-----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, LVOwpRAxryjZZs3BcL/bDL54onu7+ionOr9XAwZoVrkjCy8VGvUGBbVDX3RY+XkB BwxFthSHd0tsU0FLaN2duA== 0000950131-99-000894.txt : 19990217 0000950131-99-000894.hdr.sgml : 19990217 ACCESSION NUMBER: 0000950131-99-000894 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19990212 ITEM INFORMATION: FILED AS OF DATE: 19990216 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: 8-K SEC ACT: SEC FILE NUMBER: 001-09779 FILM NUMBER: 99538844 BUSINESS ADDRESS: STREET 1: 801 E 86TH AVENUE CITY: MERRILLVILLE STATE: IN ZIP: 46410 BUSINESS PHONE: 2198535200 MAIL ADDRESS: STREET 1: 5265 HOHMAN AVENUE CITY: HAMMOND STATE: IN ZIP: 46320-1775 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) February 12, 1999 NIPSCO INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Indiana 1-9779 35-1719974 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 801 E. 86th Avenue, Merrillville, Indiana 46410 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (219) 853-5200 ----------------------------- - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. The following exhibits are filed herewith: 1.1 Underwriting Agreement, dated February 9, 1999 among NIPSCO Industries, Inc., NIPSCO Capital Markets, Inc., NIPSCO Capital Trust I, and Lehman Brothers Inc., Goldman Sachs & Co. and Morgan Stanley & Co. Incorporated, as Underwriters 3.1 Amended and Restated By-Laws of NIPSCO Industries, Inc. Effective January 30, 1999 4.1 Form of First Supplemental Indenture among NIPSCO Capital Markets, Inc., NIPSCO Industries, Inc., and The Chase Manhattan Bank, as Trustee 4.2 Form of Purchase Contract Agreement by and between NIPSCO Industries, Inc., and The Chase Manhattan Bank, as Purchase Contract Agent 4.3 Form of Pledge Agreement among NIPSCO Industries, Inc., The First National Bank of Chicago, as Collateral Agent and Securities Intermediary, and The Chase Manhattan Bank, as Purchase Contract Agent 4.4 Form of Remarketing Agreement among NIPSCO Industries, Inc., NIPSCO Capital Markets, Inc., NIPSCO Capital Trust I, and Lehman Brothers Inc., as Remarketing Agent 4.5 Form of Certificate Evidencing Corporate PIES (included as Exhibit A to Exhibit 4.2 filed herewith) 4.6 Form of Certificate Evidencing Treasury PIES (included as Exhibit B to Exhibit 4.2 filed herewith) 4.7 Form of Certificate Evidencing 5.90% Senior Debenture due 2005 8.1 Tax Opinion of Schiff Hardin & Waite 12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges 23.1 Consent of Arthur Andersen LLP (incorporated by reference to Exhibit 23.1 to the Current Report on Form 8-K of NIPSCO Industries, Inc. dated February 8, 1999) 23.2 Consent of Schiff Hardin & Waite (included in the tax opinion filed as Exhibit 8.1) SIGNATURE Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NIPSCO INDUSTRIES, INC. (Registrant) Dated: February 12, 1999 By: /s/ Nina M. Rausch ------------------------------------- Name: Nina M. Rausch Title: Secretary EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - -------------- ----------- 1.1 Underwriting Agreement dated February 9, 1999 among NIPSCO Industries, Inc., NIPSCO Capital Markets, Inc., NIPSCO Capital Trust I, and Lehman Brothers Inc., Goldman Sachs & Co. and Morgan Stanley & Co. Incorporated, as Underwriters 3.1 Amended and Restated By-Laws of NIPSCO Industries, Inc. Effective January 30, 1999 4.1 Form of First Supplemental Indenture among NIPSCO Capital Markets, Inc., NIPSCO Industries, Inc., and The Chase Manhattan Bank, as Trustee 4.2 Form of Purchase Contract Agreement by and between NIPSCO Industries, Inc. and The Chase Manhattan Bank, as Purchase Contract Agent 4.3 Form of Pledge Agreement among NIPSCO Industries, Inc., The First National Bank of Chicago, as Collateral Agent and Securities Intermediary, and The Chase Manhattan Bank, as Purchase Contract Agent 4.4 Form of Remarketing Agreement among NIPSCO Industries, Inc., NIPSCO Capital Markets, Inc., NIPSCO Capital Trust I, and Lehman Brothers Inc., as Remarketing Agent 4.5 Form of Certificate Evidencing Corporate PIES (included as Exhibit A to Exhibit 4.2 filed herewith) 4.6 Form of Certificate Evidencing Treasury PIES (included as Exhibit B to Exhibit 4.2 filed herewith) 4.7 Form of Certificate Evidencing 5.90% Senior Debenture due 2005 8.1 Tax Opinion of Schiff Hardin & Waite 12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges 23.1 Consent of Arthur Andersen LLP (incorporated by reference to Exhibit 23.1 to the Current Report on Form 8-K of NIPSCO Industries, Inc. dated February 8, 1999) 23.2 Consent of Schiff Hardin & Waite (included in the tax opinion filed as Exhibit 8.1)
EX-1.1 2 UNDERWRITING AGREEMENT Exhibit 1.1 ST&B Draft 2/3/99 NIPSCO INDUSTRIES, INC. NIPSCO CAPITAL MARKETS, INC. NIPSCO CAPITAL TRUST I Trust Preferred Securities REMARKETING AGREEMENT February __, 1999 LEHMAN BROTHERS INC. Three World Financial Center New York, New York 10285 Ladies and Gentlemen: NIPSCO Capital Trust I, a Delaware statutory business trust (the "Trust"), is issuing today Trust Preferred Securities (stated liquidation amount $50 per Trust Preferred Security) (the "Preferred Securities") pursuant to the Amended and Restated Declaration of Trust, dated as of February __, 1999 (the "Declaration"), and guaranteed (the "Guarantee"; together with the Preferred Securities, the "Securities") by NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital Markets"), to the extent set forth in the Guarantee Agreement, dated as of February __, 1999 (the "Guarantee Agreement"), between Capital Markets and The Chase Manhattan Bank, as Guarantee Trustee (the "Guarantee Trustee"). Capital Markets will be the owner of all of the beneficial ownership interests represented by Common Securities (the "Common Securities"; together with the Preferred Securities, the "Trust Securities") of the Trust. Concurrently with the issuance of the Securities and Capital Market's purchase of all of the beneficial ownership interests represented by Common Securities of the Trust, the Trust will invest the proceeds of each thereof in Capital Market's Debentures (the "Debentures"). The Debentures are to be issued pursuant to the Indenture, dated as of February 14, 1997 (the "Indenture"), among NIPSCO Industries, Inc., an Indiana corporation and the parent of Capital Markets (the "Company"), Capital Markets and The Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee"). Capitalized terms used and not defined in this Agreement shall have the meanings set forth in the Declaration or the Indenture, as the case may be. The Remarketing (as defined below) of the Securities is provided for in the Declaration and, if the Debentures have been distributed to holders of the Preferred Securities in liquidation of the Trust, the Indenture. As used in this Agreement, the term "Remarketed Securities" means the Securities or Debentures subject to the Remarketing as notified by the Indenture Trustee on the fifth Business Day prior to the Purchase Contract Settlement Date; the term "Remarketing Procedures" means the procedures in connection with the Remarketing of the Securities described 2 in Section 7.13 of the Declaration and [Article Twelve] of the Indenture(1), as the case may be; and the term "Remarketing" means the remarketing of the Remarketed Securities pursuant to the Remarketing Procedures. Section 1. Appointment and Obligations of the Remarketing Agent. (a) The Company, Capital Markets and the Trust (collectively, the "Issuers") hereby appoint Lehman Brothers Inc. as exclusive remarketing agent (the "Remarketing Agent"), and Lehman Brothers Inc. hereby accepts appointment as Remarketing Agent for the purpose of (i) Remarketing Remarketed Securities on behalf of the holders thereof and (ii) performing such other duties as are assigned to the Remarketing Agent in the Remarketing Procedures, all in accordance with and pursuant to the Remarketing Procedures. (b) The Remarketing Agent agrees (i) to use commercially reasonable efforts to remarket the Remarketed Securities tendered or deemed tendered to the Remarketing Agent in the Remarketing, (ii) to notify the Issuers promptly of the Reset Rate and (iii) to carry out such other duties as are assigned to the Remarketing Agent in the Remarketing Procedures, all in accordance with the provisions of the Remarketing Procedures. (c) On the third Business Day immediately preceding the Purchase Contract Settlement Date (the "Remarketing Date"), the Remarketing Agent shall use commercially reasonable efforts to remarket, at a price equal to 100% of the aggregate liquidation or principal amount thereof, Remarketed Securities tendered or deemed tendered for purchase. (d) If none of the holders of Remarketed Securities elect to have Remarketed Securities held by them remarketed in the Remarketing, the Remarketing Agent shall determine the Reset Rate which shall be the rate that would have been established had a Remarketing been held on the Remarketing Date. (e) If, as a result of the efforts described in Section 1(b), the Remarketing Agent has determined that it will be able to remarket all Remarketed Securities tendered or deemed tendered for purchase at a price of 100% of the aggregate stated liquidation or principal amount of such Remarketed Securities prior to 4:00 P.M., New York City time, on the Remarketing Date, the Remarketing Agent shall determine the Reset Rate, which shall be the rate per annum (rounded to the nearest one-thousandth (0.001) of one percent per annum) which the Remarketing Agent determines, in its sole judgment, to be the lowest rate per annum that will enable it to remarket all Remarketed Securities tendered or deemed tendered for Remarketing. (f) If, by 4:00 P.M., New York City time, on the Remarketing Date, the Remarketing Agent is unable to remarket all Remarketed Securities tendered or deemed tendered for purchase, a failed Remarketing ("Failed Remarketing") shall be deemed to have occurred and the Remarketing - ---------- 1 Current version of Indenture does not provide for remarketing and will need to be so amended in the Supplement. 3 Agent shall so advise by telephone the Depositary, the Property Trustee, the Debenture Trustee, the Company, the Trust and Capital Markets. (g) By approximately 4:30 P.M., New York City time, on the Remarketing Date, provided that there has not been a Failed Remarketing, the Remarketing Agent shall advise, by telephone (i) the Depositary, the Property Trustee, the Debenture Trustee, the Company, the Trust and Capital Markets of the Reset Rate determined in the Remarketing and the number of Remarketed Securities sold in the Remarketing, (ii) each purchaser (or the Depositary Participant thereof) of the Reset Rate and the number of Remarketed Securities such purchaser is to purchase and (iii) each purchaser to give instructions to its Depositary Participant to pay the purchase price on the Purchase Contract Settlement Date in same day funds against delivery of the Remarketed Securities purchased through the facilities of the Depositary. (h) The Remarketing Agent shall remit to the Collateral Agent all proceeds of the Remarketed Securities subject to the Pledge Agreement. 2. Representations, Warranties and Agreements of the Company and Capital Markets. The Company and Capital Markets jointly represent, warrant and agree (i) on and as of the date hereof, (ii) on and as of the date the Prospectus or other Remarketing Materials (each as defined in Section 2(a) below) are first distributed in connection with the Remarketing (the "Commencement Date"), (iii) on and as of the Remarketing Date, and (iv) on and as of the Purchase Contract Settlement Date that: (a) A registration statement or registration statements on Form S-3 (file No. 333-69279) and an amendment or amendments thereto with respect to the Securities and the Debentures have (i) been prepared by the Issuers in conformity with the requirements of the Securities Act of 1933 as amended (the "Securities Act") and the rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act; a registration statement on Form S-3, if required to be filed in connection with the Remarketing, may also be prepared by the Issuers in conformity with the requirements of the Securities Act and the Rules and Regulations and filed with the Commission under the Securities Act; and the Indenture, the Guarantee Agreement and the Declaration have each been qualified under the Trust Indenture Act of 1939, as amended, (the "Trust Indenture Act"). Copies of such registration statement or registration statements that have become effective and the amendment or amendments to such registration statements have been delivered by the Issuers to you. As used in this Agreement, "Effective Time" means the date and time as of which the last of such registration statements that have become effective or may be filed, or the most recent post-effective amendment thereto, if any, was declared effective by the Commission; Effective Date means the date of the Effective Time of such last registration statement; Preliminary Prospectus means each prospectus included in such last registration statement, or amendment thereto, before it became effective under the Securities Act and any prospectus filed by the Issuers with your consent pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" 4 means such last registration statement, as amended at its Effective Time, including documents incorporated by reference therein at such time and, if applicable, all information contained in the final prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations, including any information deemed to be part of such Registration Statement as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules and Regulations; and "Prospectus" means such final prospectus, as first filed pursuant to Rule 424(b) of the Rules and Regulations. Reference made herein to any Preliminary Prospectus, the Prospectus or any other information furnished by the Issuers to the Remarketing Agent for distribution to investors in connection with the Remarketing (the "Remarketing Materials") shall be deemed to refer to and include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the case may be, or, in the case of Remarketing Materials, referred to as incorporated by reference therein, and any reference to any amendment or supplement to any Preliminary Prospectus, the Prospectus or the Remarketing Materials shall be deemed to refer to and include any document filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the date of such Preliminary Prospectus or the Prospectus or, if so incorporated, the Remarketing Materials, as the case may be; and any reference to any amendment to the Registration Statement shall be deemed to include any annual report of the Company or Capital Markets filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after the Effective Time that is incorporated by reference in the Registration Statement. (b) Giving effect to the interpretations of the requirements of the Securities Act reflected in the Company's letter requesting "no-action" submitted to the staff of the commission (the "Staff"), dated April 27, 1992, as supplemented by letters dated July 9, 1992 and September 21, 1992 (the "No-Action Request") and the Staff's response thereto dated September 25, 1992 (the "Staff Response"), the Registration Statement conforms (and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus, when they become effective or are filed with the Commission, as the case may be, will conform) in all respects to the requirements of the Securities Act and the Rules and Regulations and the Registration Statement, the Prospectus and the Remarketing Materials do not and will not, as of the Effective Date (as to the Registration Statement and any amendment thereto), as of the applicable filing date (as to the Prospectus and any amendment or supplement thereto) and as of the Commencement Date, Remarketing Date and Remarketing Settlement Date (as to any Remarketing Materials) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided that no representation and warranty is made as to the statement of eligibility and qualification on Form T-1 of the Indenture Trustee, the Property Trustee or the Guarantee Trustee under the Trust Indenture Act, or as to information contained in or omitted from the Registration Statement, the Prospectus or the Remarketing Materials in reliance upon and in conformity with written information furnished to the Issuers by the Remarketing Agent specifically for inclusion therein; the Indenture, the Declaration and the Guarantee Agreement each conform in all material respects to the requirements of the Trust Indenture Act and the applicable rules and 5 regulations thereunder; and the Commission has not issued an order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus, the Prospectus or the Remarketing Materials. (c) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (d) Each of the Company, Capital Markets, Northern Indiana Public Service Company ("Northern Indiana"), Bay State Gas Company ("Bay State") and IWC Resources Corporation ("IWCR" and, together with Northern Indiana and Bay State, the "Significant Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus or in any Remarketing Materials, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each other subsidiary (as defined in Section 15 hereof) of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. (e) The Company has an authorized capitalization as set forth in the Prospectus and in any Remarketing Materials; and all of the issued capital shares of the Company and each wholly-owned subsidiary of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and except as set forth in Exhibit 21 to the most recent Form 10-K of the Company, all of the issued common shares of Northern Indiana and Indianapolis Water Company ("IWC") and all of the issued capital shares of each other subsidiary of the Company (except for directors' qualifying shares and except as set forth in the Prospectus) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. (f) Northern Indiana[, Bay State] and IWCR constitute the only "significant subsidiaries" (as such term is defined in Rule 1-02 of Regulation S-X) of the Company. 6 (g) The Indenture has been duly authorized, executed and delivered by the Company and Capital Markets, and (assuming due execution and delivery by the Indenture Trustee) constitutes a valid and binding agreement of each of the Company and Capital Markets enforceable against the Company and Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and the Debentures have been duly authorized, executed, issued and delivered by Capital Markets and (assuming due authentication by the Indenture Trustee) constitute valid and binding obligations of Capital Markets, entitled to the benefits of the Indenture and the Support Agreement, dated April 4, 1989, as amended as of May 15, 1989, December 10, 1990 and February 14, 1991 (the "Support Agreement"), between the Company and Capital Markets, and enforceable in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (h) The Declaration has been duly authorized, executed and delivered by Capital Markets and the Regular Trustees, and (assuming due execution and delivery by the Property Trustee and the Delaware Trustee) constitutes a valid and binding agreement of Capital Markets, enforceable against Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (i) The Guarantee Agreement has been duly authorized, executed and delivered by Capital Markets and, (assuming due execution and delivery by the Guarantee Trustee) constitutes a valid and binding agreement of Capital Markets enforceable against Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (j) This Agreement has been duly authorized, executed and delivered by the Company, Capital Markets and the Trust. (k) The Remarketed Securities, the Indenture, the Declaration, the Guarantee Agreement and the Remarketing Agreement, when the Remarketed Securities are delivered pursuant to this Agreement, will conform to the descriptions thereof contained in the Prospectus and in any Remarketing Materials. 7 (l) The execution, delivery and performance of this Agreement, the Indenture, the Declaration, the Guarantee Agreement and the Remarketing Agreement by the Company and Capital Markets, as applicable, and the consummation by the Issuers of the transactions contemplated hereby and thereby and the issuance and delivery of the Debentures (the "Transactions") did not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties or assets; and except for such consents, approvals, authorizations, registrations or qualifications as may be required under the Securities Act, Trust Indenture Act, Exchange Act and applicable state securities laws in connection with the initial distribution of the Preferred Securities or the Remarketing, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the Transactions. (m) There are no contracts, agreements or understandings between (i) the Company or Capital Markets and (ii) any person granting such person the right to require the Company or Capital Markets to file a registration statement under the Securities Act with respect to any securities of the Company or Capital Markets owned or to be owned by such person or to require the Company or Capital Markets to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company or Capital Markets under the Securities Act. (n) Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements included or incorporated by reference in the Prospectus or in any Remarketing Materials, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, which could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries taken as a whole or upon the ability of the Issuers to perform their obligations under this Agreement (a "Material Adverse Effect"), otherwise than as set forth or contemplated in the Prospectus and in any Remarketing Materials; and, since such date, there has not been any material change in the consolidated share capital or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus and in any Remarketing Materials. 8 (o) The financial statements filed as part of the Registration Statement or incorporated by reference in the Prospectus or as presented in any Remarketing Materials present fairly the financial condition and results of operations of the entities purported to be shown thereby, at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved and, with respect to financial statements included in periodic reports filed by the Company pursuant to Section 13 or 15(d) of the Exchange Act with the Commission on and after September 25, 1992, contain the information requested by the Staff in the Staff Response to be so included; and the supporting schedules included or incorporated by reference in the Prospectus or in any Remarketing Materials present fairly the information required to be stated therein. (p) Arthur Andersen LLP, who have certified certain financial statements of the Company, whose report appears in the Prospectus or is incorporated by reference therein or in any Remarketing Materials and who have delivered the letter referred to in Section 6(h) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (q) The Company and each Significant Subsidiary has good and marketable title in fee simple to such of its fixed assets as are real property and good and marketable title to its other assets reflected in the most recent consolidated balance sheet incorporated by reference in the Prospectus or in any Remarketing Materials, except properties and assets that are leased or that are sold or otherwise disposed of in the ordinary course of business after the date of said balance sheet, subject to no mortgages, liens, charges or encumbrances of any kind whatsoever ("Liens") other than Liens permitted under the Indenture. (r) Other than as set forth or incorporated by reference in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or to which any property or asset of the Company or any of its subsidiaries is the subject which could reasonably be expected individually or in the aggregate to have a Material Adverse Effect; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (s) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (t) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations. 