporate Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Order of the Company contemplated by Section 303 for the authentication and delivery of such Securities or coupons. The Trustee's certificates of authentication shall be in substantially the form set forth in this Article or Article Six. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, the Securities of each series shall be issuable in global and registered form without coupons. If so provided as contemplated by Section 301, the Securities of a series also shall be issuable in bearer form, with or without interest coupons attached. The definitive Securities and coupons, if any, shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities or coupons. -16- SECTION 202. Form of Trustee's Certificate of Authentication. Subject to Section 614, the Trustee's certificate of authentication shall be in substantially the following form: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. CHEMICAL BANK as Trustee By: __________________________ Authorized Officer SECTION 203. Securities in Global Form. If Securities of a series are issuable in global form, any such Security may provide that it or any number of such Securities shall represent the aggregate amount of all Outstanding Securities of such series (or such lesser amount as is permitted by the terms thereof) from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of any Security in global form to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of Outstanding Securities represented thereby shall be made in such manner and by such Person or Persons as shall be specified therein or in the Order of the Company to be delivered pursuant to Sections 303 or 304 with respect thereto. Subject to the provisions of Section 303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Order of the Company. If the Order of the Company pursuant to Sections 303 or 304 has been, or simultaneously is, delivered, any instructions by the Company with respect to a Security in global form shall be in writing but need not be accompanied by or contained in an Officers' Certificate and need not be accompanied by an Opinion of Counsel. SECTION 204. Form of Legend for Global Securities. Any Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form, or in such other form that is acceptable to the Depositary and the Trustee: "Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or -17- another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." SECTION 205. Form of Legend for Bearer Securities. Any Bearer Security authenticated and delivered hereunder shall bear a legend in substantially the following form: "Any United States person who holds this Security will be subject to limitations under the United States income tax laws, including the limitation provided in Sections 165(j) and 1287(a) of the Internal Revenue Code of 1986, as amended." ARTICLE THREE THE SECURITIES AND THE SUPPORT AGREEMENT SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution of the Company, and set forth in an Officers' Certificate of the Company, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of all other series issued by the Company); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107); (3) the date or dates on which the principal of the Securities of the series is payable; (4) the right, if any, to extend the date or dates on which the principal of the Securities of the series is payable; (5) the rate or rates at which the Securities of the series shall bear interest, if any, or any method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue, the Interest Payment Dates on which -18- such interest shall be payable and the Regular Record Date for the interest payable on Registered Securities on any Interest Payment Date; (6) the right, if any, to extend the interest payment periods and the duration of such extension; (7) the place or places where the principal of (and premium, if any) and interest, if any, on Securities of the series shall be payable; (8) whether Securities of such series may be redeemed, and if so, the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company; (9) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (10) whether Bearer Securities of the series are to be issuable; (11) if Bearer Securities of the series are to be issuable, whether interest in respect of any portion of a temporary Bearer Security in global form (representing all of the Outstanding Bearer Securities of the series) payable in respect of an Interest Payment Date prior to the exchange of such temporary Bearer Security for definitive Securities of the series shall be paid to any clearing organization with respect to the portion of such temporary Bearer Security held for its account and, in such event, the terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such Interest Payment Date; (12) the date as of which any Bearer Securities of the series, any temporary Bearer Security in global form and any Global Securities shall be dated if other than the date of original issuance of the first Security of the series to be issued; (13) the denominations in which Registered Securities of the series, if any, shall be issuable if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which Bearer Securities of the series, if any, shall be issuable if other than the denomination of $5,000; (14) the currency or currencies, including composite currencies, in which payment of the principal of (and premium, if any) and interest, if any, on the -19- Securities of the series shall be payable (if other than the currency of the United States of America); (15) if the amount of payments of principal of (and premium, if any) or interest on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined; (16) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (17) any Events of Default or covenants of the Company or Industries pertaining to the Securities of the series in addition to the Events of Default set forth in Section 501 and the covenants set forth in Article Ten hereof; (18) whether and under what circumstances the Company will pay additional amounts on the Securities of the series held by a Person who is a United States Alien in respect of taxes or similar charges withheld or deducted and, if so, whether the Company will have the option to redeem such Securities rather than pay such additional amounts; (19) whether any Securities of the series are to be issuable in whole or in part in the form of one or more Global Securities and, if so, (a) the Depositary with respect to such Global Security or Securities and (b) the circumstances under which beneficial owners of interests in any such Global Security may exchange such interest for Securities of the same series and of like tenor and of any authorized form and denomination, and the circumstances under which any such exchange may occur, if other than as set forth in Section 305; (20) if any of such Securities are to be issued in global form and are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents, or conditions; and (21) any other terms of the series (which terms shall not be inconsistent with the terms of this Indenture). All Securities of any one series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except, in the case of Registered Securities, as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. -20- If any of the terms of the series are established by action taken pursuant to a Board Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Corporate Secretary or an Assistant Corporate Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate of the Company setting forth the terms of the series. Such Board Resolution may provide general terms or parameters for Securities of the series and may provide that the specific terms of particular Securities of such series, and the Persons authorized to determine such terms or parameters, may be determined in accordance with or pursuant to the Order of the Company referred to in the third paragraph of Section 303. SECTION 302. Denominations. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, the Registered Securities of each series shall be issuable in denominations of $1,000 or any integral multiple thereof and the Bearer Securities of each series, if any, shall be issuable in the denomination of $5,000. SECTION 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Corporate Secretary or one of its Assistant Corporate Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Treasurer or any Assistant Treasurer of the Company. Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed on behalf of the Company to the Trustee for authentication by the Trustee together with an Order of the Company for the authentication and delivery of such Securities, and the Trustee in accordance with such Order shall authenticate and deliver such Securities; provided, however, that, in connection with its original issuance, a Bearer Security may be delivered only outside the United States and only if the Trustee shall have received from the person entitled to receive such Bearer Security a certificate in the form required by Section 311. The maturity dates, original issue dates, interest rates and any other terms of the Securities of such series shall be determined by or pursuant to such Order and procedures. If provided for in such procedures, such Order may authorize authentication and delivery pursuant to oral instructions from the -21- Company or its duly authorized agent, which instructions shall be promptly confirmed in writing. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Sections 315(a) through 315(d) of the Trust Indenture Act) shall be fully protected in relying upon: (a) the Board Resolution of the Company or indenture supplemental hereto establishing the form of the Securities of that series pursuant to Section 201 and the terms of the Securities of that series pursuant to Section 301; (b) an Officers' Certificate pursuant to Sections 201 and 301 and complying with Section 102; (c) an Opinion of Counsel complying with Section 102 stating, (i) that the forms of such Securities and coupons, if any, have been established by or pursuant to a Board Resolution of the Company or by an indenture supplemental hereto, as permitted by Section 201 and in conformity with the provisions of this Indenture; (ii) that the terms of such Securities have been established by or pursuant to a Board Resolution of the Company or by an indenture supplemental hereto, as permitted by Section 201 and Section 301 and in conformity with the provisions of this Indenture; (iii) that such Securities, together with the coupons appertaining thereto, if any, have been duly authorized, executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Support Agreement and the Indenture, enforceable in accordance with their respective terms, except to the extent that the enforcement of such obligations may be subject to bankruptcy laws or insolvency laws or other similar laws and to the exercise of judicial discretion in accordance with general principles of equity; (iv) that all laws and requirements in respect of the execution and delivery of the Securities have been complied with; and (v) such other matters as the Trustee may reasonably request. With respect to each issuance of Securities of a series established in accordance with the final paragraph of Section 301, the Trustee may conclusively rely on the documents and opinion delivered in connection with the initial issuance thereof pursuant to Sections 201 -22- and 301 and this Section 303, as applicable (unless revoked by superseding comparable documents or opinions), as to the authorization of the Board of Directors of any Securities delivered hereunder, the form thereof and the legality, validity, binding effect and enforceability thereof. With respect to Securities of a series established in accordance with the final paragraph of Section 301, if the form and general terms of the Securities of such series have been established by or pursuant to one or more Board Resolutions of the Company or by an indenture supplemental hereto, as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Sections 315(a) through 315(d) of the Trust Indenture Act) shall be fully protected in relying upon, in addition to the foregoing documents and Opinion of Counsel, or in lieu of clause (iii) above, an Opinion of Counsel stating that the Securities have been duly authorized by the Company and, when duly executed by the Company and completed and authenticated by the Trustee in accordance with the Indenture and issued, delivered and paid for in accordance with any applicable distribution agreement, will have been duly issued under the Indenture and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Support Agreement and the Indenture, enforceable in accordance with their respective terms, except to the extent that the enforcement of such obligations may be subject to bankruptcy laws or insolvency laws or other similar laws and to the exercise of judicial discretion in accordance with general principles of equity. If such forms or terms have been so established by or pursuant to a Board Resolution of the Company or by an indenture supplemental hereto as permitted by Sections 201 and 301, the Trustee shall have the right to decline to authenticate and deliver any Securities of such series: (i) if the Trustee, being advised by counsel, determines that such action may not lawfully be taken; (ii) if the Trustee in good faith by its board of directors, executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that such action would expose the Trustee to personal liability to Holders of any outstanding series of Securities; or (iii) if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties and immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. If the Company shall establish pursuant to Section 301 that the Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with this Section and the Order of the Company with respect to such series, authenticate and deliver one or more Global -23- Securities in permanent form that (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by such Global Security or Securities, (ii) shall be registered, if in registered form, in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction and (iv) shall bear a legend as required by Section 204. Each Registered Security shall be dated the date of its authentication. Each Global Security, each Bearer Security and any temporary Bearer Security in global form shall be dated as of the date specified as contemplated by Section 