9 (u) None of the Company nor any Significant Subsidiary has any material contingent liability which is not disclosed in the Prospectus. (v) None of the Company nor any Significant Subsidiary (i) is in violation of its charter or by-laws or similar constitutive documents, (ii) is in default in any respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject, except where such defaults, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, or (iii) is in violation in any material respect of any law, ordinance, governmental rule, regulation or court decree to which it or its properties or assets may be subject or has failed to obtain any material license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its properties or assets or to the conduct of its business, except where such violations or failures, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (w) Neither the Company nor any subsidiary of the Company is an "investment company" within the meaning of such term under the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the Commission thereunder; the Commission has issued an order (the "Order") exempting Capital Markets from all of the provisions of the 1940 Act; the Order is in full force and effect; and Capital Markets will continue to comply with the terms and conditions of the Order, or otherwise remain exempt from all of the provisions of the 1940 Act, so long as any Remarketed Securities are outstanding. (x) The Support Agreement has been duly authorized by Capital Markets and the Company and constitutes a valid and binding agreement of each of Capital Markets and the Company enforceable against Capital Markets and the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Company's obligations under the Support Agreement will rank prior to the equity securities of the Company and equal with all other unsecured and unsubordinated indebtedness of the Company, whether now or hereafter outstanding; and the Debentures and the Guarantee will be entitled to the benefits of the Support Agreement, the obligations of Capital Markets under the Debentures and the Guarantees will be deemed to be "Debt" (as defined in the Support Agreement) for purposes of the Support Agreement and the holders of the Debentures and the Guarantee will be entitled to the rights of "Lenders" (as defined in the Support Agreement) under the Support Agreement. 10 (y) Each of the Company and each Significant Subsidiary has statutory authority, franchises and consents free from burdensome restrictions and adequate for the conduct of the business in which it is engaged. (z) Except for the Company's ownership of the voting securities of the Significant Subsidiaries, as and to the extent described in the Prospectus, no person or corporation which is a "holding company" or a "subsidiary company" of a "holding company" (as such terms are defined in the Public Utility Holding Company Act of 1935, as amended (the "1935 Act")), directly or indirectly owns, controls or holds with power to vote 10% or more of the outstanding voting securities of the Company or any Significant Subsidiary; the Company is a "holding company" (as such term is defined in the 1935 Act) but is exempt from all provisions of the 1935 Act pursuant to Section 3(a)(1) thereof except Section 9(a)(2) thereof; and none of the Significant Subsidiaries is a "holding company" as defined in the 1935 Act. (aa) The Prospectus accurately describes the most restrictive of the existing limitations on the payment of dividends by Northern Indiana on its common shares held by the Company. 3. Representations, Warranties and Agreements of the Company, Capital Markets and the Trust. The Company, Capital Markets and the Trust, jointly and severally, represent, warrant and agree, (i) on and as of the date hereof, (ii) on and as of the Commencement Date, (iii) on and as of the Remarketing Date and (iv) on and as of the Remarketing Settlement Date that: (a) The Trust has been duly created and is validly existing as a statutory business trust in good standing under the Business Trust Act of the State of Delaware (the "Delaware Trust Act") with the trust power and authority to own property and conduct its business as described in the Prospectus, and has conducted and will conduct no business other than the transactions contemplated by this Agreement as described in the Prospectus or in any Remarketing Materials; the Trust is not a party to or bound by any agreement or instrument other than this Agreement, the Declaration and the other agreements entered into in connection with the transaction contemplated hereby; the Trust has no liabilities or obligations other than those arising out of the transactions contemplated by this Agreement and the Declaration and described in the Prospectus or in any Remarketing Materials; and the Trust is not a party to or subject to any action, suit or proceeding of any nature. (b) The Declaration has been duly authorized, executed and delivered by Capital Markets, as Sponsor, and the Regular Trustees and (assuming due authorization, execution and delivery by the Property Trustee and the Delaware Trustee), constitutes a valid and binding obligation of the Trust, enforceable against the Trust in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing, and will conform to the description thereof contained in the Prospectus or in any Remarketing Materials. 11 (c) The Trust Securities are duly authorized, validly issued, fully paid and, in the case of the Preferred Securities, non-assessable and conform to the descriptions contained in the Prospectus or in any Remarketing Materials. (d) This Agreement has been duly authorized, executed and delivered by the Trust. (e) The execution, delivery and performance of this Agreement, the Declaration and the Trust Securities by the Trust, the purchase of the Debentures by the Trust from Capital Markets, the distribution of the Debentures upon the liquidation of the Trust in the circumstances contemplated by the Declaration, and the consummation by the Trust of the transactions contemplated herein and in the Declaration (the "Trust Transactions"), did not and will not result in a violation of any statute or order, rule or regulation of any court or governmental agency or body having jurisdiction over the Trust or any of its assets; and except for such consents, approvals, authorizations, registrations or qualifications as may be required under the Securities Act, Trust Indenture Act, Exchange Act or under applicable state securities laws in connection with the initial distribution of the Preferred Securities and the Remarketing, no consent, approval, authorization or order of or filing or registration with, any such court or governmental agency or body is required for the Trust Transactions. (f) The Trust is not an "investment company" within the meaning of such term under the Investment Company Act and the rules and regulations of the Commission thereunder. 4. Fees and Expenses. (a) For the performance of its services as Remarketing Agent hereunder, Capital Markets shall pay to the Remarketing Agent on the Purchase Contract Settlement Date, by wire transfer to an account designated by the Remarketing Agent, an amount to be agreed upon by Capital Markets and the Remarketing Agent. (b) The Company and Capital Markets, jointly and severally, agree to pay (i) the costs incident to the preparation and printing of the Registration Statement, Prospectus and any Remarketing Materials and any amendments or supplements thereto; (ii) the costs of distributing the Registration Statement, Prospectus and any Remarketing Materials and any amendments or supplements thereto; (iii) the fees and expenses of qualifying the Remarketed Securities under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Remarketing Agent); (iv) all other costs and expenses incident to the performance of the obligations of the Company, Capital Markets and the Trust hereunder; and (v) the reasonable fees and expenses of counsel to the Remarketing Agent in connection with their duties hereunder. The Trust shall not be liable for any fees and expenses in this Section. 5. Further Agreements of the Company and Capital Markets. The Company and Capital Markets, jointly and severally, agree: (a) To prepare any registration statement or prospectus, if required, in connection with the Remarketing, in a form approved by the Remarketing Agent and to file any such 12 prospectus pursuant to the Securities Act within the period required by the Rules and Regulations; to advise the Remarketing Agent, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Remarketing Agent with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Remarketed Securities; to advise the Remarketing Agent, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of the Prospectus, of the suspension of the qualification of any of the Remarketed Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal. (b) To furnish promptly to the Remarketing Agent and to counsel for the Remarketing Agent a signed copy of the Registration Statement as originally filed with the Commission, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith. (c) To deliver promptly to the Remarketing Agent in New York City such number of the following documents as the Remarketing Agent shall request: (i) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits other than this Agreement, the Indenture, the Declaration and the Guarantee Agreement), (ii) the Prospectus and any amended or supplemented Prospectus, (iii) any document incorporated by reference in the Prospectus (excluding exhibits thereto) and (iv) any Remarketing Materials; and, if the delivery of a prospectus is required at any time in connection with the Remarketing and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Remarketing Agent and, upon its request, to file such document and to prepare and furnish without charge to the Remarketing Agent and to any dealer in securities as many copies as the Remarketing Agent may from time to time request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance. 13 (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the judgment of the Company or the Remarketing Agent, be required by the Securities Act or requested by the Commission. (e) Prior to filing with the Commission (i) any amendment to the Registration Statement or supplement to the Prospectus or any document incorporated by reference in the Prospectus or (ii) any Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to the Remarketing Agent and counsel for the Remarketing Agent; and not to file any such amendment or supplement which shall be disapproved by the Remarketing Agent promptly after reasonable notice. (f) As soon as practicable after the Effective Date of the Registration Statement to make generally available to the Company's security holders and to deliver to the Remarketing Agent an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158). (g) During a period of five years following the effective date of the Registration Statement, to deliver to the Remarketing Agent copies of all reports or other communications (financial or other) furnished to shareholders of the Company, and deliver to the Remarketing Agent, (i) as soon as they are available, copies of any reports and financial statements furnished to or filed by the Company or Capital Markets with the Commission or any national securities exchange on which any of the Remarketed Securities or any class of securities of the Company or Capital Markets may be listed; and (ii) such additional information concerning the business and financial condition of the Company or Capital Markets as the Remarketing Agent may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to the Company's shareholders generally or to the Commission). (h) Promptly from time to time to take such action as the Remarketing Agent may reasonably request to qualify any of the Remarketed Securities and the obligations of the Company under the Support Agreement for offering and sale under the securities laws of such jurisdictions as the Remarketing Agent may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities and the obligations of the Company pursuant to the Support Agreement; provided that in connection therewith, neither the Company nor Capital Markets shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. 6. Conditions to the Remarketing Agent's Obligations. The obligations of the Remarketing Agent hereunder are subject to the accuracy, on and as of the date when made, of the representations and warranties of the Company, Capital Markets and the Trust contained herein, to 14 the performance by the Company, Capital Markets and the Trust of their respective obligations hereunder, and to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission; no stop order suspending the effectiveness of the Registration Statement or any part thereof or suspending the qualification of the Indenture, the Guarantee Agreement or the Declaration shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with. (b) The Remarketing Agent shall not have discovered and disclosed to the Company on or prior to the Remarketing Date that the Prospectus, the Registration Statement, or the Remarketing Materials or any amendment or supplement thereto contains any untrue statement of a fact which, in the opinion of counsel for the Remarketing Agent, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Declaration, the Indenture, the Remarketed Securities, the Guarantee Agreement, the Preferred Securities, the Common Securities, the Prospectus, the Registration Statement, the Remarketing Materials and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Remarketing Agent, and the Issuers shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Counsel to the Company and Capital Markets shall have furnished to the Remarketing Agent its written opinion, as counsel to the Company and Capital Markets, addressed to the Remarketing Agent and dated the Remarketing Date, in form and substance satisfactory to the Remarketing Agent, to the effect that: (i) The Company and each of its Significant Subsidiaries have been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation, with respective power and authority (corporate and other) to own their respective properties and conduct their businesses as described in the Prospectus. (ii) The Company has an authorized capitalization as set forth in the Prospectus and in any Remarketing Materials, all of the issued capital shares of the Company and each Significant Subsidiary of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and all of the issued common shares of Northern Indiana and all of the issued capital shares of each other Significant Subsidiary (except for directors' qualifying shares and as set forth or incorporated by reference in the Registration Statement) are owned directly or 15 indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. (iii) The Company and each Significant Subsidiary has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (iv) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of the Debentures pursuant to the Company's or Capital Markets' charter or by-laws or any agreement or other instrument known to such counsel. (v) To the best of such counsel's knowledge and other than as set forth in the Prospectus or in any Remarketing Materials, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or to which any property or asset of the Company or any of its subsidiaries is subject which could reasonably be expected individually or in the aggregate to have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge and other than as set forth in the Prospectus, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (vi) The Registration Statement was declared effective under the Securities Act, and the Indenture, the Declaration and the Guarantee Agreement were qualified under the Trust Indenture Act, as of the date and time specified in such opinion, the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission. (vii) Giving effect to the interpretations of the requirements of the Securities Act reflected in the No-Action Request and the Staff Response, the Registration Statement, as of its Effective Date, and the Prospectus, as of its date, and any further amendments or supplements thereto, as of their respective dates, made by the Company prior to the Purchase Contract Settlement Date (other than the financial statements, related schedules and other financial data contained therein, as to which such counsel need express no opinion) complied as to form in all material respects with the requirements of the Securities Act, the Rules and Regulations and the Trust Indenture Act; and the documents incorporated by reference in the Prospectus and any further amendment or supplement to any such incorporated 16 document made by any of the Issuers prior to the Purchase Contract Settlement Date (other than the financial statements, related schedules and other financial data contained therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and the Indenture, the Declaration and the Guarantee Agreement conform in all material respects to the requirements of the Trust Indenture Act and the applicable rules and regulations thereunder. (viii) The statements contained in the Prospectus under the captions "Description of the Debentures," "Description of the Preferred Securities," "Description of the Guarantee," "Relationship Among the Preferred Securities, the Debentures and the Guarantee" and "Description of the Support Agreement" insofar as they purport to constitute summaries of certain terms of documents referred to therein, constitute accurate summaries of the terms of such documents in all material respects. (ix) The Indenture has been duly authorized, executed and delivered by the Company and Capital Markets and (assuming due authentication, execution and delivery by the Indenture Trustee) constitutes a valid and binding agreement of each of the Company and Capital Markets enforceable against them in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (x) The Debentures have been duly authorized, executed and delivered by Capital Markets and (assuming due authentication by the Indenture Trustee) constitute valid and binding obligations of Capital Markets entitled to the benefits of the Indenture and enforceable in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (xi) The Declaration has been duly authorized, executed and delivered by Capital Markets. (xii) The Guarantee Agreement has been duly authorized, executed and delivered by Capital Markets and (assuming due execution and delivery by the Guarantee Trustee) constitutes a valid and binding agreement of Capital Markets enforceable against Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, 17 moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (xiii) This Agreement has been duly authorized, executed and delivered by the Company and Capital Markets. (xiv) The Support Agreement has been duly authorized, executed and delivered by the Company and Capital Markets and constitutes a valid and binding agreement of the Company and Capital Markets enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; the Debentures and the Guarantee will be entitled to the benefits of the Support Agreement, the obligations of Capital Markets under the Debentures and the Guarantees will be deemed to be "Debt" for purposes of the Support Agreement and the holders of the Debentures and the Guarantee will be entitled to the rights of "Lenders" under the Support Agreement. (xv) The Transactions will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Trust, the Company or any of the Significant Subsidiaries is a party or by which the Trust, the Company or any of the Significant Subsidiaries is bound or to which any of the properties or assets of the Trust, the Company or any of the Significant Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of the Significant Subsidiaries or the Declaration or Certificate of Trust of the Trust or any statute, rule or regulation or any order known to such counsel of any court or governmental agency or body having jurisdiction over the Trust, the Company or any of the Significant Subsidiaries or any of their properties or assets; and, except for the registration of the Debentures, the Preferred Securities, the Guarantees, the Company's obligations under the Support Agreement under the Securities Act, the qualification of the Indenture, the Declaration and the Guarantee Agreement under the Trust Indenture Act, and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state securities laws, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the Transactions. (xvi) None of the Trust nor the Company or any of its subsidiaries is an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act. 18 (xvii) Based upon current law and the assumptions stated or referred to therein: (i) the Trust will be classified as a grantor trust for United States federal income tax purposes and not as an association taxable as a corporation; (ii) the Debentures will be classified as indebtedness of Capital Markets and (iii) the statements set forth in the Prospectus or in the Remarketing Materials under the caption "Certain United States Federal Income Tax Consequences" insofar as they purport to constitute summaries of matters of United States federal tax laws and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects. In rendering such opinion, such counsel may (i) state that its opinion is limited to matters governed by the Federal laws of the United States of America and the laws of the State of Indiana and New York (with respect to clause (x)) and (ii) rely (to the extent such counsel deems proper and specifies in its opinion), as to matters involving the application of the laws of the State of Massachusetts upon the opinion of ______________. Such counsel shall also advise the Remarketing Agent that although such counsel is not passing upon and assumes no responsibility or liability for the accuracy, completeness or fairness of the statements contained in the documents incorporated by reference in the Prospectus or any further amendment or supplement thereto made by the Issuers prior to such Remarketing Date, they have no reason to believe that any of such documents (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when such documents became effective or were filed with the Commission, as the case may be, contained, in the case of a registration statement which became effective under the Securities Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Securities Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made when such documents were so filed, not misleading. Such counsel shall also advise the Remarketing Agent that although such counsel is not passing upon and, except as set forth in clauses (viii) and (xvii) above, assumes no responsibility or liability for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Prospectus and the Remarketing Materials and any further amendments and supplements thereto made by the Issuers prior to such date, they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the Issuers prior to such date (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Prospectus and the Remarketing Materials or any further amendment or supplement thereto made by the Issuers prior to such Remarketing Date (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or that, as of such 19 Remarketing Date, either the Registration Statement, the Prospectus or the Remarketing Materials or any further amendment or supplement thereto made by the Issuers prior to such Remarketing Date (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or the Remarketing Materials or required to be described in the Registration Statement, the Prospectus or the Remarketing Materials which were not filed or incorporated by reference or described as required. (e) Special Delaware counsel to the Issuers shall have furnished to the Remarketing Agent its written opinion, as special Delaware counsel to the Issuers, addressed to the Remarketing Agent and dated the Remarketing Date, in form and substance satisfactory to the Remarketing Agent, to the effect that: (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Trust Act. Under the Delaware Trust Act and the Declaration, the Trust has the business trust power and authority to own property and to conduct its business as described in the Prospectus and the Remarketing Materials and to enter into and perform its obligations under this Agreement and the Trust Securities. (ii) The Common Securities have been duly authorized by the Declaration and are validly issued and (subject to the terms in this paragraph) fully paid undivided beneficial interests in the assets of the Trust (such counsel may note that the holders of Common Securities will be subject to the withholding provisions of Section 10.4 of the Declaration, will be required to make payment or provide indemnity or security as set forth in the Declaration and will be liable for the debts and obligations of the Trust to the extent provided in Section 9.1(b) of the Declaration); under the Delaware Trust Act and the Declaration, the issuance of the Common Securities is not subject to preemptive rights. (iii) The Preferred Securities have been duly authorized by the Declaration and are validly issued and (subject to the terms in this paragraph) fully paid and non-assessable undivided beneficial ownership interests in the assets of the Trust, the holders of the Preferred Securities will be entitled to the benefits of the Declaration (subject to the limitations set forth in clause (v) below) and will be entitled to the same limitation of personal liability as extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware (such counsel may note that the holders of Preferred Securities will be subject to the withholding provisions of Section 10.4 of the Declaration and will be required to make payment or provide indemnity or security as set forth in the 20 Declaration); under the Delaware Trust Act and the