301. No Security or coupon shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Except as permitted by Section 306 or 307, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured and paid or payment duly provided for, have been detached and canceled. SECTION 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon an Order of the Company the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. Such temporary Securities may be in global form. Except in the case of temporary Securities in global form, which shall be exchanged in accordance with the provisions thereof, if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series (accompanied by any unmatured coupons appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor (at an office or agency of the Company in the case of Bearer Securities) a like principal amount of definitive Securities of the same series -24- of authorized denominations and of like tenor; provided, however, that no definitive Bearer Security shall be delivered in exchange for a temporary Registered Security; and provided, further, that no definitive Bearer Security shall be delivered in exchange for a temporary Bearer Security unless the Trustee shall have received from the Person entitled to receive the definitive Bearer Security a certificate in the form required by Section 311. Until so exchanged, the temporary Securities of any series, including temporary Securities in global form, shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. SECTION 305. Registration, Registration of Transfer and Exchange . The Company shall cause to be kept at one of its offices or agencies designated pursuant to Section 1002 a register (referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and of transfers of Registered Securities. Said office or agency is hereby appointed the Security Registrar for the purpose of registering Registered Securities and transfers of Registered Securities as herein provided. Upon surrender for registration of transfer of any Registered Security of any series at the office or agency in a Place of Payment maintained for such purpose for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series, Stated Maturity and original issue date, of any authorized denominations and of like tenor and aggregate principal amount. At the option of the Holder, Registered Securities of any series (except a Global Security representing all or a portion of such series) may be exchanged for Registered Securities of the same series, Stated Maturity and original issue date, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at any such office or agency. At the option of the Holder, Bearer Securities of any series may be exchanged for Registered Securities of the same series, Stated Maturity and original issue date, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been -25- made, such Holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 1002, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series after the close of business at such office or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date of payment, as the case may be. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer. The Company shall not be required (i) to issue, to register the transfer of or to exchange Securities of any series during a period of 15 Business Days immediately preceding the date notice is given identifying the serial numbers of the Securities of that series called for redemption, or (ii) to issue, to register the transfer of or to exchange any Registered Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part, or (iii) to exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for a Registered Security of that series, provided that such Registered Security shall be immediately surrendered for redemption with written instruction for payment consistent with the provisions of this Indenture. -26- Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, any Global Security shall be exchangeable pursuant to this Section 305 or Sections 304, 306, 906 or 1107 for Securities registered in the name of, and a transfer of a Global Security of any series may be registered to, any Person other than the Depositary for such Global Security or its nominee only if: (i) such Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and a successor Depositary is not appointed by the Company within 60 days; (ii) the Company executes and delivers to the Trustee an Order of the Company that such Global Security shall be so exchangeable and the transfer thereof so registrable; or (iii) there shall have occurred and be continuing an Event of Default or an event which, with the giving of notice or lapse of time, would constitute an Event of Default with respect to the Securities of such series. Upon the occurrence in respect of any Global Security of any series of any one or more of the conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or such other conditions as may be specified as contemplated by Section 301 for such series, then without unnecessary delay, but in any event not later than the earliest date on which such interests may be so exchanged, the Company shall deliver to the Trustee definitive Securities of that series in aggregate principal amount equal to the principal amount of such Global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such Global Securities shall be surrendered from time to time by the Depositary and in accordance with instructions given to the Trustee and the Depositary (which instructions shall be in writing but need not be contained in or accompanied by an Officers' Certificate or be accompanied by an Opinion of Counsel), as shall be specified in the Order of the Company with respect thereto to the Trustee, as the Company's agent for such purpose, to be exchanged, in whole or in part, for definitive Securities of the same series without service charge. The Trustee shall authenticate and make available for delivery, in exchange for each portion of such surrendered Global Security, a like aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such Global Security to be exchanged which (unless the Securities of the series are not issuable both as Bearer Securities and as Registered Securities, in which case the definitive Securities exchanged for the Global Security shall be issuable only in the form in which the Securities are issuable, as specified as contemplated by Section 301) shall be in the form of Bearer Securities or Registered Securities, or any combination thereof, as shall be specified by the beneficial owner thereof; provided, however, that no such exchanges may -27- occur during a period beginning at the opening of business 15 Business Days before any selection of Securities of that series to be redeemed and ending on the relevant Redemption Date; and provided, further, that (unless otherwise specified as contemplated by Section 301) no Bearer Security delivered in exchange for a portion of a Global Security shall be mailed or otherwise delivered to any location in the United States. Promptly following any such exchange in part, such Global Security shall be returned by the Trustee to the Depositary in accordance with the instructions of the Company referred to above. If a Registered Security is issued in exchange for any portion of a Global Security after the close of business at the office or agency where such exchange occurs on (i) any Regular Record Date for such Security and before the opening of business at such office or agency on the next Interest Payment Date, or (ii) any Special Record Date for such Security and before the opening of business at such office or agency on the related proposed date for payment of interest or Defaulted Interest, as the case may be, interest shall not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Registered Security, but shall be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such Global Security is payable in accordance with the provisions of this Indenture. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security or a Security with a mutilated coupon appertaining to it is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series, Stated Maturity and original issue date, and of like tenor and principal amount and bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to the surrendered Security. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security or coupon and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security or coupon has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security or in exchange for the Security to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or stolen), a new Security of the same series, Stated Maturity and original issue date, and of like tenor and principal amount and bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to which such destroyed, lost or stolen coupon appertains. In case any such mutilated, destroyed, lost or stolen Security or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing -28- a new Security, pay such Security or coupon; provided, however, that payment of principal of (and premium, if any) and any interest on Bearer Securities shall, except as otherwise provided in Section 1002, be payable only at an office or agency located outside the United States; and provided, further, that, with respect to any such coupons, interest represented thereby (but not any additional amounts payable as provided in Section 1004), shall be payable only upon presentation and surrender of the coupons appertaining thereto. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series, with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Security, or in exchange for a Security to which a destroyed, lost or stolen coupon appertains, shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and any such new Security and coupons, if any, shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series and their coupons, if any, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons. SECTION 307. Payment of Interest; Interest Rights Preserved. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Interest, if any, is paid on Bearer Securities to holders of coupons. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. Any interest on any Registered Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant -29- Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Registered Securities of such series at the address of such Holder as it appears in the Security Register, not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in an Authorized Newspaper in each Place of Payment, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). In case a Bearer Security of any series is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such proposed date of payment and Defaulted Interest will not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. -30- (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any authorized agent of the Company or the Trustee may deem and treat the Person in whose name such Registered Security is registered as the absolute owner of such Registered Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any authorized agent of the Company or the Trustee shall be affected by any notice to the contrary. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No holder of any beneficial interest in any Global Security held on its behalf by a Depositary (or its nominee) shall have any rights under this Indenture with respect to such Global Security or any Security represented thereby, and such Depositary may be treated by the Company, the Trustee, and any agent of the Company or the Trustee as the owner of such Global Security or any Security represented thereby for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. -31- SECTION 309. Cancellation. All Securities and coupons surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by the Trustee. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities and coupons held by the Trustee shall be destroyed and certification of their destruction delivered to the Company, unless by an Order the Company shall direct that canceled Securities be returned to it. The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their Stated Maturity, for purposes of this Section 309, shall not operate as a payment, redemption or satisfaction of the indebtedness represented by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee with an Order that such Securities be canceled. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months. SECTION 311. Form of Certification by a Person Entitled to Receive a Bearer Security. Whenever any provision of this Indenture or the form of Security contemplates that certification be given by a Person entitled to receive a Bearer Security, such certification shall be provided substantially in the form of the following certificate, with only such changes as shall be approved by the Company: [Form of Certificate to Be Given By Person Entitled to Receive Bearer Security] Certificate ____________________ This is to certify that the above-captioned Security is not being acquired by or on behalf of a United States person, or for offer to resell or for resale to a United States person, or, if a beneficial interest in the Security is being acquired by a United States person, that such person is a financial institution or is acquiring through a financial -32- institution, that the Security is held by a financial institution that has agreed in writing to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder and that such person or financial institution is not purchasing for offer to resell or for resale within the United States. If this certificate is being provided by a clearing organization, it is based on statements provided to it by its member organizations. As used herein, "United States" means the United States of America (including the States and the District of Columbia), its territories and possessions and other areas subject to its jurisdiction, and "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof and any estate or trust the income of which is subject to United States Federal income taxation regardless of its source. If the undersigned is a dealer, the undersigned agrees to obtain a similar certificate from each person entitled to delivery of any of the above-captioned Securities in bearer form purchased from it; provided, however, that, if the undersigned has actual knowledge that the information contained in such a certificate is false, the undersigned will not deliver a Security in temporary or definitive bearer form to the person who signed such certificate notwithstanding the delivery of such certificate to the undersigned. We undertake to advise you by telecopy if the above statement as to beneficial ownership is not correct on the date of delivery of the above- captioned Securities in bearer form as to all of such Securities. We understand that this certificate is required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: _________________ ______________________________ SECTION 312. Support Agreement. Holders of Securities and coupons and the Trustee are entitled to the benefits of the Support Agreement available to Lenders (as defined in the Support Agreement), it being understood and agreed that the Securities and coupons constitute Debt (as defined in the Support Agreement) for purposes of the Support Agreement. -33- ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon a Request of the Company cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for, and any right to receive additional amounts, as provided in Section 1004), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when: (1) either (A) all Securities theretofore authenticated and delivered and all coupons appertaining thereto (other than (i) coupons appertaining to Bearer Securities surrendered for exchange for Registered Securities and maturing after such exchange, whose surrender is not required or has been waived as provided in Section 305, (ii) Securities and coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons appertaining to Securities called for redemption and maturing after the relevant Redemption Date, whose surrender has been waived as provided in Section 1106, and (iv) Securities and coupons for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust dedicated solely for such purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities and coupons not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of -34- Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) in the event that the Company has deposited funds with the Trustee pursuant to paragraph (1)(B) above, at the time of such deposit, (A) no default in the payment of principal, premium, interest or any other payment due on any Senior Indebtedness shall have occurred and be continuing, (B) no acceleration of the maturity of any Senior Indebtedness shall have occurred because of a default (unless such acceleration shall have been subsequently revoked, in accordance with the instrument evidencing such Senior Indebtedness, or such Senior Indebtedness shall have been paid in full or payment therefor shall have been duly provided) and (C) no other event with respect to any Senior Indebtedness shall have occurred and be continuing which, after the giving of notice or the lapse of time or both, would permit the holders of such Senior Indebtedness or a trustee on behalf of such holders to accelerate the maturity of such Senior Indebtedness; (3) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (4) the Company has delivered to the Trustee an Officers' Certificate of the Company and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. In the event there are Securities of two or more series hereunder, the Trustee shall be required to execute an instrument acknowledging satisfaction and discharge of this Indenture only if requested to do so with respect to Securities of all series as to which it is Trustee and if the other conditions thereto are met. In the event there are two or more Trustees hereunder, then the effectiveness of any such instrument shall be conditioned upon receipt of such instruments from all Trustees hereunder. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company and Industries to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Sections 305, 306, 402, 1002 and 1003 shall survive. SECTION 402. Application of Trust Money. Subject to the provision of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities, the coupons and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the -35- principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee, but such money need not be segregated from other funds, except to the extent required by law. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default," wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) the Company defaults in the payment of any interest (including any additional amounts due under Section 1004 as specified therein) upon any Security of that series when it becomes due and payable and continuance of such default for a period of 30 days; or (2) the Company defaults in the payment of the principal (including any additional amounts due under Section 1004 as specified therein) of (or premium, if any, on) any Security of that series at its Maturity; or (3) the Company defaults in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or (4) the Company or Industries defaults in the performance or breach of any covenant or warranty of the Company or Industries, as the case may be, in this Indenture or the Support Agreement (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in or pursuant to this Indenture solely for the benefit of one or more series of Securities other than that series), and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company and Industries by the Trustee, or to the Company, Industries and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; provided, however, that the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee assigned to the Corporate Trust Department (or any successor division or department of the Trustee) shall have actual knowledge of such default, or (B) the -36- Trustee shall have received written notice thereof from the Company or from any Holder of Outstanding Securities of that series; or (5) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of any of the Company, Industries or Northern Indiana in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging any of the Company, Industries or Northern Indiana a bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than the Company, Industries, Northern Indiana or any of their Affiliates seeking reorganization, arrangement, adjustment or composition of or in respect of any of the Company, Industries or Northern Indiana under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for any of the Company, Industries or Northern Indiana or for any substantial part of the property of any of the Company, Industries or Northern Indiana, or ordering the liquidation or winding up of the affairs of any of the Company, Industries or Northern Indiana, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (6) the commencement by any of the Company, Industries or Northern Indiana of a case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of it in a case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official in respect of it or any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or its admission in writing of its inability to pay its debts generally as they become due, or its taking of corporate action in furtherance of any such action; or (7) any other Event of Default provided with respect to Securities of that series. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 33% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities, -37- such portion of the principal amount as may be specified in the terms of that series) of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company and Industries (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company, Industries and the Trustee, may rescind and annul such declaration and its consequences if: (1) The Company or Industries has paid or deposited with the Trustee a sum sufficient to pay: (A) all overdue interest on all Securities of that series; (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities; and (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities; and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 607; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. -38- SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities and coupons, the whole amount then due and payable on such Securities and coupons for principal (and premium, if any) and interest, with interest on any overdue principal (and premium, if any) and on any overdue interest, to the extent that payment of such interest shall be legally enforceable, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 607. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company, Industries (pursuant to its Support Obligations) or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company (subject to the limitations set forth in the Support Agreement), Industries (subject to the limitations set forth in the Support Agreement) or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series and any related coupons by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or the Support Agreement, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, Industries or any other obligor upon the Securities or the property of the Company, Industries or of such other obligor or their creditors, the Trustee (irrespective of -39- whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company or Industries for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise: (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 607) and of the Holders of Securities and coupons allowed in such judicial proceeding; and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Securities and coupons to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities and coupons, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security or coupon any plan of reorganization, arrangement, adjustment or composition affecting the Securities or coupons or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Security or coupon in any such proceeding. SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons. All rights of action and claims under this Indenture, the Support Agreement or the Securities or coupons may be prosecuted and enforced by the Trustee without the possession of any of the Securities or coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities and coupons in respect of which such judgment has been recovered. -40- SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities or coupons, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: Subject to the provisions of Article Fourteen, to the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Securities and coupons in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities and coupons for principal (and premium, if any) and interest, respectively; and THIRD: To the Company or Industries, as the case may be. SECTION 507. Limitation on Suits. No Holder of any Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than a majority in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; -41- it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture or the Support Agreement to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture or the Support Agreement, except in the manner herein or therein provided and for the equal and ratable benefit of all of such Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, (1) the Holder of any Security or coupon shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest on such Security or payment of such coupon on the Stated Maturity or Maturities expressed in such Security or coupon (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired or affected without the consent of such Holder; and (2) the Holder of any Security or coupon shall be considered a Lender (as defined in the Support Agreement) and shall have all rights of a Lender set forth therein. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder of a Security or coupon has instituted any proceeding to enforce any right or remedy under this Indenture or the Support Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, Industries, the Trustee and the Holders of Securities and coupons shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities or coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. -42- SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of Securities or coupons may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Securities or coupons, as the case may be. SECTION 512. Control by Holders of Securities. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture, expose the Trustee to personal liability or be unduly prejudicial to Holders not joined therein; and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series and any related coupons waive any past default hereunder with respect to such series and its consequences, except a default: (1) in the payment of the principal of (or premium, if any) or interest on any Security of such series; or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. -43- SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder of any Security or coupon for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security or the payment of any coupon on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). SECTION 515. Waiver of Stay or Extension Laws. Each of the Company and Industries covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force which may affect the covenants or the performance of this Indenture; and each of the Company and Industries (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default with respect to Securities of any series: (1) the Trustee undertakes to perform, with respect to Securities of such series, such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and -44- (2) in the absence of bad faith on its part, the Trustee may, with respect to Securities of such series, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default with respect to Securities of any series has occurred and is continuing, the Trustee shall exercise, with respect to Securities of such series, such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (1) This subsection shall not be construed to limit the effect of subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. -45- SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, notice of all such defaults hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time would become, an Event of Default with respect to Securities of such series. SECTION 603. Certain Rights of Trustee. Subject to Sections 315(a) through 315(d) of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company or Industries mentioned herein shall be sufficiently evidenced by a Request or Order and any resolution of the Board of Directors of the Company or Industries shall