Declaration, the issuance of the Preferred Securities is not subject to preemptive rights. (iv) Under the Delaware Trust Act and the Declaration all necessary trust action has been taken to duly authorize the execution, delivery and performance by the Trust of this Agreement. (v) Assuming the Declaration has been duly authorized by Capital Markets and has been duly executed and delivered by Capital Markets and the Regular Trustees, and assuming due authorization, execution and delivery of the Declaration by the Property Trustee and the Delaware Trustee, the Declaration constitutes a valid and binding obligation of Capital Markets and the Regular Trustees, enforceable against Capital Markets and the Regular Trustees in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws relating to or affecting the rights and remedies of creditors generally, (ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (vi) The issuance and sale by the Trust of the Preferred Securities, the purchase by the Trust of the Debentures, the execution, delivery and performance by the Trust of this Agreement, the consummation by the Trust of the transactions contemplated by this Agreement and compliance by the Trust with its obligations thereunder do not violate any of the provisions of the Certificate of Trust or the Declaration or any applicable Delaware law or administrative regulation. (vii) Assuming that the Trust derives no income from or connected with sources within the State of Delaware and has no assets, activities (other than having a Delaware Trustee as required by the Delaware Trust Act and the filing of documents with the Secretary of State of Delaware) or employees in the State of Delaware, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware governmental authority or agency (other that as may be required under the securities or blue sky laws of the state of Delaware, as to which such counsel need express no opinion) is necessary or required to be obtained by the Trust solely in connection with the due authorization, execution and delivery by the Trust of this Agreement or the offering, issuance, sale or delivery of the Preferred Securities. (f) Counsel to the Property Trustee and the Guarantee Trustee shall have furnished to the Remarketing Agent its written opinion, as counsel to The Chase Manhattan Bank, as Property Trustee and Guarantee Trustee, addressed to the Remarketing Agent and dated the 21 Remarketing Date, in form and substance satisfactory to the Remarketing Agent, to the effect that: (i) Each of the Property Trustee and the Guarantee Trustee is duly incorporated as a New York banking corporation with all necessary power and authority to execute and deliver and perform their respective obligations under the terms of the Declaration and the Guarantee Agreement. (ii) The execution, delivery and performance by the Property Trustee of the Declaration and the execution, delivery and performance by the Guarantee Trustee of the Guarantee Agreement have been duly authorized by all necessary corporate action on the part of the Property Trustee and the Guarantee Trustee, respectively. The Declaration has been duly executed and delivered by the Property Trustee and the Guarantee Agreement has been duly executed and delivered by the Guarantee Trustee and each constitutes the valid and binding agreement of the Property Trustee and the Guarantee Trustee, respectively, enforceable against the Property Trustee and the Guarantee Trustee, respectively, in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (iii) The execution, delivery and performance of the Declaration and the Guarantee Agreement by the Property Trustee and the Guarantee Trustee, respectively, do not conflict with or constitute a breach of the charter or by-laws of the Property Trustee and the Guarantee Trustee, respectively. (iv) No consent, approval or authorization of, or registration with or notice to, any New York or federal banking authority is required for the execution, delivery or performance by the Property Trustee and the Guarantee Trustee of the Declaration and the Guarantee Agreement, respectively. (g) Counsel to the Delaware Trustee shall have furnished to the Remarketing Agent its written opinion, as counsel to Chase Manhattan Bank Delaware, as Delaware Trustee, addressed to the Remarketing Agent and dated the Remarketing Date, in form and substance satisfactory to the Remarketing Agent, to the effect that: (i) The Delaware Trustee has been duly incorporated and is validly existing as a banking corporation in good standing under the laws of the State of Delaware with all necessary power and authority to execute and deliver, and to carry out and perform its obligations under the terms of the Declaration. (ii) The execution, delivery and performance by the Delaware Trustee of the Declaration has been duly authorized by all necessary corporate action on the part 22 of the Delaware Trustee. The Declaration has been duly executed and delivered by the Delaware Trustee and constitutes the valid and binding agreement of the Delaware Trustee enforceable against the Delaware Trustee in accordance with its terms, subject to (i) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws relating to or affecting the rights and remedies of creditors generally, (ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (iii) The execution, delivery and performance of the Declaration by the Delaware Trustee do not conflict with or constitute a breach of the charter or by-laws of the Delaware Trustee. (iv) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking authority is required for the execution, delivery or performance by the Delaware Trustee of the Declaration. (h) On the Remarketing Date, the Company shall have furnished to the Remarketing Agent a letter addressed to the Remarketing Agent and dated such date, in form and substance satisfactory to the Remarketing Agent, of Arthur Andersen LLP, or such other firm of nationally recognized independent public accountants satisfactory to the Remarketing Agent, containing statements and information of the type ordinarily included in accountants' "comfort letters" with respect to certain financial information contained in the Prospectus and in the Remarketing Materials. (i) Each of the Company and Capital Markets shall have furnished to the Remarketing Agent a certificate, dated the Remarketing Date, of, (i) with respect to the Company, (A) its Chairman of the Board and President, or its Executive Vice President, and (B) its chief financial officer, and (ii) with respect to Capital Markets, its President, and its chief financial officer, stating that: (i) The representations, warranties and agreements of the Company and Capital Markets in Sections 2 and 3 are true and correct as of the Remarketing Date; the Company and Capital Markets have complied with all its agreements contained herein; and the conditions contained in Section 6(a) have been fulfilled; (ii) (A) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus or in the Remarketing Materials any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, which could, individually or in the aggregate, reasonably be expected to have 23 a Material Adverse Effect, otherwise than as set forth or contemplated in the Prospectus or in the Remarketing Materials and (B) since the respective dates as of which information is given in the Prospectus or in the Remarketing Materials, there has not been any material change in the consolidated share capital or long-term debt of the Company and its subsidiaries or the consolidated share capital or long-term debt of any Significant Subsidiary or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries (taken as a whole), otherwise than as set forth or contemplated in the Prospectus or the Remarketing Materials; and (iii) They have carefully examined the Registration Statement, the Prospectus and the Remarketing Materials and, in their opinion (A) the Registration Statement, as of its effective date, and the Prospectus and the Remarketing Materials, as of their respective dates, did not include any untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since such dates, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Prospectus or the Remarketing Materials. (j) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus and in the Remarketing Materials any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus or in the Remarketing Materials or (ii) since such date there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus or in the Remarketing Materials, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Remarketing Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the Remarketing on the terms and in the manner contemplated in the Prospectus and in the Remarketing Materials. (k) Without the prior written consent of the Remarketing Agent, the Declaration or the Indenture shall not have been amended in any manner, or otherwise contain any provision contained therein as of the date hereof that, in the opinion of the Remarketing Agent, materially changes the nature of the Remarketed Securities or the Remarketing Procedures. (l) Subsequent to the execution and delivery of this Agreement, (i) no downgrading shall have occurred in the rating accorded the Preferred Securities or any of the Company's, any Significant Subsidiary's or Capital Markets' debt securities by any "nationally 24 recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Preferred Securities or any of the Company's, any Significant Subsidiary's or Capital Markets' debt securities. (m) Subsequent to the execution and delivery of this Agreement, there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company or Capital Markets on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Remarketing Agent, impracticable or inadvisable to proceed with the Remarketing on the terms and in the manner contemplated in the Prospectus or in the Remarketing Materials. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Remarketing Agent. 7. Indemnification and Contribution. (a) The Issuers shall indemnify and hold harmless the Remarketing Agent, its officers and employees and each person, if any, who controls the Remarketing Agent within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of the Remarketed Securities), to which the Remarketing Agent or that officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement, the Prospectus or the Remarketing Materials or in any amendment or supplement thereto, or (B) in any blue sky application or other document prepared or executed by the Issuers (or based upon any written information furnished by the Issuers) specifically for the purpose of qualifying any or all of the Remarketed Securities under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus or the Remarketing Materials or in any amendment or supplement thereto, or in any Blue Sky Application, any material fact required to be stated therein or necessary to make the statements therein not misleading and shall reimburse the Remarketing Agent and each such officer, employee 25 and controlling person promptly upon demand for any legal or other expenses reasonably incurred by the Remarketing Agent or that officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Issuers shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement, the Prospectus or the Remarketing Materials or in any such amendment or supplement, or in any Blue Sky Application in reliance upon and in conformity with the written information furnished to the Issuers by or on behalf of the Remarketing Agent specifically for inclusion therein and described in a letter from the Remarketing Agent to the Company and provided further, that as to any Preliminary Prospectus this indemnity agreement shall not inure to the benefit of the Remarketing Agent, its officers or employees or any person controlling the Remarketing Agent on account of any loss, claim, damage, liability or action arising from the sale of the Remarketed Securities to any person by the Remarketing Agent if the Remarketing Agent failed to send or give a copy of the Prospectus, as the same may be amended or supplemented, to that person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such Preliminary Prospectus was corrected in the Prospectus, unless such failure resulted from non-compliance by the Company with Section 5(c). For purposes of the last proviso to the immediately preceding sentence, the term "Prospectus" shall not be deemed to include the documents incorporated therein by reference, and the Remarketing Agent shall not be obligated to send or give any supplement or amendment to any document incorporated by reference in any Preliminary Prospectus or the Prospectus to any person other than a person to whom the Remarketing Agent had delivered such incorporated document or documents in response to a written request therefor. The foregoing indemnity agreement is in addition to any liability which the Issuers may otherwise have to the Remarketing Agent or to any officer, employee or controlling person of the Remarketing Agent. (b) The Remarketing Agent shall indemnify and hold harmless the Company and Capital Markets, their officers and employees, each of their directors, the Trust and each Trustee, and each person, if any, who controls any of the Issuers within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or Capital Markets, any such director, officer or employee, the Trust or any such Trustee or any such controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement, the Prospectus or the Remarketing Materials or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus or the Remarketing Materials or in any amendment or supplement thereto, or in any Blue Sky Application, any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with the written information furnished to the Company or the Trustee by or on behalf of the Remarketing 26 Agent specifically for inclusion therein and described in a letter from the Remarketing Agent to the Company and Capital Markets, and shall reimburse the Company and Capital Markets and any such director, officer or employee, the Trust or any such Trustee or such controlling person for any legal or other expenses reasonably incurred by the Company or Capital Markets or any such director or officer, the Trust or any Trustee or any such controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which the Remarketing Agent may otherwise have to the Company or Capital Markets or any such director or officer, the Trust or any such Trustee or any such controlling person. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 7 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 7. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 7 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Remarketing Agent shall have the right to employ counsel to represent jointly the Remarketing Agent and its officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Remarketing Agent against the Issuers under this Section 7 if, in the reasonable judgment of the Remarketing Agent, it is advisable for the Remarketing Agent and those officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the fees and expenses of such separate counsel shall be paid by the Issuers. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. 27 (d) If the indemnification provided for in this Section 7 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 7(a) or 7(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Issuers on the one hand and the Remarketing Agent on the other hand from the Remarketing or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers on the one hand and the Remarketing Agent on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Issuers on the one hand and the Remarketing Agent on the other with respect to such offering shall be deemed to be in the same proportion as the total liquidation or principal amount of the Remarketed Securities less the fee paid to the Remarketing Agent pursuant to Section 4(a) of this Agreement, on the one hand, and the total fees received by the Remarketing Agent pursuant to such Section 4(a), on the other hand, bear to the total liquidation or principal amount of the Remarketed Securities. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuers on the one hand or the Remarketing Agent on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Remarketing Agent agree that it would not be just and equitable if contributions pursuant to this Section 7(d) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 7(d) shall be deemed to include, for purposes of this Section 7(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7(d), the Remarketing Agent shall not be required to contribute any amount in excess of the amount by which the fees received by it under Section 4 exceed the amount of any damages which the Remarketing Agent has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 8. Resignation and Removal of the Remarketing Agent. The Remarketing Agent may resign and be discharged from its duties and obligations hereunder, and Capital Markets may remove the Remarketing Agent, by giving 60 days' prior written notice, in the case of a resignation, to Capital Markets, the Depositary, the Property Trustee and the Indenture Trustee and, in the case of a removal, the removed Remarketing Agent, the Depositary, the Property Trustee and the Indenture Trustee; provided, however, that (i) Capital Markets may not remove the Remarketing Agent unless (A) the Remarketing Agent becomes involved as a debtor in a bankruptcy, insolvency or similar proceeding, (B) the Remarketing Agent shall not be among the 15 underwriters with the 28 largest volume underwritten in dollars, on a lead or co-managed basis, of U.S. domestic debt securities during the twelve-month period ended as of the last calendar quarter preceding the Remarketing Date or (C) the Remarketing Agent shall be subject to one or more legal restrictions preventing the performance of its obligations hereunder and (ii) no such resignation nor any such removal shall become effective until Capital Markets shall have appointed at least one nationally recognized broker-dealer as successor Remarketing Agent and such successor Remarketing Agent shall have entered into a remarketing agreement with the Company, Capital Markets and the Trust in which it shall have agreed to conduct the Remarketing in accordance with the Remarketing Procedures. In any such case, Capital Markets will use its reasonable efforts to appoint a successor Remarketing Agent and enter into such a remarketing agreement with such person as soon as reasonably practicable. The provisions of Sections 4 and 7 shall survive the resignation or removal of any Remarketing Agent pursuant to this Agreement. 9. Dealing in the Remarketed Securities. The Remarketing Agent, when acting as a Remarketing Agent or in its individual or any other capacity, may, to the extent permitted by law, buy, sell, hold and deal in any of the Remarketed Securities. The Remarketing Agent may exercise any vote or join in any action which any beneficial owner of Remarketed Securities may be entitled to exercise or take pursuant to the Declaration or the Indenture with like effect as if it did not act in any capacity hereunder. The Remarketing Agent, in its individual capacity, either as principal or agent, may also engage in or have an interest in any financial or other transaction with the Issuers as freely as if it did not act in any capacity hereunder. 10. Remarketing Agent's Performance; Duty of Care. The duties and obligations of the Remarketing Agent shall be determined solely by the express provisions of this Agreement and the Declaration and the Indenture. No implied covenants or obligations of or against the Remarketing Agent shall be read into this Agreement, the Declaration or the Indenture. In the absence of bad faith on the part of the Remarketing Agent, the Remarketing Agent may conclusively rely upon any document furnished to it, which purports to conform to the requirements of this Agreement, the Declaration or the Indenture as to the truth of the statements expressed in any of such documents. The Remarketing Agent shall be protected in acting upon any document or communication reasonably believed by it to have been signed, presented or made by the proper party or parties. The Remarketing Agent, acting under this Agreement, shall incur no liability to the Company or to any holder of Remarketed Securities in its individual capacity or as Remarketing Agent for any action or failure to act, on its part in connection with a Remarketing or otherwise, except if such liability is judicially determined to have resulted from the gross negligence or willful misconduct on its part. 11. Termination. This Agreement shall terminate as to the Remarketing Agent on the effective date of the resignation or removal of the Remarketing Agent pursuant to Section 8. In addition, the obligations of the Remarketing Agent hereunder may be terminated by it by notice given to the Company or the Trust prior to 10:00 A.M., New York City time, on the Remarketing Date if, prior to that time, any of the events described in Sections 6(j), (k), (l) or (m) shall have occurred or if the Remarketing Agent shall decline to perform its obligations under this Agreement for any reason permitted hereunder. 29 12. Notices. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Remarketing Agent, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: (212) 528-8822); (b) if to the Issuers shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Prospectus, Attention: Treasurer. (Fax: 219-853-5352). Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Remarketing Agent, the Company, Capital Markets, the Trust and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (x) the representations, warranties, indemnities and agreements of the Issuers contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of the Remarketing Agent and the person or persons, if any, who control the Remarketing Agent within the meaning of Section 15 of the Securities Act and (y) the indemnity agreement of the Remarketing Agent contained in Section 7(b) of this Agreement shall be deemed to be for the benefit of directors, officers and employees of the Issuers and any person controlling the Issuers within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to herein, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 14. Survival. The respective indemnities, representations, warranties and agreements of the Issuers and the Remarketing Agent contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the Remarketing and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 15. Definition of the Terms "Business Day" and "Subsidiary". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the meaning set forth in Rule 405 under the Securities Act. 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 30 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 31 If the foregoing correctly sets forth the agreement among the Company, the Trust and the Remarketing Agent, please indicate your acceptance in the space provided for that purpose below. Very truly yours, NIPSCO INDUSTRIES, INC. By: ------------------------------------ Title: NIPSCO CAPITAL MARKETS, INC. By: ------------------------------------ Title: NIPSCO CAPITAL TRUST I By: NIPSCO Capital Markets, as Sponsor By: -------------------------------- Title: Accepted: LEHMAN BROTHERS INC. By: ------------------------------- Authorized Representative EX-3.1 3 AMENDED AND RESTATED BY-LAWS EXHIBIT 3.1 NIPSCO INDUSTRIES, INC. BY-LAWS Effective January 30, 1999 BY-LAWS OF NIPSCO INDUSTRIES, INC. ARTICLE I. OFFICES. SECTION 1.1. Registered Office. The registered office of the Corporation in the State of Indiana shall be at 5265 Hohman Avenue, in the City of Hammond, County of Lake. SECTION 1.2. Principal Business Office. The principal business office of the Corporation shall be at 801 East 86th Avenue, in the Town of Merrillville, County of Lake, in the State of Indiana. ARTICLE II. SHAREHOLDERS' MEETINGS. SECTION 2.1. Place of Meetings. Meetings of the shareholders of the Corporation shall be held at such place, within or without the State of Indiana, as may be specified by the Board of Directors in the notice of such meeting, but if no such designation is made, then at the principal business office of the Corporation. SECTION 2.2. Annual Meetings. The annual meeting of the shareholders shall be held in each year on the second Wednesday in the month of April, if not a legal holiday, and if a legal holiday, then on the next succeeding business day that is not a legal holiday or on such other day as the Board of Directors may determine; at the hour of ten o'clock a.m. or at such other time as the Board of Directors may determine, for the purpose of electing Directors and for the transaction of such other business as may legally come before the meeting. If for any reason any annual meeting shall not be held at the time herein provided, the same may be held at any time thereafter, upon notice as hereinafter provided, or the business thereof may be transacted at any special meeting of shareholders called for that purpose. SECTION 2.3. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Chairman, the President, or the Board of Directors, and shall be called by the Chairman at the request in writing of a majority of the Board of Directors, or at the request in writing of the shareholders holding at least one-fourth of all the shares outstanding and entitled to vote on the business proposed to be transacted thereat. All requests for special meetings of shareholders shall state the time, place and the purpose or purposes thereof. SECTION 2.4. Notice of Shareholders' Meetings. Notice of each meeting of shareholders, stating the date, time and place, and, in the case of special meetings, the purpose or purposes for which such meeting is called, shall be given to each shareholder entitled to vote thereat not less than 10 nor more than 60 days before the date of the meeting unless otherwise prescribed by statute. SECTION 2.5. Record Dates. (a) In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a future date as the record date, which shall not be 2 more than 60 nor less than 10 days before the date of such meeting or any other action requiring a determination by shareholders. (b) If a record date has not been fixed as provided in preceding subsection (a), then: (i) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. (c) Only those who shall be shareholders of record on the record date so fixed as aforesaid shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend or other distribution, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding the transfer of any shares on the books of the Corporation after the applicable record date; provided, however, the Corporation shall fix a new record date if a meeting is adjourned to a date more than 120 days after the date originally fixed for the meeting. SECTION 2.6. Quorum and Adjournment. The holders of a majority of all the capital shares issued and outstanding and entitled to vote at any meeting of the shareholders, represented by the holders thereof in person or by proxy, shall be requisite at all meetings of the shareholders to constitute a quorum for the election of Directors or for the transaction of other business, unless otherwise provided by law or 3 by the Corporation's Articles of Incorporation, as amended (the "Articles of Incorporation"). Whether or not there is such a quorum, the chairman of the meeting or the shareholders present or represented by proxy representing a majority of the shares present or represented may adjourn the meeting from time to time without notice other than an announcement at the meeting. At such adjourned meeting at which the requisite number of voting shares shall be present or represented, any business may be transacted which might have been transacted at the meeting originally called. SECTION 2.7. Voting by Shareholders; Proxies. Every shareholder shall have the right at every shareholders' meeting to one vote for each share standing in his name on the books of the Corporation, except as otherwise provided by law or by the Articles of Incorporation, and except that no share shall be voted at any meeting upon which any installment is due and unpaid, or which belongs to the Corporation. Election of directors at all meetings of the shareholders at which directors are to be elected shall be by ballot, and a plurality of the votes cast thereat shall be necessary to elect any Director. If a quorum exists, action on a matter (other than the election of directors) submitted to shareholders entitled to vote thereon at any meeting shall be approved if the votes cast favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law or by the Articles of Incorporation. A shareholder may vote either in person or by proxy executed in writing by the shareholder or a duly authorized attorney in fact. No proxy shall be valid after eleven months from the date of its execution unless a longer time is expressly provided therein. All voting at meetings of shareholders shall be by ballot, except that the presiding officer of the meeting may call for a viva voce vote on any matter other than the election of directors, unless the holder or holders of ten percent (10%) or more of the shares entitled to vote demands or demand a vote by ballot. 4 SECTION 2.8. List of Shareholders. The Secretary shall make, or cause the agent having charge of the stock transfer books of the Corporation to make, at least five (5) days before each meeting of shareholders, a complete list of the shareholders entitled by the Articles of Incorporation to vote at said meeting, arranged in alphabetical order, with the address and number of shares so entitled to vote held by each, which list shall be on file at the principal business office of the Corporation and subject to inspection by any shareholder within the usual business hours during said five (5) days either at the principal business office of the corporation or a place in the city where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not so specified, at the place where said meeting is to be held. Such list shall be produced and kept open at the time and place of the meeting and subject to the inspection of any shareholder during the holding of such meeting. SECTION 2.9. Conduct of Business. (a) Presiding Officer. The Chairman, when present, and in the absence of the Chairman the President, shall be the presiding officer at all meetings of shareholders, and in the absence of the Chairman and the President, the Board of Directors shall choose a presiding officer. The presiding officer of the meeting shall have plenary power to determine procedure and rules of order and make definitive rulings at meetings of the shareholders. (b) Annual Meetings of Shareholders. (i) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (A) pursuant to the Corporation's notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Section 2.9, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.9. 5 (ii) For nominations or other business to be properly brought before any annual meeting by a shareholder pursuant to clause (C) of paragraph (b)(i) of this Section 2.9, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal business office of the Corporation not later than 150 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not later than the 150th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such shareholder's notice shall set forth (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (x) the name and address of such shareholder, as they appear on the Corporation's books, and of such beneficial owner and (y) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner. 6 (iii) The notice procedures of this Section 2.9 shall not apply to any annual meeting if (A) with respect to annual meetings of shareholders subsequent to the 1994 annual meeting of shareholders, the Corporation shall not have set forth in its proxy statement for the preceding annual meeting of shareholders the date by which notice of nominations by shareholders of persons for election as directors or of other business proposed to be brought by shareholders at the next annual meeting of shareholders must be received by the Corporation to be considered timely pursuant to this Section 2.9 or (B) with respect to the 1994 annual meeting of shareholders, the Corporation shall have failed to issue a public announcement setting forth such information not less than 30 days prior to the date by which a shareholder's notice must be received by the Corporation to be considered timely pursuant to this Section 2.9. (c) Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation's notice of meeting (A) by or at the direction of the Board of Directors or (B) by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Section 2.9, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.9. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if a shareholder's notice containing the information set forth in paragraph (b)(ii) of this Section 2.9 shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the 150th day prior to such Special Meeting or the 10th day following the date on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. 7 (d) General. (i) Only such persons who are nominated in accordance with the procedures set forth in this Section 2.9 shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.9. The presiding officer at the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.9 and, if any proposed nomination or business is not in compliance with this Section 2.9, to declare that such defective proposal shall be disregarded. (ii) For purposes of this Section 2.9, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act. (iii) Notwithstanding the foregoing provisions of this Section 2.9, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. SECTION 2.10. Organization of Meetings. The Secretary, who may call on any officer or officers of the Corporation for assistance, shall make all necessary and appropriate arrangements for all meetings of shareholders, receive all proxies and ascertain and report to each meeting of shareholders the number of shares present, in person and by proxy. In the absence of the Secretary, the Assistant Secretary shall perform the foregoing duties. The certificate and report of the Secretary or Assistant Secretary, as 8 to the regularity of such proxies and as to the number of shares present, in person and by proxy, shall be received as prima facie evidence of the number of shares present in person and by proxy for the purpose of establishing the presence of a quorum at such meeting and for organizing the same, and for all other purposes. SECTION 2.11. Inspectors. At every meeting of shareholders it shall be the duty of the presiding officer to appoint three (3) shareholders of the Corporation inspectors of election to receive and count the votes of shareholders. Each inspector shall take an oath to fairly and impartially perform the duties of a inspector of the election and to honestly and truly report the results thereof. Such inspectors shall be responsible for tallying and certifying the vote taken on any matter at each meeting which is required to be tallied and certified by them in the resolution of the Board of Directors appointing them or the appointment of the presiding officer at such meeting as the case may be. Except as otherwise provided by these By-Laws or by law, such inspectors shall also decide all questions touching upon the qualification of voters, the validity of proxies and ballots, and the acceptance and rejection of votes. The Board of Directors shall have the authority to make rules establishing presumptions as to the validity and sufficiency of proxies. SECTION 2.12. Minutes of Shareholder Meetings. The presiding officer, secretary, and inspectors of election serving at a shareholders' meeting shall constitute a committee to correct and approve the minutes of such meeting. The approval thereof shall be evidenced by an endorsement thereon signed by a majority of the committee. 9 ARTICLE III. BOARD OF DIRECTORS. SECTION 3.1. Powers. The Board of Directors shall have the general direction, management and control of all the property, business and affairs of the Corporation and shall exercise all the powers that may be exercised or performed by the Corporation, under the statutes, the Articles of Incorporation, and these By-Laws. SECTION 3.2. Number, Election and Term of Office. The Board of Directors shall consist of ten (10) members, classified with respect to the time for which they shall severally hold office by dividing them into three classes, and after being so classified one-third (1/3) of the Directors, or as near as may be, shall be elected annually for a term of three (3) years. SECTION 3.3. Vacancies. Any vacancy in the Board of Directors caused by death, resignation or other reason shall be filled for the remainder of the Director's term by a majority vote of the remaining Directors although less than a quorum, or by the sole remaining director, and any director so chosen shall hold office for a term expiring at the annual meeting of shareholders at which the term of office of the class of directors to which such director has been elected expires. All Directors of the Corporation shall hold office until their successors are duly elected and qualified. SECTION 3.4. Annual Meetings. A meeting of the Directors whose terms have not expired and the newly elected Directors, to be known as the annual meeting of the Board of Directors, for the election of officers and for the transaction of such other business as may properly come before the meeting, shall be held on the same day as the annual meeting of the shareholders, at that time and place determined by the Board of Directors or at such date, time and place otherwise set by the Chairman. 10 SECTION 3.5. Regular Meetings. Regular monthly meetings of the Board of Directors shall be held from time to time (either within or without the state) as the Board may by resolution determine, without call and without notice, and unless otherwise determined all such regular monthly meetings shall be held at the principal business office of the Corporation on the fourth Tuesday of each and every month at 10:30 a.m. SECTION 3.6. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman, by the President, or by the Chairman upon the written request of any four (4) Directors by giving, or causing the Secretary to give, to each Director, notice in accordance with Article IV of these By-Laws. SECTION 3.7. Quorum. At all meetings of the Board of Directors, a majority of the Directors shall constitute a quorum for the transaction of business and the act of a majority of those present shall be necessary and sufficient for the taking of any action thereat, but a less number may adjourn the meeting from time to time until a quorum is present. SECTION 3.8. Action by Written Consent. Unless otherwise restricted by statute, the Articles of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all directors or by all members of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee. SECTION 3.9. Attendance by Conference Telephone. Members of the Board of Directors or any committee thereof may participate in a meeting of such Board of Directors or committee by means of 11 conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. SECTION 3.10. Committees. (a) The Board of Directors may from time to time, in its discretion, by resolution passed by a majority of the Board, designate, and appoint, from the directors, committees of one or more persons which shall have and may exercise such lawfully delegable powers and duties conferred or authorized by the resolutions of designation and appointment. The Board of Directors shall have power at any time to change the members of any such committee, to fill vacancies, and to discharge any such committee. (b) Unless the Board of Directors shall provide otherwise, the presence of one-half of the total membership of any committee of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of such committee and the act of a majority of those present shall be necessary and sufficient for the taking of any action thereat. ARTICLE IV. NOTICES. SECTION 4.1. Notices. Notices to directors and shareholders shall be in writing and delivered personally or mailed to their addresses appearing on the records of the Corporation or, if to directors, by telegram, cable, telephone, telecopy, facsimile or a nationally recognized overnight delivery service. Notice to directors of special meetings by mail shall be given at least two days before the meeting. Notice to directors of special meetings by telegram, cable, personal delivery, telephone, telecopy or facsimile 12 shall be given a reasonable time before the meeting, but in no event less than one hour before the meeting. Notice by mail or recognized overnight delivery service shall be deemed to be given when sent to the director at his or her address appearing on the records of the Corporation. Notice by telegram or cable shall be deemed to be given when the telegram or cable addressed to the director at his or her address appearing on the records of the Corporation is delivered to the telegraph company. Notice by telephone, telecopy or facsimile shall be deemed to be given when transmitted by telephone, telecopy or facsimile to the telephone, telecopy or facsimile number appearing on the records of the Corporation for the director (regardless of whether the director shall have personally received such telephone call or telecopy or facsimile message). SECTION 4.2. Waiver of Notice. Whenever any notice is required, a waiver thereof signed by the person entitled to such notice, whether before or after the time stated therein, and filed with the minutes or corporate records, shall be deemed equivalent thereto. Attendance of any person at any meeting of shareholders or directors shall constitute a waiver of notice of such meeting, except when such person attends only for the express purpose of objecting, at the beginning of the meeting (or in the case of a director's meeting, promptly upon such director's arrival), to the transaction of any business at the meeting and does not thereafter vote for or assent to action taken at the meeting. 13 ARTICLE V. OFFICERS. SECTION 5.1. Designation; Number; Election. The officers of the Corporation shall be chosen by the Board of Directors and may consist of a Chairman, a President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, a Controller, one or more Assistant Controllers, an Auditor, and an Environmental Officer and Counsel. One person may hold any two offices except those of Chairman or President, and Secretary. SECTION 5.2. Term of Office; Vacancies; Removal. Such officers shall be elected by the Board of Directors at its annual meeting, and shall hold office for one year and/or until their respective successors shall have been duly elected. The Board of Directors may from time to time, elect or appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as may be prescribed by the Board of Directors. Vacancies among the officers of the Corporation shall be filled by the Board of Directors. Any officer or agent elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. SECTION 5.3. Compensation of Officers. The Board of Directors or a committee of the Board shall have the authority to fix the compensation of the officers of the Corporation. SECTION 5.4. Chairman. The Chairman shall be the chief executive officer of the Company and shall have general authority and supervision over the management and direction of the affairs of the Company, and supervision of all departments and of all officers of the Company. The Chairman shall, 14 subject to the other provisions of these by-laws, have such other powers and perform such other duties as usually devolve upon the chief executive officer of a company or as may be prescribed by the Board of Directors, and shall, when present, preside at all meetings of the shareholders and of the Board of Directors. When the Board of Directors is not in session, the Chairman shall have authority to suspend the authority of any other officer or officers, subject, however, to the pleasure of the Board of Directors at its next meeting. In case of the absence, disability, death, resignation or removal from office of the Chairman, the powers and duties of the Chairman shall for the time being devolve upon and be exercised by the President, unless otherwise ordered by the Board of Directors. SECTION 5.5. President. The President shall be the chief operating officer of the Corporation and shall have such general authority and supervision over the management and direction of the affairs of the Corporation, subject to the authority of the Chairman, as shall usually devolve upon a chief operating officer of a corporation. The President shall, subject to the other provisions of these By-Laws, have such other powers and perform such other duties as usually devolve upon the President of a corporation, and such further duties as may be prescribed for the President by the Chairman or the Board of Directors. In case of the absence, disability, death, resignation or removal from office of the President, the powers and duties of the President shall, for the time being, devolve upon and be exercised by the Chairman, and in case of the absence, disability, death, resignation, or removal from office of both the Chairman and the President, the powers and duties of the President shall for the time being devolve upon and be exercised by the Vice President so appointed by the Board of Directors. SECTION 5.6. Vice Presidents. Each of the Vice Presidents shall have such powers and duties as may be prescribed by the Board of Directors, the Chairman or the President. 15 SECTION 5.7. Secretary. The Secretary shall attend and keep the minutes of all meetings of the Board of Directors and of the shareholders. The Secretary shall have charge and custody of the corporate records and corporate seal of the Corporation, and shall in general perform all the duties incident to the office of secretary of a corporation, subject at all times to the direction and control of the Board of Directors, the Chairman and the President. SECTION 5.8. Assistant Secretaries. Each of the Assistant Secretaries shall have such duties and powers as may be prescribed by the Board of Directors or be delegated by the Chairman or the President. In the absence or disability of the Secretary, the powers and duties of the Secretary shall devolve upon such one of the Assistant Secretaries as the Board of Directors, the Chairman or the President may designate, or, if there be but one Assistant Secretary, then upon such Assistant Secretary; and such Assistant Secretary shall thereupon have and exercise such powers and duties during such absence or disability of the Secretary. SECTION 5.9. Treasurer. The Treasurer shall have charge of, and shall be responsible for, the collection, receipt, custody and disbursement of the funds of the Corporation, and shall also have the custody of all securities belonging to the Corporation. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper receipts or making proper vouchers for such disbursements, and shall at all times preserve the same during the term of office. When necessary or proper, the Treasurer shall endorse, on behalf of the Corporation, all checks, notes, or other obligations payable to the Corporation or coming into possession of the Treasurer for and on behalf of the Corporation, and shall deposit the funds arising therefrom, together with all other funds of the Corporation coming into possession of the Treasurer, in the name and to the credit of the Corporation in such bank or banks as the Board of Directors shall from time to time by resolution direct. The Treasurer shall perform 16 all duties which are incident to the office of treasurer of a corporation, subject at all time to the direction and control of the Board of Directors, the Chairman and the President. The Treasurer shall give the Corporation a bond if required by the Board of Directors in a sum, and with one or more sureties, satisfactory to the Board, for the faithful performance of the duties of the office of Treasurer, and for the restoration to the Corporation, in case of the death, resignation, retirement or removal from office of the Treasurer, of all books, papers, vouchers, money or other property of whatever kind in the possession or under the control of the Treasurer belonging to the Corporation. SECTION 5.10. Assistant Treasurers. Each of the Assistant Treasurers shall have such powers and duties as may be prescribed by the Board of Directors or be delegated by the Chairman or the President. In the absence or disability of the Treasurer, the powers and duties shall devolve upon such one of the Assistant Treasurers as the Board of Directors, the Chairman or the President may designate, or, if there be but one Assistant Treasurer, then upon such Assistant Treasurer who shall thereupon have and exercise such powers and duties during such absence or disability of the Treasurer. Each Assistant Treasurer shall likewise give the Corporation a bond if required by the Board of Directors upon like terms and conditions as the bond required of the Treasurer. SECTION 5.11. Controller. The Controller shall have control over all accounts and records pertaining to moneys, properties, materials and supplies. The Controller shall have executive direction of the bookkeeping and accounting departments, and shall have general supervision over the records in all other departments pertaining to moneys, properties, materials and supplies. The Controller shall have charge of the preparation of the financial budget, and such other powers and duties as are commonly 17 incident to the office of controller of a corporation, subject at all times to the direction and control of the Board of Directors, the Chairman and the President. SECTION 5.12. Assistant Controllers. Each of the Assistant Controllers shall have such powers and duties as may be prescribed by the Board of Directors or be delegated by the Chairman or the President. In the absence or disability of the Controller, the powers and duties of the Controller shall devolve upon such one of the Assistant Controllers as the Board of Directors, the Chairman or the President may designate, or, if there be but one Assistant Controller, then upon such Assistant Controller who shall thereupon have and exercise such powers and duties during such absence or disability of the Controller. SECTION 5.13. Auditor. The Auditor shall review and monitor the activities of the Corporation and its subsidiaries, including development of and compliance with policies and procedures, and shall in general perform all the duties incident to the office of auditor of a corporation, subject at all times to direction and control of the Board of Directors, the Chairman and the President. SECTION 5.14. Environmental Officer and Counsel. The Environmental Officer and Counsel shall supervise, review and monitor the environmental affairs of the Corporation and its subsidiaries, including the development of and compliance with policies and procedures, and shall in general perform all the duties incident to such an office, subject at all times to the direction and control of the Board of Directors, the Chairman and the President. ARTICLE VI. CONDUCT OF BUSINESS. SECTION 6.1. Contracts, Deeds and Other Instruments. All agreements evidencing obligations of the Corporation, including but not limited to contracts, trust deeds, promissory notes, sight drafts, time drafts and letters of credit (including applications therefor), may be signed by any one of the Chairman, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary, any Assistant Secretary, any other person authorized by a resolution of the Board of Directors, and any other person 18 authorized by the Chairman, as evidenced by a written instrument of delegation. Any such authorization by the Board of Directors or the Chairman shall remain in effect until rescinded by action of the Board of Directors or (in the case of a delegation by the Chairman) by the Chairman and, where it identifies the authorized signatory by office rather than by name, shall not be rescinded solely by virtue of a change in the person holding that office or a temporary vacancy in that office. A certified copy of these By-Laws and/or any authorization given hereunder may be furnished as evidence of the authorities herein granted, and all persons shall be entitled to rely on such authorities in the case of a specific contract, conveyance or other transaction without the need of a resolution of the Board of Directors specifically authorizing the transaction involved. SECTION 6.2. Checks. Checks and other negotiable instruments for the disbursement of Corporation funds may be signed by any one of the Chairman, the President, any Vice President, the Treasurer, the Controller and the Secretary in such manner as shall from time to time be determined by resolution of the Board of Directors. Electronic or wire transfers to funds may be authorized by any officer of the Corporation who is authorized pursuant to this Section 6.2 to disburse Corporation funds by check or other negotiable instrument. SECTION 6.3. Deposits. Securities, notes and other evidences of indebtedness shall be kept in such places, and deposits of checks, drafts and funds shall be made in such banks, trust companies or depositories, as shall be recommended and approved by any two of the Chairman, the President, any Vice President and the Treasurer. 19 SECTION 6.4. Voting of Stock. Unless otherwise ordered by the Board of Directors, the Chairman, the President or any Vice President shall have the power to execute and deliver on behalf of the Corporation proxies on stock owned by the Corporation appointing a person or persons to represent and vote such stock at any meeting of stockholders, with full power of substitution, and shall have power to alter or rescind such appointment. Unless otherwise ordered by the Board of Directors, the Chairman, the President or any Vice President shall have the power on behalf of the Corporation to attend and to act and vote at any meeting of stockholders of any corporation in which the Corporation holds stock and shall possess and may exercise any and all rights and powers incident to the ownership of such stock, which, as the owner thereof, the Corporation might have possessed and exercised if present. The Board may confer like powers upon any other person or persons. SECTION 6.5. Transfer of Stock. Such form of transfer or assignment customary or necessary to effect a transfer of stocks or other securities standing in the name of the Corporation shall be signed by the Chairman, the President, any Vice President or the Treasurer, and the Secretary or an Assistant Secretary shall sign as witness if required on the form. A corporation or person transferring any such stocks or other securities pursuant to a form of transfer or assignment so executed shall be fully protected and shall be under no duty to inquire whether the Board of Directors has taken action in respect thereof. ARTICLE VII. SHARE CERTIFICATES AND THEIR TRANSFER. SECTION 7.1. Share Certificates. Certificates for shares of the Corporation shall be signed by the Chairman, the President or any Vice President, and by the Secretary or any Assistant Secretary, and shall not be valid unless so signed. Such certificates shall be appropriately numbered and contain the name 20 of the registered holder, the number of shares and the date of issue. If such certificate is countersigned (a) by a transfer agent other than the Corporation or its employee, or (b) by a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he, she or it were such officer, transfer agent, or registrar at the date of issue. SECTION 7.2. Transfer of Shares. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation and such transfer agent to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction. No certificate shall be issued in exchange for any certificate until the former certificate for the same number of shares of the same class and series shall have been surrendered and cancelled, except as provided in Section 7.4. SECTION 7.3. Regulations. The Board of Directors shall have authority to make rules and regulations concerning the issue, transfer and registration of certificates for shares of the Corporation. SECTION 7.4. Lost, Stolen and Destroyed Certificates. The Corporation may issue a new certificate or certificates for shares in place of any issued certificate alleged to have been lost, stolen or destroyed upon such terms and conditions as the Board of Directors may prescribe. 21 SECTION 7.5. Registered Shareholders. The Corporation shall be entitled to treat the holder of record (according to the books of the Corporation) of any share or shares as the holder in fact thereof and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other party whether or not the Corporation shall have express or other notice thereof, except as expressly provided by law. SECTION 7.6. Transfer Agents and Registrars. The Board of Directors may from time to time appoint a transfer agent and a registrar in one or more cities, may require all certificates evidencing shares of the Corporation to bear the signatures of a transfer agent and a registrar, may provide that such certificates shall be transferable in more than one city, and may provide for the functions of transfer agent and registrar to be combined in one agency. ARTICLE VIII. INDEMNIFICATION. SECTION 8.1. Litigation Brought by Third Parties. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, formal or informal (other than an action by or in the right of the Corporation) (an "Action") by reasons of the fact that he or she is or was a director, officer, employee or agent of the Corporation (a "Corporate Person"), or is or was serving at the request of the Corporation as a director, officer, employee, agent, partner, trustee or member or in another authorized capacity (collectively, an "Authorized Capacity") of or for another corporation, unincorporated association, business trust, partnership, joint venture, trust, individual or other legal entity, whether or not organized or formed for profit (collectively, "Another Entity"), against expenses (including 22 attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such Action ("Expenses") if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Action by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, that the person had reasonable cause to believe his or her conduct was unlawful. SECTION 8.2. Litigation by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any action by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a Corporate Person, or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against Expenses actually and reasonably incurred by him or her in connection with that defense or settlement of such action if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for willful negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that a court of equity or the court in which such action was pending shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court of equity or other court shall deem proper. 23 SECTION 8.3. Successful Defense. To the extent that a person who is or was a Corporate Person or is or was serving in an Authorized Capacity of Another Entity at the request of the Corporation and has been successful on the merits or otherwise in defense of any action, referred to in Section 8.1 or 8.2 of this Article, or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by him or her in connection therewith. SECTION 8.4 Determination of Conduct. Any indemnification under Section 8.1 or 8.2 of this Article (unless ordered by a court) shall be made by the Corporation only upon a determination that indemnification of the person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in said Section 8.1 or 8.2. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors not at the time parties to such action, suit or proceeding, or (b) if a quorum cannot be obtained, by a majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate) consisting of two or more directors not at the time parties to such action, suit or proceeding, or (c) by special legal counsel, or (d) by the shareholders; provided, however, that shares owned by or voted under the control of persons who are at the time parties to such action, suit or proceeding may not be voted on the determination. SECTION 8.5. Advance Payment. The Corporation shall advance Expenses reasonably incurred by any Corporate Person in any Action in advance of the final disposition thereof upon the undertaking of such party to repay the advance unless it is ultimately determined that such party is entitled to indemnification hereunder, if (a) the indemnitee furnishes the Corporation a written affirmation of his or her good faith belief that he or she has satisfied the standard of conduct in Section 8.1 or 8.2 and (b) a 24 determination is made by those making the decision pursuant to Section 8.4 that the facts then known would not preclude indemnification under these By-Laws. SECTION 8.6. By-Law Not Exclusive. The indemnification provided by this Article 8 shall not be deemed exclusive of any other rights to which any person may be entitled under any by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 8.7. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article 8 or the Indiana Business Corporation Law. SECTION 8.8. Effect of Invalidity. The invalidity or unenforceability of any provision of this Article 8 shall not affect the validity or enforceability of the remaining provisions of this Article 8. SECTION 8.9. Definition of Corporation. For purposes of this Article 8, references to "the Corporation" shall include, in addition to the surviving or resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger. 25 SECTION 8.10. Change in Law. Notwithstanding the foregoing provisions of Article 8, the Corporation shall indemnify any person who is or was a Corporate Person or is or was serving at the request of the Corporation in an Authorized Capacity of or for Another Entity to the full extent permitted by the Indiana Business Corporation Law or by any other applicable law, as may from time to time be in effect. ARTICLE IX. GENERAL. SECTION 9.1. Fiscal Year. The fiscal year of the Corporation shall begin on the 1st day of January and end on the 31st day of December in each year. SECTION 9.2. Corporate Seal. The corporate seal shall be circular in form and shall have inscribed thereon the words "NIPSCO Industries, Inc. - Corporate Seal - Indiana." SECTION 9.3. Amendments. These By-Laws may be altered, amended or repealed in whole or in part, and new By-Laws may be adopted, at any annual, regular or special meeting of the Board of Directors by the affirmative vote of a majority of a quorum of the Board of Directors. SECTION 9.4. Dividends. Subject to any provisions of any applicable statute or of the Articles of Incorporation, dividends may be declared upon the capital stock of the Corporation by the Board of Directors at any regular or special meeting thereof; and such dividends may be paid in cash, property or shares of the Corporation. 26 SECTION 9.5. Control Shares. The Terms "control shares" and "control share acquisition" used in this Section 9.5 shall have the meanings set forth in Indiana Business Corporation Law Section 23-1-42-1, et seq. (the "Act"). Control shares of the Corporation acquired in a control share acquisition shall have only such voting rights as are conferred by the Act. Control shares of the Corporation acquired in a control share acquisition with respect to which the acquiring person has not filed with the Corporation the Statement required by the Act may, at any time during the period ending sixty days after the last acquisition of control shares by the acquiring person, be redeemed by the Corporation at the fair value thereof pursuant to procedures authorized by a resolution of the Board of Directors. Such authority may be exercised generally or confined to specific instances. Control shares of the Corporation acquired in a control share acquisition with respect to which the acquiring person was not granted full voting rights by the shareholders as provided in the Act may, at any time after the shareholder vote required by the Act, be redeemed by the Corporation at the fair value thereof pursuant to procedures authorized by a resolution of the Board of Directors. Such authority may be exercised generally or confined to specific instances. 27 EX-4.1 4 FIRST SUPPLEMENTAL INDENTURE EXHIBIT 4.1 FIRST SUPPLEMENTAL INDENTURE FIRST SUPPLEMENTAL INDENTURE, dated as of___________________________, 1999 (this "First Supplemental Indenture"), among NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital Markets"), NIPSCO Industries, Inc., an Indiana corporation ("Industries"), and The Chase Manhattan Bank, as trustee (the "Trustee"), under the Indenture dated as of February 14, 1997 among Capital Markets, Industries and the Trustee (the "Indenture"). WHEREAS, Industries and Capital Markets executed and delivered the Indenture to the Trustee to provide for the issuance from time to time of Capital Markets' unsecured debentures, notes or other evidences of indebtedness (collectively the "Securities," and individually, a "Security") to be issued in one or more series as might be determined by Capital Markets under the Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered as provided in the Indenture; WHEREAS, pursuant to the terms of the Indenture, Capital Markets desires to provide for the establishment of a new series of Securities to be known as the 5.90% Senior Debentures due 2005 (the "Debentures"), the form and substance of such Debentures and the terms, provisions and conditions thereof to be as set forth in the Indenture and this First Supplemental Indenture; WHEREAS, NIPSCO Capital Trust I, a Delaware statutory business trust (the "Trust"), has offered to the public up to $345,000,000 in aggregate liquidation amount of its 5.90% Trust Preferred Securities (the "Preferred Securities") and, in connection therewith, Capital Markets has agreed to purchase up to $10,700,000 in aggregate liquidation amount of the Trust's common securities (the "Common Securities" and, together with the Preferred Securities, the "Trust Securities"), each representing an undivided beneficial interest in the assets of the Trust, and proposes to invest the proceeds from such offerings in up to $355,700,000 aggregate principal amount of the Debentures; WHEREAS, Capital Markets and Industries have requested that the Trustee execute and deliver this First Supplemental Indenture, all requirements necessary to make this First Supplemental Indenture a valid instrument in accordance with its terms (and to make the Debentures, when executed by Capital Markets and authenticated and delivered by the Trustee, the valid obligations of Capital Markets) have been performed, and the execution and delivery of this First Supplemental Indenture has been duly authorized in all respects; NOW, THEREFORE, in consideration of the purchase and acceptance of the Debentures by the Holders thereof, and for the purpose of setting forth, as provided in the Indenture, the form and substance of the Debentures and the terms, provisions and conditions thereof, Capital Markets and Industries covenant and agree with the Trustee as follows: ARTICLE I DEFINITIONS Section 1.1 Definition of Terms. Unless the context otherwise requires: (a) a term not defined herein that is defined in the Indenture has the same meaning when used in this First Supplemental Indenture; (b) a term defined anywhere in this First Supplemental Indenture has the same meaning throughout; (c) the singular includes the plural and vice versa; (d) a reference to a Section or Article is to a Section or Article of this First Supplemental Indenture; (e) headings are for convenience of reference only and do not affect interpretation; (f) the following terms have the meanings given to them in the Declaration: (i) Applicable Margin; (ii) Applicable Principal Amount; (iii) Delaware Trustee; (iv) Failed Remarketing; (v) Preferred Securities; (vi) Preferred Security Certificate; (vii) Property Trustee; (viii) Redemption Amount; (ix) Regular Trustees; (x) Remarketing Agreement; (xi) Remarketing Date; (xii) Treasury Portfolio Purchase Price; and (xiii) Two-Year Benchmark Treasury Rate; (g) the following terms have the meanings given to them in the Purchase Contract Agreement: (i) Cash Settlement; (ii) Corporate PIES; (iii) Purchase Contract and (iv) Purchase Contract Settlement Date (h) the following terms have the meanings given to them in this Section 1.1(h): "Business Day" means any day other than a Saturday or Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed or a day on which the principal office of the Trustee or the Property Trustee is closed for business. "Declaration" means the Amended and Restated Declaration of Trust of the Trust, dated as of _______________________, 1999, as amended and restated from time to time. "Direct Action" has the meaning specified in Section 7.2. "Primary Treasury Dealer" means a primary U.S. government securities dealer in New York City. 2 "Purchase Contract Agreement" means the Purchase Contract Agreement dated as of ______________________, 1999 between Industries and The Chase Manhattan Bank, as Purchase Contract Agent. "Quotation Agent" means (i) Lehman Brothers Inc. and its respective successors, provided that if Lehman Brothers Inc. ceases to be a Primary Treasury Dealer, Capital Markets will substitute another Primary Treasury Dealer therefor, or (ii) any other Primary Treasury Dealer selected by Capital Markets. "Redemption Amount" means, for each Debenture, the product of the principal amount of such Debenture and a fraction, the numerator of which is the Treasury Portfolio Purchase Price and the denominator of which is the Applicable Principal Amount. "Redemption Price" means, for each Debenture, the sum of the Redemption Amount plus accrued and unpaid interest thereon to the Tax Event Redemption Date. "Remarketing" means (i) as long as the Trust has not been liquidated, the operation of the procedures for remarketing specified in Section 7.13 of the Declaration and (ii) if the Trust has been liquidated, the operation of the procedures for remarketing specified in Article VIII. "Remarketing Agent" shall mean Lehman Brothers Inc. or any successor remarketing agent selected by Capital Markets. "Reset Rate" means the rate per annum that results from the remarketing of the Preferred Securities that are a part of the Corporate PIES as to which the holders have not given notice of their election to settle the related Purchase Contracts with cash, or have given such notice but failed to deliver cash, and the Preferred Securities that are not a part of the Corporate PIES as to which the holders have requested remarketing. "Tax Event" means the receipt by Capital Markets and the Trust of an opinion of counsel, rendered by a law firm having a recognized national tax practice, to the effect that, as a result of any amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative decision, pronouncement, judicial decision or action interpreting or applying such laws or regulations, which amendment or change is effective or which proposed change, pronouncement, action or decision is announced on or after the date of issuance of the Preferred Securities, there is more than an insubstantial risk that (i) the Trust is, or within 90 days of the date of such opinion will be, subject to United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest payable by Capital Markets on the Debentures is not, or within 90 days of the date of such opnion, will not be, deductible by Capital Markets, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or within 90 days of the date of such opinion will be, subject to more than a de minimis amountof other taxes, duties or other governmental charges. "Tax Event Redemption Date" has the meaning specified in Section 2.5(a). "Treasury Portfolio" means, with respect to the Applicable Principal Amount of Debentures (i) if the Tax Event Redemption Date occurs prior to the Purchase Contract Settlement Date, a portfolio of zero-coupon U.S. Treasury Securities consisting of (a) principal or interest strips of U.S. Treasury Securities that mature on or prior to the Purchase Contract Settlement Date in an aggregate amount at maturity equal 3 to the Applicable Principal Amount and (b) with respect to each scheduled interest payment date on the Debentures that occurs after the Tax Event Redemption Date, principal or interest strips of U.S. Treasury Securities that mature on or prior to such date in an aggregate amount at maturity equal to the aggregate interest payment that would be due on the Applicable Principal Amount of the Debentures on such date and (ii) if the Tax Event Redemption Date occurs after the Purchase Contract Settlement Date, a portfolio of zero-coupon U.S. Treasury Securities consisting of (a) principal or interest strips of U.S. Treasury Securities that mature on or prior to February 19, 2005, in an aggregate amount at maturity equal to the Applicable Principal Amount and (b) with respect to each scheduled interest payment date on the Debentures that occurs after the Tax Event Redemption Date, principal or interest strips of such U.S. Treasury Securities that mature on or prior to such date in an aggregate amount at maturity equal to the aggregate interest payment that would be due on the Applicable Principal Amount of the Debentures on such date. ARTICLE II TERMS AND CONDITIONS OF THE DEBENTURES Section 2.1 Designation and Principal Amount. There is hereby authorized a series of Securities designated the "5.90% Senior Debentures due 2005," limited in aggregate principal amount to $355,700,000. Section 2.2 Maturity. The Stated Maturity will be February 19, 2005. Section 2.3 Global Debentures. If distributed to holders of Preferred Securities in connection with the involuntary or voluntary dissolution of the Trust: (a) The Debentures in certificated form may be presented to the Trustee by the Property Trustee in exchange for a Global Security in an aggregate principal amount equal to all Outstanding Debentures (a "Global Debenture"). The Depositary for the Debentures will be The Depository Trust Company. The Global Debentures will be registered in the name of the Depositary or its nominee, Cede & Co., and delivered by the Trustee to the Depositary or a custodian appointed by the Depositary for crediting to the accounts of its participants pursuant to the instructions of the Regular Trustees. Capital Markets upon any such presentation shall execute a Global Debenture in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with the Indenture and this First Supplemental Indenture. Payments on the Debentures issued as a Global Debenture will be made to the Depositary or its nominee. (b) If any Preferred Securities are held in non book-entry certificated form, the Debentures in certificated form may be presented to the Trustee by the Property Trustee, and any Preferred Security Certificate which represents Preferred Securities other than Preferred Securities held by the depositary for the Preferred Securities or its nominee ("Non Book-Entry Preferred Securities") will be deemed to represent beneficial interests in Debentures presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate liquidation amount of the Non Book-Entry Preferred Securities until such Preferred Security Certificates are presented to the Security Registrar for 4 transfer or reissuance, at which time such Preferred Security Certificates will be canceled and a Debenture registered in the name of the holder of the Preferred Security Certificate or the transferee of the holder of such Preferred Security Certificate, as the case may be, with an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Security Certificate canceled will be executed by Capital Markets and delivered to the Trustee for authentication and delivery in accordance with the Indenture and this First Supplemental Indenture. On issue of such Debentures, Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. Section 2.4 Interest. (a) Each Debenture will bear interest at the rate of 5.90% per annum from February 16, 1999 until the Purchase Contract Settlement Date, and at the Reset Rate thereafter, payable quarterly in arrears on the Interest Payment Dates, which shall be February 19, May 19, August 19 and November 19 of each year, commencing May 19, 1999. (b) The Regular Record Dates for the Debentures shall be (i) as long as the Debentures are represented by a Global Debenture, the Business Day preceding each Interest Payment Date or (ii) if the Debentures are issued in certificated form, the 15th Business Day prior to each Interest Payment Date. (c) The interest rate on the Debentures outstanding on and after the Purchase Contract Settlement Date will be reset on the third Business Day preceding the Purchase Contract Settlement Date to the Reset Rate. The Reset Rate will be equal to the rate per annum that results from the Remarketing, provided that if a Failed Remarketing occurs, the Reset Rate will be equal to (i) the Two-Year Benchmark Treasury Rate plus (ii) the Applicable Margin. (d) The amount of interest payable on the Debentures for any period will be computed (i) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next day that is a Business Day (and without interest or other payment in respect of any such delay), except that, if such Business Day is in the next calendar year, then such payment will be made on the preceding Business Day. Section 2.5 Redemption. (a) If a Tax Event occurs and is continuing, Capital Markets may, at its option and upon not less than 30 nor more than 60 days' notice to the Holders of the Debentures, redeem the Debentures in whole (but not in part) within 90 days following the occurrence of such Tax Event, at a price equal to, for each Debenture, the Redemption Price. The Redemption Amount shall be paid prior to 12:00 noon, New York City time, on the date of redemption (the "Tax Event Redemption Date") or such earlier time as Capital Markets determines, provided that Capital Markets shall have deposited with the Trustee an amount sufficient to pay the Redemption Amount by 10:00 a.m. on the Tax Event Redemption Date. Such redemption shall otherwise be in accordance with the provisions of Article Eleven of the Indenture. 