be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; -46- (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities of any series pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company or Industries, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities (except the Trustee's certificates of authentication) and in any coupons shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, the Support Agreement or of the Securities or coupons, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and coupons and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with the Company, Industries or an Affiliate of either with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. -47- SECTION 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. The Company and Industries agree: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel and any Authenticating Agent), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(5) or (6), the expenses and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law. As security for the performance of the obligations of the Company and Industries under this Section the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of, premium, if any, or interest, if any, on particular Securities. The Company's obligations under this Section 607 and any lien arising hereunder shall survive the resignation or removal of any Trustee, the discharge of the Company's obligations pursuant to Article Four of this Indenture and/or the termination of this Indenture. Nothing in Article Fourteen shall apply to the right of the Trustee to receive any amounts due under or pursuant to this Section 607. -48- SECTION 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of Section 310(b) or any other provision of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder that is a Corporation organized and doing business under the laws of the United States of America, any State or the District of Columbia, authorized under such laws to exercise corporate trust powers, or any other person permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000, is subject to supervision or examination by Federal, State or District of Columbia authority and is not otherwise ineligible under Section 310(a)(5) of the Trust Indenture Act. If such Corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company and Industries. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Trustee, the Company and Industries. (d) If at any time: -49- (1) the Trustee shall fail to comply with Section 608 after written request by the Company and Industries or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months; or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company and Industries or by any such Holder; or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, (i) the Company and Industries by Board Resolutions may remove the Trustee with respect to all Securities, or (ii) subject to Section 315(e) of the Trust Indenture Act, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all other similarly situated Holders, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company and Industries, by Board Resolutions, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company, Industries and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company and Industries. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company and Industries or the Holders of Securities and accepted appointment in the manner required by Section 611, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor -50- Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register and, if Securities of such Series are issuable as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company, Industries and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company and Industries or on the request of the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, Industries, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of -51- such successor Trustee relates; but, on request of the Company and Industries or on the request of any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien provided for in Section 607, with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company and Industries shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company or Industries (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of Section 311 and any other provision of the Trust Indenture Act regarding the collection of claims against the Company or Industries (or any such other obligor). SECTION 614. Appointment of Authenticating Agent. At any time when any of the Securities remain Outstanding the Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and -52- delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of not less than $50,000,000 and subject to supervision or examination by Federal, State or District of Columbia authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall (i) mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Registered Securities, if any, of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register, and (ii) if Securities of the series are issuable as Bearer Securities, publish notice of such appointment at least once in an Authorized Newspaper in the place where such successor Authenticating Agent has its principal office if such office is located outside the United States. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. -53- The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments in accordance with the provisions of Section 607. The provisions of Sections 308, 604 and 605 shall be applicable to each Authenticating Agent. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. CHEMICAL BANK As Trustee By: ----------------------------- As Authenticating Agent By: ----------------------------- Authorized Signatory ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND INDUSTRIES SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. In accordance with Section 312(a) of the Trust Indenture Act, the Company will furnish or cause to be furnished to the Trustee: (a) semi-annually, not later than June 1 and December 1, in each year, a list, in such form as the Trustee may reasonably require, containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Securities as of the preceding May 15 or November 15, as the case may be, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; -54- provided, however, that so long as the Trustee is Security Registrar for any particular series of Securities issuable only as Registered Securities, no such list need be furnished with respect to such Securities. SECTION 702. Preservation of Information; Communications to Holders. (a) The Trustee shall comply with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act. (b) Every Holder of Securities or coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor Industries nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 703. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the first May 15 following the first issuance of Securities pursuant to Section 301, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15 with respect to any of the events specified in said Section 313(a) which may have occurred since the later of the immediately preceding May 15 and the date of this Indenture. (b) The Trustee shall transmit the reports required by Section 313(b) of the Trust Indenture Act at the times specified therein. (c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and 313(d) of the Trust Indenture Act. SECTION 704. Reports by Company and Industries. The Company and Industries, pursuant to Section 314(a) of the Trust Indenture Act, shall: (1) file with the Trustee, within 15 days after the Company or Industries is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company or Industries may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act -55- of 1934; or, if the Company or Industries is not required to file information, documents or reports pursuant to either of said sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company and Industries with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit, within 30 days after the filing thereof with the Trustee, to the Holders of Securities, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company and Industries May Consolidate, Etc., Only on Certain Terms. Neither the Company nor Industries shall consolidate with or merge into any other Corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) the Corporation formed by any such consolidation or into which it is merged or the Person which acquires by conveyance or transfer, or which leases, its properties and assets substantially as an entirety shall be a Corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, in the case of the Company, the due and punctual payment of the principal of (and premium, if any) and interest on all the Securities; in the case of the Company or Industries, the performance of every covenant of this Indenture on the part of the Company or Industries, as applicable; and in the case of Industries, all the obligations under the Support Agreement to be performed or observed; -56- (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, would become an Event of Default, shall have happened and be continuing; and (3) the Company or Industries, as applicable, has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease complies with this Section 801 and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Corporation Substituted. Upon any consolidation by the Company or Industries with or merger by the Company or Industries into any other Corporation or any conveyance, transfer or lease of either the Company's or Industries' properties and assets substantially as an entirety in accordance with Section 801, the successor Corporation formed by such consolidation or into which it is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or Industries, as applicable, under this Indenture with the same effect as if such successor Corporation had been named as the Company or Industries, as applicable, herein, and thereafter, except in the case of a lease, the predecessor Corporation shall be relieved of all obligations and covenants under this Indenture, the Securities and, in the case of Industries, the Support Agreement. SECTION 803. Assumption by Industries or Subsidiary. Industries or a Subsidiary may directly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all the Securities and any coupons appertaining thereto and the performance of every covenant of this Indenture on the part of the Company to be performed or observed. Upon any such assumption, Industries or such Subsidiary shall succeed to and be substituted for and may exercise every right and power of the Company under this Indenture with the same effect as if Industries or such Subsidiary had been named as the Company herein and the Company shall be released from its liability as obligor on the Securities; provided that, in the case of such assumption by a Subsidiary, the Support Agreement is modified so that references to the Company and its Debt therein are changed to, or modified to include, references to such Subsidiary and its Debt (including the Securities). No such assumption shall be permitted unless Industries has delivered to the Trustee an Officers' Certificate of Industries and an Opinion of Counsel for Industries, each stating that such assumption and supplemental indenture comply with this Article, that all conditions precedent herein provided for relating to such transaction have been complied with and, in the event of assumption by a Subsidiary, that Industries' obligations under this Indenture and the Support Agreement (modified as aforesaid) remain in full force and effect. -57- ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures without Consent of Holders. Without the consent of any Holders of Securities or coupons, the Company and Industries, when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Corporation to the Company or Industries and the assumption by any such successor of the covenants of the Company or Industries, as the case may be, herein and in the Securities and coupons; or (2) to add to the covenants of the Company and Industries for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company or Industries; or (3) to add any additional Events of Default; or (4) to add to or change any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal (or premium, if any) on Registered Securities or of principal (or premium, if any) or any interest on Bearer Securities, to permit Registered Securities to be exchanged for Bearer Securities or to permit the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; or (5) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; or (6) to establish the form or terms of Securities of any series and any related coupons as permitted by Sections 201 and 301; or (7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series, to contain such provisions as shall be deemed necessary or desirable to confirm that all the -58- rights, powers, trusts and duties of the predecessor Trustee with respect to the Securities of any series as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); or (8) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; or (9) to effect assumption by Industries or a Subsidiary pursuant to Section 803; or (10) to conform this Indenture to any amendment of the Trust Indenture Act. SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company, Industries and the Trustee, the Company and Industries, when authorized by Board Resolutions, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or modifying in any manner the rights of the Holders of Securities of such series and any related coupons under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security or coupon affected thereby: (1) change the Stated Maturity of the principal of, or of any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the method of calculating the rate of interest thereon, or change any obligation of the Company to pay additional amounts pursuant to Section 1004 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment in the United States where, or the coin or currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date) or modify the provisions of this Indenture with -59- respect to the subordination of the Securities in a manner adverse to the Holders; or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 1304 for quorum or voting; or (3) change any obligation of the Company to maintain an office or agency in each Place of Payment, or any obligation of the Company to maintain an office or agency outside the United States pursuant to Section 1002; or (4) modify any of the provisions of this Section, Section 513 or Section 1010, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder of a Security or coupon with respect to changes in the references to ``the Trustee'' and concomitant changes in this Section and Section 1009, or the deletion of this proviso, in accordance with the requirements of Sections 611(b) and 901(8). A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. The Company and Industries shall have the right to set a record date for the solicitation of any consents under this Article Nine, which record date shall be set in accordance with Section 104. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 315 of the Trust Indenture Act) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. -60- The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, immunities or liabilities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder and of any coupons appertaining thereto shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest on the Securities of that series in accordance with the terms of the Securities, any coupons appertaining thereto and this Indenture. Any interest due on Bearer Securities on or before Maturity, other than additional amounts, if any, payable as provided in Section 1004 in respect of principal of (or premium, if any, on) such a Security, shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. -61- SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series (but, except as otherwise provided below, unless such Place of Payment is located outside the United States, not Bearer Securities) may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company initially hereby appoints the Trustee, its office or agency for each of said purposes. If Securities of a series are issuable as Bearer Securities, the Company will maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series which is located outside the United States where Securities of such series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Securities of such series pursuant to Section 1004); provided, however, that if the Securities of such series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent in London or Luxembourg or any other required city located outside the United States, as the case may be, so long as the Securities of such series are listed on such exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency in respect of any series of Securities or shall fail to furnish the Trustee with the address thereof, such presentations and surrenders of Securities of that series may be made and notices and demands may be made or served at the Corporate Trust Office of the Trustee, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any additional amounts payable on Bearer Securities of that series pursuant to Section 1004) at the place specified for the purpose pursuant to Section 301 or, if no such place is specified, at the main office of the Trustee in London, and the Company hereby appoints the Trustee as its agent to receive such respective presentations, surrenders, notices and demands. No payment of principal, premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, payment of principal of and any premium and interest in U.S. dollars (including additional amounts payable in respect thereof) on any Bearer Security may be made at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York if (but only if) payment of the full amount of such principal, premium, interest or additional amounts at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions. -62- The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment in accordance with the requirements set forth above for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1003. Money for Securities Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or prior to each due date of the principal of (and premium, if any) or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal of (and premium, if any) or interest on the Securities of that series; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. -63- The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. Any sums deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment or mailed to each such Holder, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Additional Amounts. If the Securities of a series provide for the payment of additional amounts, the Company will pay to the Holder of any Security of any series or any coupon appertaining thereto additional amounts as provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of principal of (or premium, if any) or interest on, or in respect of, any Security of any series or any related coupon or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of additional amounts provided for in this Section to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of additional amounts (if applicable) in any provisions hereof shall not be construed as excluding additional amounts in those provisions hereof where such express mention is not made. If the Securities of a series provide for the payment of additional amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Securities (or if the Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal (and premium, if any) is made), and at least 10 days prior to each date of payment of principal (and premium, if any) or interest if there has been any change -64- with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of (and premium, if any) or interest on the Securities of that series shall be made to Holders of Securities of that series or the related coupons who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities or coupons and the Company will pay to the Trustee or such Paying Agent the additional amounts required by this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. SECTION 1005. Corporate Existence. Subject to Article Eight, 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 its rights (charter and statutory) and franchises. Subject to Article Eight, (1) Industries will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and that of its subsidiary Northern Indiana and its rights (charter and statutory) and franchises and those of Northern Indiana; provided, however, that Industries shall not be required to preserve any such right or franchise of Northern Indiana if, in the judgment of Industries, the preservation thereof is no longer desirable in the conduct of the business of Northern Indiana and the loss thereof would not be disadvantageous in any material respect to the Holders of Securities, and (2) Industries will continue to own, directly or indirectly, all of the outstanding common stock of Northern Indiana. SECTION 1006. Maintenance of Properties. Each of the Company and Industries will cause all properties used or useful in the conduct of its business, and Industries will cause all properties used or useful in the business of the Subsidiaries, to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent Industries from discontinuing the operation or maintenance of any of such properties or disposing of them if such discontinuance or disposal is, in the judgment of Industries, desirable in the -65- conduct of its business or the business of the Subsidiaries and not disadvantageous in any material respect to the Holders of Securities. SECTION 1007. Payment of Taxes and Other Claims. Each of the Company and Industries will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon it and, in the case of Industries, any of the Subsidiaries, or upon the income, profits or property of the Company, Industries or any of the Subsidiaries, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company, Industries or any of the Subsidiaries; provided, however, that none of the Company, Industries or any of the Subsidiaries shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1008. Limitations on Dividends, Repurchases and Sinking Fund Payments. If there shall have occurred any event that would, with the giving of notice or the passage of time, or both, constitute an Event of Default under the Indenture or the Company shall have given notice of its election to extend an interest payment period of a series of the Securities as provided in the Board Resolution or indenture supplemental hereto providing for the issuance of such series of the Securities and such period, or any extension thereof, shall be continuing, neither the Company nor Industries shall, until such Event of Default shall have been cured or waived in accordance with this Indenture or shall have ceased to exist and all interest accrued on such series of the Securities during an extended interest payment period shall have been paid in full, (i) declare, set aside or pay any dividend or distribution on any shares of any class or series of its capital stock, except for dividends or distributions in shares of its capital stock or in rights to acquire shares of its capital stock, (ii) repurchase, redeem or otherwise acquire, or make any sinking fund payment for the purchase or redemption of, any shares of any class or series of its capital stock (except by conversion into or exchange for shares of its capital stock and except for a redemption, purchase or other acquisition by Industries of shares of its capital stock made for the purpose of an employee incentive plan or benefit plan of Industries or any of its Subsidiaries), (iii) make any liquidation payment with respect to any shares of any class or series of its capital stock, (iv) make any payment of interest, principal or premium, if any, on or repay, repurchase, redeem or otherwise acquire or make any sinking fund payment for the purchase or redemption of any debt securities issued by the Company that rank pari passu with or junior to the Securities, or (v) make any guarantee payment with respect to any of the foregoing. SECTION 1009. Statement by Officers as to Default. (a) Each of the Company and Industries will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, a certificate, signed by the principal executive officer, principal financial officer or principal accounting officer of the Company or Industries, as the case may be, stating whether or not -66- to the best knowledge of the signers thereof the Company or Industries, as the case may be, is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company or Industries shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. (b) The Company or Industries, as applicable, will deliver to the Trustee, within five days after the occurrence thereof, written notice of any event which after notice or lapse of time would become an Event of Default pursuant to clause (4) of Section 501. SECTION 1010. Waiver of Certain Covenants. The Company and Industries may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1006 and 1007 with respect to the Securities of any series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and Industries and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. SECTION 1011. Support Agreement. Each of the Company and Industries covenants and agrees for the benefit of each series of Securities that (1) it will perform its respective obligations under the Support Agreement, and (2) it will not agree to any amendment or termination of the Support Agreement as in effect on the date of this Indenture, except in accordance with the terms of the Support Agreement as in effect on the date of this Indenture. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article. -67- SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of the Securities of any series, with the same issue date, interest rate, Stated Maturity and other terms, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities (i) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or (ii) pursuant to an election of the Company which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or condition. SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Securities of such series (other than Securities of such series held by the Company), not previously called for redemption by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Registered Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. Unless otherwise provided in the Securities of a series, partial redemptions must be in an amount not less than $1,000,000 principal amount of Securities. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 to the Holders of Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date. All notices of redemption shall state: -68- (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, (5) the place or places where such Securities, together in the case of Bearer Securities with all coupons appertaining thereto, if any, maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price, and (6) that the redemption is for a sinking fund, if such is the case. With respect to any notice of redemption of Securities at the election of the Company, unless, upon the giving of such notice, such Securities shall be deemed to have been paid in accordance with Section 401, such notice may state that such redemption shall be conditional upon the receipt by the 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 Securities and that if such money shall not have been so received such notice shall be of no force or effect and the Company shall not be required to redeem such Securities. In the event that such notice of redemption contains such a condition and such money is not so received, the redemption shall not be made and within a reasonable time thereafter notice shall be given, in the manner in which the notice of redemption was given, that such money was not so received and such redemption was not required to be made. A notice of redemption published as contemplated by Section 106 need not identify particular Registered Securities to be redeemed. Notice of redemption of Securities to be redeemed at the election of the Company, and any notice of non-satisfaction of a condition for redemption as aforesaid, shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest, if any, on, all the Securities which are to be redeemed on that date. -69- SECTION 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, and the conditions, if any, set forth in such notice having been satisfied, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless, in the case of an unconditional notice of redemption, the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, together with all coupons, if any, appertaining thereto maturing after the Redemption Date, such Security shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 1002); and provided, further, that installments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 1002. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. SECTION 1107. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires with respect to any Registered Security, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his -70- attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series, Stated Maturity and of any authorized denomination as requested by such holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. Except as otherwise specified as contemplated by Section 301, if a Global Security is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the Depositary in global form, without service charge, a new Global Security in a denomination equal to and in exchange for the unredeemed portion of the principal of the Global Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 301 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment," and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment." If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto, and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption -71- Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. SECTION 1203. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202 and stating the basis for such credit and that such Securities have not previously been so credited and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. ARTICLE THIRTEEN MEETINGS OF HOLDERS OF SECURITIES SECTION 1301. Purposes for Which Meetings May be Called. If Securities of a series are issuable as Bearer Securities, a meeting of Holders of Securities of such series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series. SECTION 1302. Call Notice and Place of Meeting. (a) The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 1301, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or in London as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in principal amount of the Outstanding Securities of any series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for -72- any purpose specified in Section 1301, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, or in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. SECTION 1303. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1304. Quorum; Action. The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders of Securities of such series. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Except as provided by Section 1305(d), notice of the reconvening of any adjourned meeting shall be given as provided in Section 1302(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities of that series; provided, however, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which this Indenture -73- expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of that series. Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Securities of such series and the related coupons, whether or not present or represented at the meeting. SECTION 1305. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of such series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1302(b), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting. (c) At any meeting each Holder of a Security of such series or proxy shall be entitled to one vote for each $100 principal amount of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of such series or proxy. (d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1302 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series -74- represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 1306. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1302 and, if applicable, Section 1304. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated SECTION 1307. Action Without Meeting. In lieu of a vote of Holders at a meeting as hereinbefore contemplated in this Article, any request, demand, authorization, direction, notice, consent, waiver or other action may be made, given or taken by Holders by written instruments as provided in Section 104. ARTICLE FOURTEEN SUBORDINATION OF SECURITIES SECTION 1401. Securities Subordinated to Senior Indebtedness. The Company covenants and agrees, and each Holder of Securities issued hereunder, by his acceptance thereof, likewise covenants and agrees, and for purposes of Section 508 consents, that all Securities shall be issued subject to the provisions of this Article Fourteen, and each Holder of a Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment of the principal of and premium, if any, and interest on all Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness, whether -75- outstanding at the date of this Indenture or thereafter incurred. No provision of this Article Fourteen shall prevent the occurrence of any default or Event of Default hereunder. SECTION 1402. Payment Over of Proceeds Upon Default on Senior Indebtedness. In the event and during the continuation of any default in the payment of principal, premium, interest or any other payment due on any Senior Indebtedness continuing beyond the period of grace, if any, specified in the instrument evidencing such Senior Indebtedness, unless and until such default shall have been cured or waived or shall have ceased to exist, and in the event that the maturity of any Senior Indebtedness has been accelerated because of a default, unless and until such acceleration shall have been revoked in accordance with the instrument evidencing such Senior Indebtedness or such Senior Indebtedness shall have been paid in full, then no payment shall be made by the Company with respect to the principal (including redemption and sinking fund payments) of, or premium, if any, or interest on the Securities. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 1402, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee within 90 days of such payment of the amounts then due and owing on Senior Indebtedness, and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness. SECTION 1403. Payment Over of Proceeds Upon Dissolution; Bankruptcy; Liquidation. Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution, winding-up, liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made on account of the principal (and premium, if any) or interest on the Securities; and upon any such dissolution, winding-up, liquidation or reorganization, any payment by the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee would be entitled, except for the provisions of this Article Fourteen, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holders of the Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the -76- Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay all Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution is made to the Holders of Securities or to the Trustee. In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing shall be received by the Trustee before all Senior Indebtedness is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. For purposes of this Article Fourteen, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other Corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article Fourteen with respect to the Securities to the payment of all Senior Indebtedness which may at the time be outstanding; provided that (i) such Senior Indebtedness is assumed by the new Corporation, if any, resulting from such reorganization or readjustment, and (ii) the rights of the holders of the Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another Corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another Corporation upon the terms and conditions provided for in Article Eight hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 1403 if such other Corporation shall, as part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eight hereof. Nothing in Article Fourteen shall apply to the right of the Trustee to receive any amounts due under or pursuant to Section 607. SECTION 1404. Subrogation. Subject to the payment in full of all Senior Indebtedness, the rights of the Holders of the Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the -77- Company applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest on the Securities shall be paid in full; and, for purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article Fourteen, and no payment over pursuant to the provisions of this Article Fourteen, to or for the benefit of the holders of such Senior Indebtedness by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. It is understood that the provisions of this Article Fourteen are and are intended solely for the purposes of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness, on the other hand. Nothing contained in this Article Fourteen or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Fourteen of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article Fourteen, the Trustee, subject to the provisions of Section 601, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any such dissolution, winding-up, liquidation or reorganization proceedings are pending or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of the Securities, for the purposes of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fourteen. SECTION 1405. Trustee to Effectuate Subordination. Each Holder of a Security, by such Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Fourteen and appoints the Trustee his attorney-in-fact for any and all such purposes. -78- SECTION 1406. Notice to the Trustee. The Company shall give prompt written notice to a Responsible Officer of the Trustee at the Corporate Trust Office of any fact known to the Company which would prohibit the making of any payment of monies to or by the Trustee or Paying Agent in respect of the Securities pursuant to the provisions of this Article Fourteen. Notwithstanding the provisions of this Article Fourteen or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee or Paying Agent in respect of the Securities pursuant to the provisions of this Article Fourteen, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 1406 at least three Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. The Trustee, subject to the provisions of Section 601, shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be the holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Fourteen, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Fourteen, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 1407. Rights of Trustee as Holder of Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article Fourteen with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. -79- SECTION 1408. Trustee Not Fiduciary for Holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Fourteen, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness, and, subject to the provisions of Section 601, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to the Holders of the Securities, the Company or any other Person money or assets to which any holder of the Senior Indebtedness shall be entitled by virtue of this Article Fourteen or otherwise. SECTION 1409. Rights of Holders of Senior Indebtedness Not Impaired. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Company, as the case may be, or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Company, as the case may be, with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article Fourteen or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 1410. Effect of Satisfaction and Discharge of the Indenture. Notwithstanding any other provision of this Indenture, upon the execution and delivery by the Trustee to the Company of instruments acknowledging satisfaction and discharge of the Indenture with respect to one or more series of Securities in accordance with Section 401, any funds deposited with the Trustee in trust pursuant to paragraph (1)(B) of Section 401 shall cease to be subject to the provisions of this Article Fourteen. -80- ARTICLE FIFTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES SECTION 1501. Liability Solely Corporate. No recourse shall be had for the payment of the principal of or premium, if any, or interest, if any, on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under this Indenture, against any incorporator, stockholder, officer, director or employee, as such, past, present or future of the Company or Industries or of any predecessor or successor Corporation (either directly or through the Company, Industries or a predecessor or successor Corporation of either of them), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that this Indenture and all the Securities are solely corporate obligations, and that no personal liability whatsoever shall attach to, or be incurred by, any incorporator, stockholder, officer, director or employee, past, present or future, of the Company or Industries or of any predecessor or successor Corporation of either of them, either directly or indirectly through the Company, Industries or any predecessor or successor Corporation of either of them, because of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or to be implied herefrom or therefrom, and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Securities; provided, however, that nothing in this Section 1501 shall be interpreted to relieve Industries of its corporate obligations set forth in this Indenture by virtue of it being a stockholder of the Company. ____________________ -81- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. NIPSCO CAPITAL MARKETS, INC. [SEAL] By: ____________________________________ Name: Jerry M. Springer Attest: Title: Vice President and Chief Financial Officer __________________________________ NIPSCO INDUSTRIES, INC. [SEAL] By: ____________________________________ Name: Stephen P. Adik Attest: Title: Executive Vice President, Chief Financial Officer and Treasurer __________________________________ CHEMICAL BANK, TRUSTEE [SEAL] By: ____________________________________ Name: Attest: Title: By: _______________________________ -82- EX-4.2 4 RESOLUTIONS OF THE BOARD OF DIRECTORS EXHIBIT 4.2 RESOLUTIONS OF THE BOARD OF DIRECTORS OF NIPSCO CAPITAL MARKETS, INC. The undersigned, being all of the directors of NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital"), in lieu of holding a special meeting of the Board of Directors of Capital, hereby adopt the following resolutions by unanimous written consent pursuant to Section 23-1-34-2 of the Indiana Business Corporation Law. WHEREAS, the Board of Directors of Capital has