5 (b) Except as provided in Section 2.5(a), Capital Markets will have no right to redeem the Debentures. (c) The Debentures will not be subject to a sinking fund provision. Section 2.6 Events of Default. It shall be an Event of Default with respect to the Debentures if the Trust shall have voluntarily or involuntarily dissolved, wound up its business or otherwise terminated its existence except in connection with (i) the distribution of the Securities held by the Trust to the holders of the Trust Securities in liquidation of their interests in the Trust, (ii) the redemption of all of the outstanding Trust Securities or (iii) a consolidation, conversion, amalgamation, merger or other transaction involving the Trust that is permitted under Section 3.15 of the Declaration. Section 2.7 Paying Agent; Security Registrar. If the Debentures are issued in certificated form, the Paying Agent and the Security Registrar for the Debentures shall be the Corporate Trust Office. ARTICLE III FORM OF DEBENTURE SECTION 3.1. Form of Debenture. The Debentures and the Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the following forms: (FORM OF FACE OF DEBENTURE) [IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT: This Debenture is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of The Depository Trust Company, a New York corporation (the "Depositary"), or a nominee of the Depositary. This Debenture is exchangeable for Debentures registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Debenture (other than a transfer of this Debenture as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Debenture is presented by an authorized representative of the Depositary to the issuer or its agent for registration of transfer, exchange or payment, and any Debenture issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depositary, and any payment hereon is made to Cede & Co., or to such other entity as is requested by an authorized representative of the Depositary), and, except as otherwise provided in the Indenture, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] No._______________ 6 $_________________ CUSIP No. 654638 AC9 ---------- 5.90% SENIOR DEBENTURE DUE 2005 NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital Markets", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ______________________, or registered assigns, the principal sum of _______ Dollars on __________________, 2005, and to pay interest on said principal sum from February 16, 1999, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly in arrears on February 19, May 19, August 19 and November 19 of each year commencing May 19, 1999, at the rate of 5.90% per annum until February 19, 2003, and at the Reset Rate thereafter, until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded quarterly. The amount of interest payable for any period will be computed (1) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable is not a Business Day, then payment of the interest payable on such date will be made on the next day that is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next calendar year, then such payment will be made on the preceding Business Day. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture referred to on the reverse side hereof, be paid to the person in whose name this Debenture (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which, if this Debenture is a Global Security, shall be the close of business on the Business Day preceding such Interest Payment Date or, if this Debenture is not a Global Security, shall be the close of business on the 15th Business Day preceding such Interest Payment Date; provided that interest paid at maturity shall be paid to the Person to whom principal is paid. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such Regular Record Date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee referred to on the reverse side hereof for the payment of such defaulted interest, notice whereof shall be given to the registered Holders of the Debentures not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of and interest on this Debenture shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of Capital Markets by check mailed to the registered Holder at such address as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Debenture is the Property Trustee, the payment of the principal of (and premium, if any) and interest on this Debenture will be made at such place and to such account as may be designated by the Property Trustee. 7 This Debenture is, to the extent provided in the Indenture, senior and unsecured and will rank in right of payment on a parity with all other senior unsecured obligations of Capital Markets. Unless the Certificate of Authentication hereon has been executed by the Trustee, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. The provisions of this Debenture are continued on the reverse side hereof, and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 8 IN WITNESS WHEREOF, Capital Markets has caused this instrument to be executed. NIPSCO CAPITAL MARKETS, INC. By:_________________________________ Attest: By:______________________________ Secretary (FORM OF CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series referred to in the within-mentioned Indenture. Dated:__________________________________ THE CHASE MANHATTAN BANK, as Trustee By:_________________________________ Authorized Officer 9 (FORM OF REVERSE OF DEBENTURE) This Debenture is one of a duly authorized series of Securities of Capital Markets (herein sometimes referred to as the "Debentures"), all issued under and pursuant to an Indenture dated as of February 14, 1997, duly executed and delivered among NIPSCO Industries, Inc. ("Industries"), NIPSCO Capital Markets, Inc. ("Capital Markets") and The Chase Manhattan Bank, as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture thereto dated as of _________________________, 1999, among Industries, Capital Markets and the Trustee (such Indenture as so supplemented, the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, Capital Markets, Industries and the Holders of the Debentures. By the terms of the Indenture, the Securities are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. This series of Securities is limited in aggregate principal amount to $355,700,000. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. If a Tax Event occurs and is continuing, Capital Markets may, at its option and upon not less than 30 nor more than 60 days' notice to the Holders of the Debentures, redeem the Debentures in whole (but not in part) within 90 days following the occurrence of such Tax Event at the Redemption Price. The Redemption Price shall be paid prior to 12:00 noon, New York City time, on the Tax Event Redemption Date, by check or wire transfer in immediately available funds at such place and to such account as may be designated by each such Holder. The Debentures will not be subject to a sinking fund provision. In case an Event of Default shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting Capital Markets and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Debentures and all other series of Securities affected at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Debentures; provided, however, that no such supplemental indenture may, without the consent of the Holder of each outstanding Debenture, among other things, (i) change the stated maturity of the principal of, or any installment of interest on, any Debenture, (ii) reduce the principal amount of, or the rate of interest on or any premium payable upon the redemption of, the Debentures, (iii) impair the right to institute suit for the enforcement of any such payment on or after the stated maturity of or any redemption date for the Debentures or (iv) reduce the above-stated percentage of principal amount of Debentures, the Holders of which are required to modify or amend the Indenture, to consent to any waiver thereunder or to approve any supplemental indenture. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Debentures at the time outstanding affected thereby, on behalf of all of the Holders of the Debentures, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to the Debentures, and its consequences, except a default in the payment of the principal of or interest on any of the Debentures (unless 10 cured as provided in the Indenture) or in respect of a covenant or provision that cannot be modified or amended without the consent of the Holders of each Debenture then outstanding. Any such consent or waiver by the registered Holder of this Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of Capital Markets, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered Holder hereof on the Security Register of Capital Markets, upon surrender of this Debenture for registration of transfer at the office or agency of Capital Markets in the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to Capital Markets or the Trustee duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but Capital Markets may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Debenture, Capital Markets, the Trustee, any paying agent and any Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither Capital Markets nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of Capital Markets or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Indenture imposes certain limitations on the ability of Capital Markets and Industries to, among other things, merge, consolidate or sell, assign, transfer or lease all or substantially all of its properties or assets. Such covenants and limitations are subject to a number of important qualifications and exceptions. Capital Markets and Industries must report periodically to the Trustee on compliance with the covenants in the Indenture. The Debentures of this series are issuable only in registered form without coupons in denominations of $50 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations herein and therein set forth, Debentures of this series so issued are exchangeable for a like aggregate principal amount 11 of Debentures of this series of a different authorized denomination, as requested by the Holder surrendering the same. ARTICLE IV EXPENSES Section 4.1 Payment of Expenses. In connection with the offering, sale and issuance of the Debentures to the Trust in connection with the sale of the Preferred Securities by the Trust, Capital Markets will: (a) pay for all costs and expenses relating to the offering, sale and issuance of the Debentures, including compensation to the underwriters payable pursuant to the Underwriting Agreement and compensation of the Trustee under the Indenture in accordance with the provisions of Section 607 of the Indenture; and (b) pay for all costs and expenses of the Trust, including, but not limited to, costs and expenses relating to the organization of the Trust, the offering, sale and issuance of the Trust Securities (including compensation to the underwriters payable pursuant to the Underwriting Agreement in connection therewith); the fees and expenses of the Property Trustee (including, without limitation, those incurred in connection with the enforcement by the Property Trustee of the rights of the holders of the Preferred Securities), the Delaware Trustee and the Regular Trustees; the costs and expenses relating to the operation of the Trust (including, without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses); and costs and expenses incurred in connection with the acquisition, financing and disposition of Trust assets; (c) be primarily liable for any indemnification obligations arising with respect to the Declaration; and (d) pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. ARTICLE V COVENANTS Section 5.1 Covenant to List on Exchange. If the Debentures are distributed to the holders of the Preferred Securities upon dissolution of the Trust, Industries and Capital Markets will use their best efforts to list such Debentures on the New York Stock Exchange or on such other exchange as the Preferred Securities are then listed. 12 Section 5.2 Covenants in the Event of an Event of Default. If an Event of Default occurs and written notice of such event has been given to Capital Markets, then neither Capital Markets nor Industries may: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock; or (b) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities that rank on a parity with or junior in interest to the Debentures or make any guarantee payments with respect to any guarantee of the debt securities of any subsidiary of Capital Markets or Industries if such guarantee ranks on a parity with or junior in interest to the Debentures; other than (i) purchases or acquisitions of capital stock of Capital Markets or Industries in connection with the satisfaction by Capital Markets or Industries of its obligations under any employee benefit plans or the satisfaction by Capital Markets or Industries of its obligations pursuant to any contract or security outstanding on the date of such event requiring Capital Markets or Industries to purchase capital stock of Capital Markets or Industries, (ii) as a result of a reclassification of Capital Markets' or Industries' capital stock for another class or series of Capital Markets' or Industries' capital stock, (iii) the purchase of fractional interests in shares of Capital Markets' or Industries' capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) dividends or distributions in capital stock of Capital Markets or Industries, (v) redemptions or repurchases of any rights pursuant to a rights agreement and (vi) payments under the Guarantee. Section 5.3 Additional Covenants Relating to the Trust. For as long as the Preferred Securities remain outstanding, Capital Markets will: (a) maintain, directly or indirectly, 100% ownership of the Common Securities; (b) cause the Trust to remain a statutory business trust and not to voluntarily dissolve, wind up, liquidate or be terminated, except as permitted by the Declaration; (c) use its commercially reasonable efforts to ensure that the Trust will not be an "investment company" required to be registered under the Investment Company Act of 1940; (d) not take any action that would be reasonably likely to cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States federal income tax purposes; and (e) pay all of the debts and obligations of the Trust (other than with respect to the securities issued by the Trust) and all costs and expenses of the Trust (including, but not limited to, all costs and expenses relating to the organization of the Trust, the fees and expenses of the trustees and all costs and expenses relating to the operation of the Trust) and any and all taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed on the Trust by the United States, or any other taxing authority, so that the net amounts received and retained by the Trust after paying such expenses 13 will be equal to the amounts the Trust would have received had no such costs or expenses been incurred by or imposed on the Trust. The obligations of Capital Markets in Section 5.35(e) are for the benefit of, and shall be enforceable by, any Person to whom any such debts, obligations, costs, expenses and taxes are owed whether or not such Person has received notice thereof. Any such Person may enforce such obligations of Capital Markets directly against Capital Markets, and Capital Markets irrevocably waives any right or remedy to require that any such Person take any action against the Trust or any other Person before proceeding against Capital Markets. ARTICLE VI ORIGINAL ISSUE OF DEBENTURES Section 6.1 Original Issue of Debentures. Debentures in an aggregate principal amount of up to $355,700,000 may, upon execution of this First Supplemental Indenture, be executed by Capital Markets and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Debentures upon receipt of a Company Order, without any further action by Industries or Capital Markets. ARTICLE VII RIGHTS OF HOLDERS OF PREFERRED SECURITIES Section 7.1 Preferred Security Holders' Rights. Notwithstanding Section 507 of the Indenture, if the Property Trustee fails to enforce its rights under the Debentures after a holder of Preferred Securities has made a written request, the holder of Preferred Securities may, to the fullest extent permitted by law, institute a legal proceeding directly against Capital Markets to enforce the Property Trustee's rights under the Indenture without first instituting any legal proceeding against the Property Trustee or any other person or entity. Section 7.2 Direct Action. Notwithstanding any other provision of the Indenture, for as long as any Preferred Securities remain outstanding, to the fullest extent permitted by law, if an Event of Default has occurred and is continuing and such event is attributable to the failure of Capital Markets to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), then a holder of Preferred Securities may institute a proceeding directly against Capital Markets (a "Direct Action") to enforce payment to such holder of the principal or interest on Debentures having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities of such holder. Section 7.3 Payments Pursuant to Direct Actions. Capital Markets will have the right to set off against its obligations to the Trust, as Holder of the Debentures, any payment made to a holder of Preferred Securities in connection with a Direct Action. 14 ARTICLE VIII REMARKETING Section 8.1 Effectiveness of this Article. This Article VIII will become effective only upon a distribution of the Debentures upon dissolution of the Trust which occurs prior to the Remarketing of the Preferred Securities pursuant to the Declaration. Until such a distribution, or if such distribution occurs after the Remarketing of the Preferred Securities pursuant to the Declaration, this Article VIII will have no effect. Section 8.2 Remarketing. (a) Capital Markets shall request, not later than 15 nor more than 30 calendar days prior to the Remarketing Date, that the Depositary notify the Holders of the Debentures and the holders of the Corporate PIES and the Treasury PIES of the Remarketing and of the procedures that must be followed if a Holder of Debentures wishes to make a Cash Settlement. (b) Not later than 5:00 p.m., New York City time, on the seventh Business Day preceding the Purchase Contract Settlement Date, each Holder of Debentures may elect to have the Debentures held by such Holder remarketed in the Remarketing. Under Section 5.4 of the Purchase Contract Agreement, holders of Corporate PIES that do not give notice of their intention to make a Cash Settlement of the Purchase Contract component of their Corporate PIES prior to such time in the manner specified in such Section, or that give such notice but fail to deliver cash prior to 11:00 a.m., New York City time, on or prior to the fifth Business Day preceding the Purchase Contract Settlement Date, shall be deemed to have consented to the disposition of the Debenture component of their Corporate PIES in the Remarketing. Holders of Debentures that are not a component of Corporate PIES wishing to have their Debentures remarketed shall give to the Purchase Contract Agent notice of their election prior to 11:00 a.m., New York City time, on such fifth Business Day. Any such notice shall be irrevocable and may not be conditioned upon the level at which the Reset Rate is established in the Remarketing. Promptly after 11:00 a.m., New York City time, on such fifth Business Day, the Purchase Contract Agent, based on the notices received by it prior to such time (including notices from the Purchase Contract Agent as to Purchase Contracts for which Cash Settlement has been elected and cash received), shall notify Capital Markets and the Remarketing Agent of the amount of Debentures to be tendered for purchase in the Remarketing. (c) If any Holder of Debentures does not give a notice of its intention to make a Cash Settlement or gives such notice but fails to deliver cash as described in the foregoing subsection (b), or gives a notice of election to have Debentures that are not a component of Corporate PIES remarketed, then the Debentures of such Holder shall be deemed tendered for purchase in the Remarketing, notwithstanding any failure by such Holder to deliver or properly deliver such Preferred Securities to the Remarketing Agent for purchase. (d) The right of each Holder to have Debentures tendered for purchase will be limited to the extent that (i) the Remarketing Agent conducts a remarketing pursuant to the terms of the Remarketing Agreement, (ii) the Debentures tendered have not been called for redemption, (iii) the Remarketing Agent is able to find a purchaser or purchasers for the tendered Debentures and (iv) such purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent. 15 (e) On the Remarketing Date, the Remarketing Agent will use commercially reasonable efforts to remarket, at a price equal to 100% of the aggregate principal amount thereof, the Debentures tendered or deemed tendered for purchase. (f) If, as a result of the efforts described in the foregoing subsection (e), the Remarketing Agent determines that it will be able to remarket all of the Debentures tendered or deemed tendered for purchase at a price of 100% of their aggregate principal amount prior to 4:00 p.m., New York City time, on the Remarketing Date, the Remarketing Agent shall determine the Reset Rate, which shall be the rate per annum (rounded to the nearest one- thousandth (0.001) of one percent per annum) that the Remarketing Agent determines, in its sole judgment, to be the lowest rate per annum that will enable it to remarket all of the Debentures tendered or deemed tendered for Remarketing. (g) If none of the Holders of the Debentures or the holders of the Corporate PIES elects to have Debentures remarketed in the Remarketing, the Reset Rate shall be the rate determined by the Remarketing Agent, in its sole discretion, as the rate that would have been established had a Remarketing been held on the Remarketing Date. (h) If, by 4:00 p.m., New York City time, on the Remarketing Date, the Remarketing Agent is unable to remarket all of the Debentures tendered or deemed tendered for purchase, a "Failed Remarketing" shall be deemed to have occurred and the Remarketing Agent shall so advise by telephone the Depositary, the Property Trustee, the Debenture Trustee and Capital Markets. In the event of a Failed Remarketing, the Reset Rate shall equal the Two-Year Benchmark Treasury plus the Applicable Margin. (i) By approximately 4:30 p.m., New York City time, on the Remarketing Date, provided that there has not been a Failed Remarketing, the Remarketing Agent shall advise, by telephone (i) the Depositary, the Property Trustee, the Debenture Trustee and Capital Markets of the Reset Rate determined in the Remarketing and the amount of Debentures sold in the Remarketing, (ii) each purchaser (or the Depositary participant thereof) of the Reset Rate and the amount of Debentures such purchaser is to purchase and (iii) each purchaser to give instructions to its Depositary participant to pay the purchase price on the Purchase Contract Settlement Date in same day funds against delivery of the Debentures purchased through the facilities of the Depositary. (j) In accordance with the Depositary's normal procedures, on the Purchase Contract Settlement Date, the transactions described above with respect to each Debenture tendered for purchase and sold in the Remarketing shall be executed through the Depositary, and the accounts of the respective Depositary participants shall be debited and credited and such Debentures delivered by book-entry as necessary to effect purchases and sales of such Debentures. The Depositary shall make payment in accordance with its normal procedures. (k) If any Holder of Debentures selling Debentures in the Remarketing fails to deliver such Debentures, the Depositary participant of such selling holder and of any other Person that was to have purchased Debentures in the Remarketing may deliver to any such other Person an amount of Debentures that is less than the amount of Debentures that otherwise was to be purchased by such Person. In such event, the amount of Debentures to be so delivered shall be determined by such Depositary participant, and delivery of such lesser amount of Debentures shall constitute good delivery. 