previously authorized the filing of a Registration Statement with the Securities and Exchange Commission, jointly with NIPSCO Industries, Inc. ("Industries"), to register the offering and sale of Capital's unsecured subordinated debt securities in an aggregate principal amount of up to $75,000,000 and Industries' obligations pursuant to the Support Agreement, dated as of April 4, 1989, as amended, between Industries and Capital; and WHEREAS, the Board of Directors of Capital has authorized the execution and delivery, by and on behalf of Capital, of an Indenture among Capital, Industries, and Chemical Bank, as trustee (the "Trustee"), providing for the issuance from time to time of Capital's subordinated debt securities; and WHEREAS, Capital and Industries have filed with the Securities and Exchange Commission a Registration Statement on Form S-3, Registration No. 33-65285 (the "Registration Statement"), registering the offer and sale of such subordinated debt securities; and WHEREAS, the Board of Directors desires to establish, pursuant to Section 301 of the Indenture, a series of subordinated debt securities to be issued pursuant to the Indenture and offered and sold under the Registration Statement; NOW THEREFORE BE IT RESOLVED by the Board of Directors as follows: 1. Capital hereby establishes, pursuant to Section 301 of the Indenture, a series of subordinated debt securities as follows (capitalized terms not defined in these resolutions having the meaning given to them in the Indenture): (a) Such subordinated debt securities shall be designated the "Junior Subordinated Deferrable Interest Debentures, Series A" (the "Series A Debentures"). (b) The aggregate principal amount at maturity of the Series A Debentures that may be authenticated and delivered under the Indenture (except for Series A Debentures that may be authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Series A Debentures pursuant to Sections 304, 305, 306, 906 or 1107 of the Indenture) shall not be in excess of $75,000,000. (c) The Series A Debentures shall mature thirty years from the date of issuance or from such other date reasonably before or after the date of issuance (the "Issue Date") as may be approved by the Treasurer of Capital at the time of pricing of the Series A Debentures, such approval to be conclusively evidenced by the delivery of a Company Order to the Trustee pursuant to Section 303 of the Indenture reflecting such Issue Date. (d) Each Series A Debenture shall bear interest at a rate per annum to be approved by the Treasurer of Capital at the time of the pricing of the Series A Debentures, such approval to be conclusively evidenced by the delivery of a Company Order to the Trustee pursuant to Section 303 of the Indenture reflecting such interest rate (the "Interest Rate"). Each Series A Debenture shall bear interest on the unpaid principal of such Series A Debenture from the Issue Date until such principal becomes due and payable and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the Interest Rate, compounded quarterly. Subject to the provisions of paragraph (f), below, interest shall be payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year (each, an "Interest Payment Date"), commencing March 31, 1996, to the person in whose name such Series A Debenture is registered on the Regular Record Date for such Interest Payment Date. The Regular Record Date for Series A Debentures issued in the form of one or more Global Securities shall be the close of business on the Business Day next preceding an Interest Payment Date; provided, however, that if the Series A Debentures are no longer represented by one or more Global Securities, the Company may select a Regular Record Date for each payment of interest which shall be any date at least one Business Day before an Interest Payment Date. (e) The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed in such 30-day month. In the event that any date on which interest is payable on the Series A Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (f) Capital shall have the right at any time, and from time to time, during the term of the Series A Debentures, so long as an Event of Default has not occurred and is not continuing, to defer payments of interest on the Series A Debentures by extending the interest payment period for a period not exceeding 20 consecutive quarters (the "Extended Interest Payment Period"). At the end of such Extended Interest Payment Period, Capital shall pay all interest then accrued and unpaid (together with interest thereon, compounded quarterly at the Interest Rate, to the extent permitted by applicable law) to the Holders of the Series A Debentures in whose names the Series A Debentures are registered in the Security Register on the first Regular Record Date after the end of the Extended Interest Payment Period. Prior to the termination of any such Extended Interest Payment Period, Capital may further extend such period, provided that such Extended Interest Payment Period, together with all such previous and further extensions thereof, shall not exceed 20 consecutive quarters or extend beyond the maturity of the Series A Debentures. Upon the termination of any Extended Interest Payment Period and the payment of all accrued and unpaid interest then due, Capital may commence a new Extended Interest Payment Period, subject to the terms set forth in the Indenture and this paragraph. No interest shall be due and payable -2- during an Extended Interest Payment Period except at the end thereof, other than with respect to a Series A Debenture redeemed by Capital pursuant to paragraph (i), below. (g) Capital shall give the Trustee and the Holders of the Series A Debentures notice of its selection of an Extended Interest Payment Period ten Business Days prior to the earlier of (i) the next Interest Payment Date or (ii) the date upon which Capital is required to give notice to the Holders of the Series A Debentures (or, if applicable, to the New York Stock Exchange or other applicable self-regulatory organization) of the record or payment date of such related interest payment. The quarter in which any notice is given pursuant to this paragraph shall be counted as one of the 20 quarters permitted in the maximum Extended Interest Payment Period. (h) The principal of each Series A Debenture and premium, if any, and interest thereon shall be payable at the office of the Paying Agent, in the Borough of Manhattan, The City of New York. Chemical Bank shall initially be appointed as Paying Agent. (i) Capital shall have the right to redeem the Series A Debentures, in whole or in part, from time to time, upon not less than 30 nor more than 60 days' notice, on or after such date or dates and at a redemption price or redemption prices equal to such percentage or percentages of the principal amount of the Series A Debentures as may be approved by the Treasurer of Capital at the time of the pricing of the Series A Debentures, such approval to be conclusively evidenced by the delivery of a Company Order to the Trustee pursuant to Section 303 of the Indenture reflecting such redemption date or redemption dates and redemption price or redemption prices. If less than all of the Series A Debentures are to be redeemed, the particular Series A Debentures to be redeemed shall be selected, not more than 60 days prior to the redemption date, pro rata or by lot or by any other method that the Trustee shall deem fair and appropriate; provided, however, that if at the time of redemption, the Series A Debentures are registered as a Global Security, the Depositary shall determine by lot the principal amount of such Series A Debentures held by each Holder to be redeemed. (j) Capital shall have no obligation to redeem or purchase the Series A Debentures pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof. (k) The Series A Debentures shall be issued in the form of one or more Global Securities, which will have an aggregate principal amount equal to that of the Series A Debentures, and shall be deposited with, or on behalf of, The Depository Trust Company, as Depositary. A Global Security shall be exchangeable for Series A Debentures registered in the names of persons other than the Depositary or its nominee only under the circumstances described in Section 305 of the Indenture. Any Series A Debenture issued in certificated form pursuant to Section 305 of the Indenture shall be in such denominations or integral multiples thereof as may be approved by the Treasurer of Capital at the time of the pricing of the Series A Debentures, such approval to be conclusively evidenced by the delivery of a Company Order to the Trustee pursuant to Section 303 of the Indenture reflecting such denominations. (l) No payments of additional amounts in respect of taxes or similar charges withheld or deducted from the Series A Debentures will be made to any United States Alien pursuant to Section 301(16) of the Indenture. -3- (m) The Series A Debentures shall contain such other terms, conditions and provisions not provided for in these or prior resolutions of the Board of Directors as the Treasurer of Capital may approve, such approval to be conclusively evidenced by the delivery to the Trustee of a Company Order specifying such terms, conditions and provisions pursuant to Section 303 of the Indenture. 2. The form of debenture for the Series A Debentures, in substantially the form included in the Registration Statement, and the terms and conditions set forth therein are hereby approved and authorized in all respects, with such changes therein as the officer executing such Series A Debentures shall determine, and such Series A Debentures shall be executed for and on behalf of Capital by any one of the Chairman of the Board, the President, any Vice President, or the Treasurer, and attested to by the Secretary or any Assistant Secretary, either by original or facsimile signature. 3. Within the limitations specified in these resolutions, the Chairman of the Board, the President or a Vice President and the Treasurer (or any Assistant Treasurer, the Comptroller, any Assistant Comptroller, the Corporate Secretary or any Assistant Corporate Secretary of Capital designated by the Treasurer) is hereby authorized to deliver to the Trustee an Officers' Certificate establishing the Series A Debentures provided for herein and all other terms specified by Section 301 of the Indenture and to issue one or more Company Orders, determining therein all terms and provisions of the Series A Debentures as provided for in these resolutions and the Officers' Certificate. 4. Subject to the Registration Statement having been declared effective and to the continuance of such effectiveness in full force and effect, the Chairman, the President, any Vice President and the Treasurer of Capital are hereby authorized to issue and sell the Series A Debentures on terms and conditions consistent with these resolutions, the Indenture and the Registration Statement. 5. The officers of Capital are hereby authorized, directed and empowered to do and perform and to cause to be done and performed all acts and things, and to execute and file such documents and instruments as may be necessary, convenient or appropriate and to pay all such charges and expenses as may be necessary to carry into effect the financing program herein contemplated and to carry into effect the various resolutions adopted by the Board of Directors with respect to this financing program. Dated: January 5, 1996 /s/ Stephen P. Adik /s/ Gary L. Neale ___________________________________ _______________________________________ Stephen P. Adik Gary L. Neale /s/ John W. Dunn /s/ Jerry M. Springer ___________________________________ _______________________________________ John W. Dunn Jerry M. Springer /s/ Patrick J. Mulchay ___________________________________ Patrick J. Mulchay -4- EX-4.4 5 FORM OF SUBORDINATED DEBENTURE EXHIBIT 4.4 FORM OF DEBENTURE (FORM OF FACE OF DEBENTURE) [IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT: This Debenture is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Debenture is exchangeable for Debentures registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Debenture (other than a transfer of this Debenture as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Debenture is presented by an authorized representative of The Depository Trust Company, a New York corporation located at 55 Water Street, New York, New York to the issuer or its agent for registration of transfer, exchange or payment, and any Debenture issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment hereon is made to Cede & Co., or to such other entity as is requested by an authorized representative of The Depository Trust Company, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] No.________________ $______________ CUSIP No.__________ ____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE, SERIES A DUE MARCH 31, 2026 NIPSCO Capital Markets, Inc, an Indiana corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___________________________, or registered assigns, the principal sum of ______________ Dollars on _________, 2026, and to pay interest on said principal sum from ___________, 1996, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 31, June 30, September 30 and December 31 of each year commencing March 31, 1996, at the rate of _____% per annum until the principal hereof shall have become due and payable, and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded quarterly. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Debenture is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Debenture (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the regular record date for such interest installment, which, subject to the following sentence, shall be the close of business on the business day next preceding such Interest Payment Date. If pursuant to Section 305 of the Indenture this series of Debentures is no longer represented by a Global Security, the Company may select a regular record date for such interest installment which shall be any date at least one Business Day before an Interest Payment Date. Interest payable on redemption or maturity shall be payable to the person to whom the principal is paid. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such regular record date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered Holder of this Debenture not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of and the interest on this Debenture shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered Holder at such address as shall appear in the Security Register. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, as defined in the Indenture, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. The indebtedness evidenced by this Debenture is entitled to the benefits of a Support Agreement, dated as of April 4, 1989, as amended as of May 15, 1989, December 10, 1990, and February 14, 1991 (as such Agreement may be hereafter amended, modified or supplemented from time to time in accordance with the terms and conditions of the Indenture, the "Support Agreement") between the Company and NIPSCO Industries, Inc. ("Industries"). The Support Agreement provides that, during the term thereof, (i) Industries will own all of the voting stock of the Company, (ii) Industries will cause the Company to have at all times a positive net worth (net assets less intangible assets, if any), as determined in accordance with generally accepted accounting principles, and (iii) if the Company is unable to make timely payment of principal of or any premium or interest on any Debt (as defined below) issued by the Company, Industries will, at the request of the Company or any Lender (as defined below), provide funds to the Company to make such payments. The Support Agreement also provides that any Lender to the Company shall have the right to demand that the Company enforce its rights against Industries under the Support Agreement as described in the previous sentence, and in the event that the Company fails to require Industries to perform -2- such obligations or the Company defaults in the timely payment of principal of or any premium or interest on any Debt owed to a Lender, such Lender may proceed directly against Industries to enforce the Company's rights against Industries under the Support Agreement or to obtain payment of such defaulted principal, premium or interest owed to such Lender. The Support Agreement provides that in no event may any Lender, on default of the Company or Industries or upon failure by the Company or Industries to comply with the Support Agreement, have recourse to or against the stock or assets of Northern Indiana Public Service Company ("Northern Indiana") or any interest of the Company or Industries therein. Notwithstanding this limitation, the Support Agreement provides that funds available to Industries to satisfy any obligations under the Support Agreement will include cash dividends paid by Northern Indiana to Industries. The term "Debt" is defined in the Support Agreement as debt securities or other obligations and includes the Debentures. The term "Lender" is defined in the Support Agreement as any person, firm or corporation to which the Company is indebted for money borrowed or to which the Company otherwise owes any Debt or which is acting as trustee or authorized representative on behalf of such person, firm or corporation. The Indenture provides that each Holder of a Debenture, as well as the Trustee, shall be considered a "Lender" for purposes of the Support Agreement and shall have all rights of a "Lender" set forth therein. The Support Agreement may be amended or terminated at any time by the agreement of Industries and the Company, provided that (i) no amendment regarding the terms described above may be made unless all Lenders consent in advance and in writing to such amendment, (ii) no amendment regarding any other term of the Support Agreement may be made in a manner that adversely affects the rights of Lenders unless all affected Lenders consent in advance and in writing to such amendment, and (iii) no termination shall be effective until such time as all Debt (including the Debentures) shall have been paid in full. This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. Unless the Certificate of Authentication hereon has been executed by the Trustee referred to on the reverse side hereof, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. -3- IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated:____________________ NIPSCO CAPITAL MARKETS, INC. By:_________________________ Attest: By:_______________________ (Assistant) Secretary (FORM OF CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This Debenture is one of the Securities of the series designated herein referred to in the within-mentioned Indenture. CHEMICAL BANK, as Trustee By:_________________________________ Authorized Officer -4- (FORM OF REVERSE OF DEBENTURE) This Debenture is one of a duly authorized series of Securities of the Company (herein sometimes referred to as the "Debentures"), specified in the Indenture, all issued or to be issued in one or more series under and pursuant to an Indenture dated as of February 1, 1996, duly executed and delivered between the Company, Industries and Chemical Bank, as Trustee (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Debentures. By the terms of the Indenture, the Debentures are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. This series of Debentures is limited in aggregate principal amount as specified in the Board Resolution establishing such series of Debentures. The Company shall have the right to redeem this Debenture at the option of the Company, in whole or in part, at any time on or after March 31, 2001 (an "Optional Redemption") at a redemption price (the "Optional Redemption Price") equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of redemption. Any redemption pursuant to this paragraph will be made upon not less than 30 nor more than 60 days' notice at the Optional Redemption Price. If the Debentures are only partially redeemed by the Company pursuant to an Optional Redemption, the Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided that if, at the time of redemption, the Debentures are registered as a Global Security, the Depositary shall determine by lot the principal amount of such Debentures held by each Debentureholder to be redeemed. In the event of redemption of this Debenture in part only, a new Debenture or Debentures of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. -5- The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Debentures of each series affected at the time outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Debentures; provided, however, that no such supplemental indenture shall (i) extend the fixed maturity of any Debentures of any series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the Holder of each Debenture so affected, or (ii) reduce the aforesaid percentage of Debentures, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Debenture then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Debentures of any series at the time outstanding affected thereby, on behalf of all of the Holders of the Debentures of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the Debentures of such series. Any such consent or waiver by the registered Holder of this Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. The Company shall have the right at any time during the term of the Debentures from time to time to extend the interest payment period of such Debentures to up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the end of which period the Company shall pay all interest then accrued and unpaid (together with interest thereon compounded quarterly at the rate specified for the Debentures to the extent that payment of such interest is enforceable under applicable law); provided that, during such Extended Interest Payment Period, neither the Company nor Industries shall declare or pay any dividend on, or purchase, acquire or make a liquidation payment with respect to, any of its capital stock, or make any payment of interest, principal or premium, if any, on or repay, repurchase, redeem or otherwise acquire or make any sinking fund payment for the purchase or redemption of any debt securities issued by the Company or Industries that rank pari passu with or junior to the Debentures, or make any guarantee payments with respect to any of the foregoing. Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, provided that such Extended Interest Payment Period, together with all previous and further extensions thereof, shall not exceed 20 consecutive quarters or extend beyond the maturity of the Debentures. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may commence a new Extended Interest Payment Period. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered Holder hereof on the Security Register of the Company, upon -6- surrender of this Debenture for registration of transfer at the office or agency of the Company in the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the registered Holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Debentures of this series are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. [This Global Security is exchangeable for Debentures in definitive form only under certain limited circumstances set forth in the Indenture. Debentures of this series so issued are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof.] As provided in the Indenture and subject to certain limitations herein and therein set forth, Debentures of this series so issued are exchangeable for a like aggregate principal amount of Debentures of this series of a different authorized denomination, as requested by the Holder surrendering the same. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. -7- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ______________________________________________________________________________ (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE) ______________________________________________________________________________ ______________________________________________________________________________ (PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) the within Debenture and all rights thereunder, hereby irrevocably constituting and appointing such person attorney to transfer such Debenture on the books of the Issuer, with full power of substitution in the premises. Dated:_________________ ______________________________________ (Signature) NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Debenture in every particular, without alteration or enlargement or any change whatever; Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agents Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") or the New York Stock Exchange, Inc. Medallion Signature Program ("MSP"). -8- EX-5 6 OPINION OF SCHIFF HARDIN & WAITE EXHIBIT 5 SCHIFF HARDIN & WAITE 7200 SEARS TOWER CHICAGO, ILLINOIS 60606 Robert J. Minkus (312) 258-5584 January 31, 1996 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: NIPSCO Industries, Inc. and NIPSCO Capital Markets, Inc. Registration Statement on Form S-3 Ladies and Gentlemen: We are acting as counsel to NIPSCO Industries, Inc., an Indiana corporation ("Industries"), and NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital"), in connection with the filing of a Registration Statement on Form S-3, as amended (No. 33-65285), by Capital and Industries registering the offer and sale of Series A Junior Subordinated Debentures of Capital in the aggregate principal amount of $75,000,000 (the "Subordinated Debentures"), and the related obligations of Industries under the Support Agreement, dated April 4, 1989, as amended as of May 15, 1989, December 10, 1990, and February 14, 1991, between Capital and Industries (the "Support Agreement"), as more fully described in the Registration Statement. The Subordinated Debentures will be issued under an indenture among Capital, Industries and Chemical Bank, as trustee, in the form of Exhibit 4.1 to the Registration Statement (the "Indenture"). We have examined such corporate records, certificates and other documents, and have made such other factual and legal investigations, as we have deemed necessary or appropriate for the purposes of this opinion. Based upon the foregoing, it is our opinion that: 1. Each of Capital and Industries is a corporation duly organized and validly existing under the laws of the State of Indiana. 2. The Subordinated Debentures will be the legally issued, valid and binding obligations of Capital, enforceable in accordance with their terms, except as the Securities and Exchange Commission January 31, 1996 Page 2 enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors' rights generally or by general principles of equity, at such time as: (a) a duly authorized officer of Capital shall have fixed certain remaining terms of the Subordinated Debentures, in accordance with the Resolutions of the Board of Directors of Capital filed as Exhibit 4.2 of the Registration Statement, and such terms shall have been set forth in an Officer's Certificate or established in a supplemental indenture in accordance with the requirements of the Indenture; and (b) the Indenture shall have been executed and delivered and the Subordinated Debentures shall have been duly executed, authenticated, issued and delivered pursuant to the provisions of the Indenture against payment of the agreed consideration therefor. 3. The Subordinated Debentures are entitled to the benefit of the Support Agreement, which is the valid and binding obligation of Industries, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors' rights generally or by general principles of equity. We hereby consent to the use of our name under the caption "Legal Opinions" in the Prospectus constituting a part of the Registration Statement and to the filing of this opinion as an exhibit to such Registration Statement. Very truly yours, SCHIFF HARDIN & WAITE By /s/ Robert J. Minkus ------------------------- Robert J. Minkus RJM/sh EX-23.1 7 CONSENT OF ARTHUR ANDERSEN LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our reports dated January 27, 1995 included or incorporated by reference in the annual report on Form 10-K for NIPSCO Industries, Inc. for the year ended December 31, 1994; our report dated April 26, 1995, included in the quarterly report on Form 10-Q for NIPSCO Industries, Inc. for the periods ended March 31, 1995; our report dated July 27, 1995, included in the quarterly report on Form 10-Q for NIPSCO Industries, Inc. for the periods ended June 30, 1995; and our report dated November 6, 1995, included in the quarterly report on Form 10-Q for NIPSCO Industries, Inc. for the periods ended September 30, 1995; and to all references made to our Firm included in this Registration Statement. Arthur Andersen LLP Chicago, Illinois January 31, 1996 -----END PRIVACY-ENHANCED MESSAGE-----