16 (l) The Remarketing Agent is not obligated to purchase any Debentures that otherwise would remain unsold in the Remarketing. Neither the Capital Markets nor the Remarketing Agent shall be obligated in any case to provide funds to make payment upon tender of the Debentures for Remarketing. (m) Under the Remarketing Agreement, Capital Markets, in its capacity as issuer of the Debentures, shall be liable for, and shall pay, any and all costs and expenses incurred in connection with the Remarketing. (n) The tender and settlement procedures set in this Section 8.2, including provisions for payment by purchasers of the Debentures in the Remarketing, shall be subject to modification to the extent required by the Depositary or if the book-entry system is no longer available for the Debentures at the time of the Remarketing, to facilitate the tendering and remarketing of the Debentures in certificated form. In addition, the Remarketing Agent may modify the settlement procedures set forth herein in order to facilitate the settlement process. ARTICLE IX MISCELLANEOUS SECTION 9.1. Ratification of Indenture. The Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided. SECTION 9.2. Trustee Not Responsible for Recitals. The recitals herein contained are made by Industries and Capital Markets and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this First Supplemental Indenture. SECTION 9.3. Governing Law. This First Supplemental Indenture and each Debenture shall be deemed to be a contract made under the internal laws of the State of New York and for all purposes shall be construed in accordance with the laws of said State. SECTION 9.4. Severability. In case any one or more of the provisions contained in this First Supplemental Indenture or in the Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this First Supplemental Indenture or of the Debentures, but this First Supplemental Indenture and the Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. 17 SECTION 9.5. Counterparts. This First Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, on the date or dates indicated in the acknowledgments and as of the day and year first above written. NIPSCO INDUSTRIES, INC. By: _________________________________ Name: Title: Attest: - ------------------------- Name: Title: NIPSCO CAPITAL MARKETS, INC. By: _________________________________ Name: Title: Attest: - ------------------------- Name: Title: THE CHASE MANHATTAN BANK, as Trustee By: _________________________________ Name: Title: Attest: - ------------------------- Name: Title: 19 EX-4.2 5 PURCHASE CONTRACT AGREEMENT Exhibit 4.2 STB DRAFT February 9, 1999 ================================================================================ NIPSCO INDUSTRIES, INC. and THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent and THE FIRST NATIONAL BANK OF CHICAGO, as Securities Intermediary and THE CHASE MANHATTAN BANK, as Purchase Contract ------------------------------ PLEDGE AGREEMENT Dated as of February __, 1999 ================================================================================ TABLE OF CONTENTS Section 1. Definitions........................................................1 Section 2. Pledge.............................................................5 2.1 Pledge.............................................................5 2.2 Control; Financing Statement.......................................5 Section 3. Distributions on Pledged Collateral ...............................6 3.1 Income Distributions...............................................6 3.2 Principal Payments Following Termination Event.....................6 3.3 Principal Payments Prior To or On Purchase Contract Settlement Date....................................................6 3.4 Payments to Purchase Contract Agent................................6 3.5 Assets Not Properly Released.......................................7 Section 4. Control............................................................7 4.1 Establishment of Collateral Account................................7 4.2 Treatment as Financial Assets......................................7 4.3 Sole Control by Collateral Agent...................................7 4.4 Securities Intermediary's Location.................................7 4.5 No Other Claims....................................................8 4.6 Investment and Release.............................................8 4.7 Statements and Confirmations.......................................8 4.8 Tax Allocations....................................................8 4.9 No Other Agreements................................................8 4.10 Powers Coupled With An Interest....................................8 Section 5. Initial Deposit; Establishment of Treasury PIES and Reestablishment of Corporate PIES..............................8 5.1 Initial Deposit of Trust Preferred Securities......................8 5.2 Establishment of Treasury PIES.....................................9 5.3 Reestablishment of Corporate PIES.................................11 5.4 Termination Event.................................................13 5.5 Cash Settlement...................................................14 5.6 Early Settlement..................................................14 5.7 Application of Proceeds Settlement................................15 5.8 Tax Event Redemption..............................................16 5.9 Liquidation of the Trust..........................................16 Section 6. Voting Rights -- Trust Preferred Securities and Pledged Debentures............................................16 Section 7. Rights and Remedies; Distribution of the Debentures; Tax Event Redemption..............................................17 7.1 Rights and Remedies of the Collateral Agent.......................17 7.2 Substitution of Debentures........................................18 7.3 Tax Event Redemption..............................................18 -i- 7.4 Substitutions.....................................................18 Section 8. Representations and Warranties; Covenants.........................18 8.1 Representations and Warranties....................................18 8.2 Covenants.........................................................19 Section 9. The Collateral Agent and the Securities Intermediary..............20 9.1 Appointment, Powers and Immunities................................20 9.2 Instructions of the Company.......................................20 9.3 Reliance by Collateral Agent and Securities Intermediary..........21 9.4 Rights in Other Capacities........................................21 9.5 Non-Reliance on Collateral Agent and Securities Intermediary......21 9.6 Compensation and Indemnity........................................21 9.7 Failure to Act....................................................22 9.8 Resignation of Collateral Agent...................................22 9.9 Right to Appoint Agent or Advisor.................................23 9.10 Survival..........................................................23 9.11 Exculpation.......................................................23 Section 10. Amendment.........................................................23 10.1 Amendment Without Consent of Holders..............................23 10.2 Amendment with Consent of Holders.................................24 10.3 Execution of Amendments...........................................24 10.4 Effect of Amendments..............................................24 10.5 Reference to Amendments...........................................25 Section 11. Miscellaneous.....................................................25 11.1 No Waiver.........................................................25 11.2 Governing Law.....................................................25 11.3 Notices...........................................................25 11.4 Successors and Assigns............................................26 11.5 Counterparts......................................................26 11.6 Severability......................................................26 11.7 Expenses, etc.....................................................26 11.8 Security Interest Absolute........................................26 EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent (Establishment of Treasury PIES) EXHIBIT B Instruction from Collateral Agent to Securities Intermediary (Establishment of Treasury PIES) EXHIBIT C Instruction from Purchase Contract Agent to Collateral Agent (Reestablishment of Corporate PIES) EXHIBIT D Instruction from Collateral Agent to Securities Intermediary (Reestablishment of Corporate PIES) -ii- EXHIBIT E Notice of Cash Settlement from the Securities Intermediary to the Purchase Contract Agent. -iii- PLEDGE AGREEMENT PLEDGE AGREEMENT dated as of February __, 1999 (this "Agreement") among NIPSCO INDUSTRIES, INC., an Indiana corporation (the "Company"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, not individually but solely as collateral agent (in such capacity, together with its successors in such capacity, the "Collateral Agent"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, not individually but solely in its capacity as a securities intermediary with respect to the Collateral Account (in such capacity, together with its successors in such capacity, the "Securities Intermediary"), and THE CHASE MANHATTAN BANK, a New York banking corporation, not individually but solely as purchase contract agent and as attorney-in-fact of the Holders from time to time of the Securities (in such capacity, together with its successors in such capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement. RECITALS The Company and the Purchase Contract Agent are parties to the Purchase Contract Agreement dated as of the date hereof (as modified and supplemented and in effect from time to time, the "Purchase Contract Agreement"), pursuant to which there may be issued up to 6,900,000 PIES (the "Securities"). Each Corporate PIES, at issuance, consists of a unit comprised of (a) one stock purchase contract (the "Purchase Contract") under which (i) the Holder will purchase from the Company on ___________, 2003, for an amount equal to $50 (the "Stated Amount"), a number of shares of Common Stock equal to the Settlement Rate, and (ii) the Company will pay the Holder Contract Adjustment Payments, if any, and (b) beneficial ownership of a Trust Preferred Security (a "Trust Preferred Security") issued by NIPSCO Capital Trust I (the "Trust"), having a liquidation amount equal to the Stated Amount and maturing on ________, 2005. Pursuant to the terms of the Purchase Contract Agreement and the Purchase Contracts, the Holders of the Securities have irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such Holders, among other things, to execute and deliver this Agreement on behalf of such Holders and to grant the pledge provided herein of the Collateral Account to secure the Obligations. Accordingly, the Company, the Collateral Agent, the Securities Intermediary and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of the Holders from time to time of the Securities, agree as follows: Section 1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; 2 (b) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Exhibit or other subdivision; (c) the following terms which are defined in the Code shall have the meanings set forth therein: "certificated security," "control," "financial asset," "entitlement order," "securities account" and "security entitlement"; (d) the following terms have the meanings assigned to them in the Purchase Contract Agreement: (1) Act, (2) Agent, (3) Board Resolution, (4) Cash Settlement, (5) Certificate, (6) Common Stock, (7) Contract Adjustment Payments, (8) Corporate PIES, (9) Debentures, (10) Early Settlement, (11) Early Settlement Amount, (12) Early Settlement Date, (13) Finance Subsidiary, (14) Holders, (15) Opinion of Counsel, (16) Outstanding Securities, (17) PIES, (18) Purchase Contract, (19) Purchase Contract Settlement Date, (20) Purchase Price, (21) Remarketing Agent, (22) Remarketing Agreement, (23) Settlement Rate, (24) Termination Event, (25) Treasury PIES and (26) Underwriting Agreement; (e) the following terms have the meanings assigned to them in the Declaration: (1) Applicable Ownership Interest (2) Applicable Principal Amount, (3) Failed Remarketing, (4) Indenture, (5) Primary Treasury Dealer, (6) Property Trustee, (7) Quotation Agent, (8) Redemption Amount, (9) Redemption Price, (10) Tax Event, (11) Tax Event Redemption, (12) Tax Event Redemption Date, (13) Treasury Portfolio and (14) Treasury Portfolio Purchase Price; and (f) the following terms have the meanings given to them in this section 1(f): "Agreement" means this Agreement, as the same may be amended, modified or supplemented from time to time. "Bankruptcy Code" means title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws. "Business Day" means any day other than (i) a Saturday or Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (ii) a day on which the principal office of either the Debenture Trustee or the Property Trustee under the Declaration is closed for business. "Capital Markets" means NIPSCO Capital Markets, Inc., an Indiana corporation, until a successor shall have become such, and thereafter "Capital Markets" shall mean such successor. "Cash" means any coin or currency of the United States as at the time shall be legal tender for payment of public and private debts. "Code" means the Uniform Commercial Code as in effect in the State of New York from time to time. 3 "Collateral Account" means the collective reference to (1) Securities Account No. _________ entitled "First National Bank of Chicago, as Collateral Agent, Securities Account (NIPSCO Capital Trust I)" maintained by the Securities Intermediary for the Purchase Contract Agent on behalf of and as attorney-in-fact for the Holders, (2) all investment property and other financial assets from time to time credited to the Collateral Account, including, without limitation, (A) the Trust Preferred Securities and security entitlements relating thereto which are a component of the Corporate PIES from time to time, (B) the Applicable Ownership Interests (as specified in clause (A) of the definition of such term) of the Holders with respect to the Treasury Portfolio which are a component of the Corporate PIES from time to time, (C) the Debentures and security entitlements relating thereto which are a component of Corporate PIES from time to time, (D) any Treasury Securities and security entitlements relating thereto delivered from time to time upon establishment of Treasury PIES in accordance with Section 5.2 hereof and (E) payments made by Holders pursuant to Section 5.5 hereof (collectively, the "Collateral"), (3) all Proceeds of any of the foregoing (whether such Proceeds arise before or after the commencement of any proceeding under any applicable bankruptcy, insolvency or other similar law, by or against the pledgor or with respect to the pledgor) and (4) all powers and rights now owned or hereafter acquired under or with respect to the Collateral Account. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor shall have become such, and thereafter "Company" shall mean such successor. "Debenture Trustee" means The Chase Manhattan Bank, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "Declaration" means the Amended and Restated Declaration of Trust of the Trust, dated as of February __, 1999, among the Capital Markets as sponsor, the trustees named therein and the holders from time to time of undivided beneficial interests in the assets of the Trust. "Obligations" means, with respect to each Holder, the collective reference to all obligations and liabilities of such Holder under such Holder's Purchase Contract and this Agreement or any other document made, delivered or given in connection herewith or therewith, in each case whether on account of principal, interest (including, without limitation, interest accruing before and after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to such Holder, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Company or the Collateral Agent or the Securities Intermediary that are required to be paid by the Holder pursuant to the terms of any of the foregoing agreements). "Permitted Investments" means any one of the following which shall mature not later than the next succeeding Business Day: (i) any evidence of indebtedness with an original maturity of 365 days or less issued, or directly and fully guaranteed or insured, by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of 4 America is pledged in support of the timely payment thereof or such indebtedness constitutes a general obligation of it); (ii) deposits, certificates of deposit or acceptances with an original maturity of 365 days or less of any institution which is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $200.0 million at the time of deposit; (iii) investments with an original maturity of 365 days or less of any Person that is fully and unconditionally guaranteed by a bank referred to in clause (ii); (iv) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed as to timely payment by the full faith and credit of the United States Government; (v) investments in commercial paper, other than commercial paper issued by the Company or its affiliates, of any corporation incorporated under the laws of the United States or any State thereof, which commercial paper has a rating at the time of purchase at least equal to "A-1" by Standard & Poor's Ratings Services ("S&P") or at least equal to "P-1" by Moody's Investors Service, Inc. ("Moody's"); and (vi) investments in money market funds registered under the Investment Company Act of 1940, as amended, rated in the highest applicable rating category by S&P or Moody's. "Person" means any legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Pledge" means the lien and security interest created by this Agreement. "Pledged Debentures" means Debentures and security entitlements with respect thereto from time to time credited to the Collateral Account and not then released from the Pledge. "Pledged Preferred Securities" means the Trust Preferred Securities and security entitlements with respect thereto from time to time credited to the Collateral Account and not then released from the Pledge. "Pledged Treasury Securities" means Treasury Securities and security entitlements with respect thereto from time to time credited to the Collateral Account and not then released from the Pledge. "Proceeds" has the meaning ascribed thereto in the Code and includes, without limitation, all interest, dividends, cash, instruments, securities, financial assets (as defined in ss. 8-102(a)(9) of the Code) and other property received, receivable or otherwise distributed upon the sale, exchange, collection or disposition of any financial assets from time to time held in the Collateral Account. "Purchase Contract Agent" has the meaning specified in the paragraph preceding the recitals of this Agreement. "TRADES" means the Treasury/Reserve Automated Debt Entry System maintained by the Federal Reserve Bank of New York pursuant to the TRADES Regulations. 5 "TRADES Regulations" means the regulations of the United States Department of the Treasury, published at 31 C.F.R. Part 357, an amended from time to time. Unless otherwise defined herein, all terms defined in the TRADES Regulations are used herein as therein defined. "Transfer" means: (a) in the case of certificated securities in registered form, delivery as provided in ss. 8-301(a) of the Code, indorsed to the transferee or in blank by an effective indorsement; (b) in the case of Treasury Securities, registration of the transferee as the owner of such Treasury Securities on TRADES; and (c) in the case of security entitlements, including, without limitation, security entitlements with respect to Treasury Securities, a securities intermediary indicating by book entry that such security entitlement has been credited to the transferee's securities account. "Treasury Security" means a zero-coupon U.S. Treasury Security (Cusip Number ________) which are the principal strips of the __% U.S. Treasury Securities which mature on ________, 2003. "Value" with respect to any item of Collateral on any date means, as to (i) a Trust Preferred Security, the liquidation amount, (ii) Cash, the face amount thereof and (iii) Treasury Securities, Debentures or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, in each case the aggregate principal amount thereof at maturity. Section 2. Pledge Section 2.1 Pledge. Each Holder, acting through the Purchase Contract Agent as such Holder's attorney-in-fact, hereby pledges and grants to the Collateral Agent, as agent of and for the benefit of the Company, a continuing first priority security interest in and to, and a lien upon and right of set off against, all of such Holder's right, title and interest in and to the Collateral Account to secure the prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations. The Collateral Agent shall have all of the rights, remedies and recourses with respect to the Collateral afforded a secured party by the Code, in addition to, and not in limitation of, the other rights, remedies and recourses afforded to the Collateral Agent by this Agreement. Section 2.2 Control; Financing Statement. (a) The Collateral Agent shall have control of the Collateral Account pursuant to the provisions of Section 4 of this Agreement. (b) On the date of initial issuance of the Securities, the Purchase Contract Agent shall deliver to the Collateral Agent a financing statement prepared by the Company for filing in the Office of the 6 Secretary of State of the State of New York, signed by the Purchase Contract Agent, as attorney-in-fact for the Holders, as Debtors, and describing the Collateral. Section 3. Distributions on Pledged Collateral Section 3.1 Income Distributions. All income distributions received by the Securities Intermediary on account of the Trust Preferred Securities or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Debentures or Permitted Investments from time to time held in the Collateral Account shall be distributed to the Purchase Contract Agent for the benefit of the applicable Holders as provided in the Purchase Contracts. Section 3.2 Principal Payments Following Termination Event. All payments received by the Securities Intermediary following a Termination Event of (1) the liquidation amount of Pledged Preferred Securities or securities entitlements thereto, (2) the Applicable Ownership Interests (as specified in clause (A) of the definition thereof) of the Treasury Portfolio, (3) the aggregate principal amount of Pledged Debentures or securities entitlements thereto, or (4) the principal amount of the Pledged Treasury Securities or securities entitlements thereto shall be distributed to the Purchase Contract Agent for the benefit of the Holders for distribution to such Holders in accordance with their respective interests. Section 3.3 Principal Payments Prior To or On Purchase Contract Settlement Date. (a) Subject to the provisions of Section 7.3, and except as provided in clause 3.3(b) below, if no Termination Event shall have occurred, all payments received by the Securities Intermediary of (1) the liquidation amount with respect to Pledged Preferred Securities or security entitlements thereto, (2) Applicable Ownership Interests (as specified in clause (A) of the definition thereof) of the Treasury Portfolio, (3) the aggregate principal amount with respect to the Pledged Debentures or security entitlements thereto or (4) the principal amount of Pledged Treasury Securities or security entitlements thereto shall be held and invested in Permitted Investments until the Purchase Contract Settlement Date and on the Purchase Contract Settlement Date distributed to the Company as provided in Section 5.7 hereof. Any balance remaining in the Collateral Account shall be distributed to the Purchase Contract Agent for the benefit of the applicable Holders for distribution to such Holders in accordance with their respective interests. (b) All payments received by the Securities Intermediary of (1) the liquidation amount with respect to Trust Preferred Securities or security entitlements thereto, (2) Applicable Ownership Interests (as specified in clause (A) of the definition thereof) of the Treasury Portfolio, (3) the aggregate principal amount of Debentures or security entitlements thereto or (4) the principal amount of Treasury Securities or security entitlements thereto that in each case have been released from the Pledge shall be distributed to the Purchase Contract Agent for the benefit of the Holders to be distributed to such Holders in accordance with their respective interests. Section 3.4 Payments to Purchase Contract Agent. Payments to the Purchase Contract Agent hereunder shall be made to the account designated by the Purchase Contract Agent for such purpose 7 not later than 12:00 p.m., New York City time, on the Business Day such payment is received by the Securities Intermediary; provided, however, that if such payment is received on a day that is not a Business Day or after 12:30 p.m., New York City time, on a Business Day, then such payment shall be made no later than 10:30 a.m., New York City time, on the next succeeding Business Day. Section 3.5 Assets Not Properly Released. If the Purchase Contract Agent or any Holder shall receive any payments of the liquidation amount or principal payments on account of financial assets credited to the Collateral Account and not released therefrom in accordance with this Agreement, the Purchase Contract Agent or such Holder shall hold the same as trustee of an express trust for the benefit of the Company and upon receipt of an Officers' Certificate (as defined in the Purchase Contract Agreement) of the Company so directing, promptly deliver the same to the Securities Intermediary for credit to the Collateral Account or to the Company for application to the obligations of the Holders under the related Purchase Contracts, and the Purchase Contract Agent and Holders shall acquire no right, title or interest in any such payments of liquidation or principal amounts so received. Section 4. Control Section 4.1 Establishment of Collateral Account. The Securities Intermediary hereby confirms that (a) the Securities Intermediary has established the Collateral Account, (b) the Collateral Account is a securities account, (c) subject to the terms of this Agreement, the Securities Intermediary shall treat the Purchase Contract Agent as entitled to exercise the rights that comprise any financial asset credited to the Collateral Account, (d) all property delivered to the Securities Intermediary pursuant to this Pledge or the Purchase Contract Agreement or the Indenture will be credited promptly to the Collateral Account and (e) all securities or other property underlying any financial assets credited to the Collateral Account shall be registered in the name of the Securities Intermediary, indorsed to the Securities Intermediary or in blank or credited to another securities account maintained in the name of the Securities Intermediary and in no case will any financial asset credited to the Collateral Account be registered in the name of the Purchase Contract Agent or any Holder, payable to the order of the Purchase Contract Agent or any Holder or specially indorsed to the Purchase Contract Agent or any Holder. Section 4.2 Treatment as Financial Assets. Each item of property (whether investment property, financial asset, security, instrument or cash) credited to the Collateral Account shall be treated as a financial asset. Section 4.3 Sole Control by Collateral Agent. Except as provided in Section 6, at all times prior to the termination of the Pledge, the Collateral Agent shall have sole control of the Collateral Account, and the Securities Intermediary shall take instructions and directions with respect to the Collateral Account solely from the Collateral Agent. If at any time the Securities Intermediary shall receive an entitlement order issued by the Collateral Agent and relating to the Collateral Account, the Securities Intermediary shall comply with such entitlement order without further consent by the Purchase Contract Agent or any Holder or any other Person. Until termination of the Pledge, the 8 Securities Intermediary will not comply with any entitlement orders issued by the Purchase Contract Agent or any Holder. Section 4.4 Securities Intermediary's Location. The Collateral Account and the rights and obligations of the Securities Intermediary, the Collateral Agent, the Purchase Contract Agent and the Holders with respect thereto shall be governed by the laws of the State of New York. Regardless of any provision in any other agreement, for purposes of the Code, New York shall be deemed to be the Securities Intermediary's location and the Collateral Account (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York. Section 4.5 No Other Claims. Except for the claims and interest of the Collateral Agent and of the Purchase Contract Agent and the Holders in the Collateral Account, the Securities Intermediary does not know of any claim to, or interest in, the Collateral Account or in any financial asset credited thereto. If any person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Collateral Account or in any financial asset carried therein, the Securities Intermediary will promptly notify the Collateral Agent and the Purchase Contract Agent. Section 4.6 Investment and Release. All proceeds of financial assets from time to time deposited in the Collateral Account shall be invested and reinvested as provided in this Agreement. At all times prior to termination of the Pledge, no property shall be released from the Collateral Account except in accordance with this Agreement or upon written instructions of the Collateral Agent. Section 4.7 Statements and Confirmations. The Securities Intermediary will promptly send copies of all statements, confirmations and other correspondence concerning the Collateral Account and any financial assets credited thereto simultaneously to each of the Purchase Contract Agent and the Collateral Agent at their addresses for notices under this Agreement. Section 4.8 Tax Allocations. All items of income, gain, expense and loss recognized in the Collateral Account shall be reported to the Internal Revenue Service and all state and local taxing authorities under the names and taxpayer identification numbers of the holders which are the beneficial owners thereof. Section 4.9 No Other Agreements. The Securities Intermediary has not entered into and prior to the termination of the Pledge will not enter into any agreement with any other Person relating to the Collateral Account or any financial assets credited thereto, including, without limitation, any agreement to comply with entitlement orders of any Person other than the Collateral Agent. Section 4.10 Powers Coupled With An Interest. The rights and powers granted in this Section 4 to the Collateral Agent have been granted in order to perfect its security interests in the Collateral Account, are powers coupled with an interest and will be affected neither by the bankruptcy of the Purchase Contract Agent or any Holder nor by the lapse of time. The obligations 9 of the Securities Intermediary under this Section 4 shall continue in effect until the termination of the Pledge. Section 5. Initial Deposit; Establishment of Treasury PIES and Reestablishment of Corporate PIES. Section 5.1 Initial Deposit of Trust Preferred Securities. Prior to or concurrently with the execution and delivery of this Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the Corporate PIES, shall Transfer to the Securities Intermediary, for credit to the Collateral Account, the Trust Preferred Securities or security entitlements relating to such Trust Preferred Securities, and the Securities Intermediary shall indicate by book entry that a securities entitlement to such Trust Preferred Securities has been credited to the Collateral Account. Section 5.2 Establishment of Treasury PIES. (a) So long as no Tax Event Redemption shall have occurred, and the Trust shall not have been liquidated, at any time on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, a Holder of Corporate PIES shall have the right to establish or reestablish Treasury PIES by substitution of Treasury Securities or security entitlements thereto for the Pledged Preferred Securities comprising a part of such Holder's Corporate PIES in integral multiples of 20 Corporate PIES by: (1) Transferring to the Securities Intermediary for credit to the Collateral Account Treasury Securities or security entitlements thereto having a Value equal to the liquidation amount of the Pledged Preferred Securities to be released, accompanied by a notice, substantially in the form of Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the Collateral Agent a notice, substantially in the form of Exhibit A hereto, (A) stating that such Holder has Transferred Treasury Securities or security entitlements thereto to the Securities Intermediary for credit to the Collateral Account, (B) stating the Value of the Treasury Securities or security entitlements thereto Transferred by such Holder and (C) requesting that the Collateral Agent release from the Pledge the Pledged Preferred Securities that are a component of such Corporate PIES; and (2) delivering the related Corporate PIES to the Purchase Contract Agent. Upon receipt of such notice and confirmation that Treasury Securities or security entitlements thereto have been credited to the Collateral Account as described in such notice, the Collateral Agent shall instruct the Securities Intermediary by a notice, substantially in the form of Exhibit B hereto, to release such Pledged Preferred Securities from the Pledge by Transfer to the Purchase Contract Agent for distribution to such Holder. (b) If a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES, at any time on or prior to the second Business Day immediately preceding the Purchase Contract Settlement Date, a Holder of Corporate PIES shall have the right to establish or reestablish Treasury PIES by substitution of Treasury Securities or security entitlements thereto for the Applicable Ownership Interest (as specified in clause (A) of the 10 definition of such term) of the Treasury Portfolio that are a component of such Holder's Corporate PIES in integral multiples of 160,000 Corporate PIES by: (1) Transferring to the Securities Intermediary for credit to the Collateral Account Treasury Securities or security entitlements thereto having a Value equal to such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio to be released, accompanied by a notice, substantially in the form of Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the Collateral Agent a notice, substantially in the form of Exhibit A hereto, (A) stating that such Holder has Transferred Treasury Securities or security entitlements thereto to the Securities Intermediary for credit to the Collateral Account, (B) stating the Value of the Treasury Securities Transferred by such Holder and (C) requesting that the Collateral Agent release from the Pledge the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio that is a component of such Corporate PIES; and (2) delivering the related Corporate PIES to the Purchase Contract Agent. Upon receipt of such notice and confirmation that Treasury Securities or security entitlements thereto have been credited to the Collateral Account as described in such notice, the Collateral Agent shall instruct the Securities Intermediary by a notice, substantially in the form of Exhibit B hereto, to release such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio from the Pledge by Transfer to the Purchase Contract Agent for distribution to such Holder. (c) If no Tax Event Redemption shall have occurred, but the Trust shall have been liquidated, and the Debentures have become a component of the Corporate PIES, at any time on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, a Holder of Corporate PIES shall have the right to substitute Treasury Securities or security entitlements thereto for the Pledged Debentures comprising a part of such Holder's Corporate PIES in integral multiples of 20 Corporate PIES by: (1) Transferring to the Securities Intermediary for credit to the Collateral Account Treasury Securities or security entitlements thereto having a Value at maturity equal to the aggregate principal amount at maturity of Pledged Debentures to be released, accompanied by a notice, substantially in the form of Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the Collateral Agent a notice, substantially in the form of Exhibit A hereto, (A) stating that such Holder has Transferred Treasury Securities or security entitlements thereto to the Securities Intermediary for credit to the Collateral Account, (B) stating the Value of the Treasury Securities Transferred by such Holder and (C) requesting that the Collateral Agent release from the Pledge the Pledged Debentures that are a component of such Corporate PIES; and (2) delivering the related Corporate PIES to the Purchase Contract Agent. 11 Upon receipt of such notice and confirmation that Treasury Securities or security entitlements thereto have been credited to the Collateral Account as described in such notice, the Collateral Agent shall instruct the Securities Intermediary by a notice, substantially in the form of Exhibit B hereto, to release such Pledged Debentures from the Pledge by Transfer to the Purchase Contract Agent for distribution to such Holder. (d) Upon credit to the Collateral Account of Treasury Securities or security entitlements thereto delivered by a Holder of Corporate PIES and receipt of the related instruction from the Collateral Agent, the Securities Intermediary shall release the Pledged Preferred Securities or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Pledged Debentures, as the case may be, and shall promptly transfer the same to the Purchase Contract Agent for distribution to such Holder, free and clear of any lien, pledge or security interest created hereby. Section 5.3 Reestablishment of Corporate PIES. (a) So long as no Tax Event Redemption shall have occurred, and the Trust shall not have been liquidated, at any time on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, a Holder of Treasury PIES shall have the right to reestablish Corporate PIES by substitution of Trust Preferred Securities or security entitlements thereto for Pledged Treasury Securities in integral multiples of 20 Treasury PIES by: (1) Transferring to the Securities Intermediary for credit to the Collateral Account Trust Preferred Securities or security entitlements thereto having a liquidation amount equal to the Value of the Pledged Treasury Securities to be released, accompanied by a notice, substantially in the form of Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the Collateral Agent a notice, substantially in the form of Exhibit C hereto, stating that such Holder has Transferred Trust Preferred Securities or security entitlements thereto to the Securities Intermediary for credit to the Collateral Account and requesting that the Collateral Agent release from the Pledge the Pledged Treasury Securities related to such Treasury PIES; and (2) delivering the related Treasury PIES to the Purchase Contract Agent. Upon receipt of such notice and confirmation that Trust Preferred Securities or security entitlements thereto have been credited to the Collateral Account as described in such notice, the Collateral Agent shall instruct the Securities Intermediary by a notice in the form provided in Exhibit D to release such Pledged Treasury Securities from the Pledge by Transfer to the Purchase Contract Agent for distribution to such Holder. (b) If a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES, at any time on or prior to the second Business Day immediately preceding the Purchase Contract Settlement Date, a Holder of Treasury PIES shall have the right to reestablish Corporate PIES by substitution of an Applicable Ownership Interest (as specified in 12 clause (A) of the definition of such term) of the Treasury Portfolio for Pledged Treasury Securities in integral multiples of 160,000 Treasury PIES by: (1) Transferring to the Securities Intermediary for credit to the Collateral Account an Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio equal to the Value of the Pledged Treasury Securities to be released, accompanied by a notice, substantially in the form provided in Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the Collateral Agent a notice, substantially in the form of Exhibit C hereto, stating that such Holder has Transferred an Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio to the Securities Intermediary for credit to the Collateral Account and requesting that the Collateral Agent release from the Pledge the Pledged Treasury Securities related to such Treasury PIES; and (2) delivering the related Treasury PIES to the Purchase Contract Agent. Upon receipt of such notice and confirmation that an Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio equal to the Value of the Pledged Treasury Securities to be released has been credited to the Collateral Account as described in such notice, the Collateral Agent shall instruct the Securities Intermediary by a notice in the form provided in Exhibit D to release such Pledged Treasury Securities from the Pledge by Transfer to the Purchase Contract Agent for distribution to such Holder. (c) If no Tax Event Redemption shall have occurred, but the Trust shall have been liquidated, and the Debentures have become a component of the Corporate PIES, at any time on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, a Holder of Treasury PIES shall have the right to reestablish Corporate PIES by substitution of Debentures or security entitlements thereto for Pledged Treasury Securities in integral multiples of 20 Treasury PIES by: (1) Transferring to the Securities Intermediary for credit to the Collateral Account Debentures or security entitlements thereto having a principal amount equal to the Value of the Pledged Treasury Securities to be released, accompanied by a notice, substantially in the form of Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the Collateral Agent a notice, substantially in the form of Exhibit C hereto, stating that such Holder has Transferred Debentures or security entitlements thereto to the Securities Intermediary for credit to the Collateral Account and requesting that the Collateral Agent release from the Pledge the Pledged Treasury Securities related to such Treasury PIES; and (2) delivering the related Treasury PIES to the Purchase Contract Agent. Upon receipt of such notice and confirmation that Debentures or security entitlements thereto have been credited to the Collateral Account as described in such notice, the Collateral Agent shall 13 instruct the Security Intermediary by a notice in the form provided in Exhibit D to release such Pledged Treasury Securities from the Pledge by Transfer to the Purchase Contract Agent for distribution to such Holder. (d) Upon credit to the Collateral Account of Trust Preferred Securities or security entitlements thereto, or an appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Debentures or security entitlements thereto, as the case may be, and receipt of the related instruction from the Collateral Agent, the Securities Intermediary shall release the applicable Pledged Treasury Securities and shall promptly Transfer the same to the Purchase Contract Agent for distribution to such Holder, free and clear of any lien, pledge or security interest created hereby. Section 5.4 Termination Event. (a) Upon receipt by the Collateral Agent of written notice from the Company or the Purchase Contract Agent that a Termination Event has occurred, the Collateral Agent shall release all Collateral from the Pledge and shall promptly Transfer: (1) any Pledged Preferred Securities or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio (if a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES) or the Pledged Debentures (if the Trust has been liquidated, and the Debentures or security entitlements thereto have become a component of the Corporate PIES); or (2) any Pledged Treasury Securities to the Purchase Contract Agent for the benefit of the Holders, for distribution to such Holders in accordance with their respective interests, free and clear of any lien, pledge or security interest or other interest created hereby. (b) If such Termination Event shall result from the Company's becoming a debtor under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail promptly to effectuate the release and Transfer of all Pledged Preferred Securities, the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, the Pledged Debentures or the Pledged Treasury Securities, as the case may be, as provided by this Section 5.4, the Purchase Contract Agent shall: (1) use its best efforts to obtain an opinion of a nationally recognized law firm reasonably acceptable to the Collateral Agent to the effect that, as a result of the Company's being the debtor in such a bankruptcy case, the Collateral Agent will not be prohibited from releasing or Transferring the Collateral as provided in this Section 5.4, and shall deliver such opinion to the Collateral Agent within ten days after the occurrence of such Termination Event, and if (A) the Purchase Contract Agent shall be unable to obtain such opinion within ten days after the occurrence of such Termination Event or (B) the Collateral Agent shall continue, after delivery of such opinion, to refuse to effectuate the release and Transfer of 14 all Pledged Preferred Securities, Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, all the Pledged Debentures or the Pledged Treasury Securities, as the case may be, as provided in this Section 5.4, then the Purchase Contract Agent shall within fifteen days after the occurrence of such Termination Event commence an action or proceeding in the court having jurisdiction of the Company's case under the Bankruptcy Code seeking an order requiring the Collateral Agent to effectuate the release and transfer of all Pledged Preferred Securities, the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, all the Pledged Debentures or the Pledged Treasury Securities, as the case may be, as provided by this Section 5.4; or (2) commence an action or proceeding like that described in clause 5.4(b)(1)(B) hereof within ten days after the occurrence of such Termination Event. Section 5.5 Cash Settlement. (a) Upon receipt by the Collateral Agent of (1) a notice from the Purchase Contract Agent promptly after the receipt by the Purchase Contract Agent of a notice that a Holder of a Corporate PIES or Treasury PIES has elected, in accordance with the procedures specified in Section 5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively, to settle its Purchase Contract with cash and (2) payment by such Holder by deposit in the Collateral Account on or prior to 11:00 a.m., New York City time, on the fifth Business Day immediately preceding the Purchase Contract Settlement Date of lawful money of the United States by certified or cashier's check or wire transfer of immediately available funds payable to or upon the order of the Securities Intermediary, then the Collateral Agent shall (i) instruct the Securities Intermediary promptly to invest any such Cash in Permitted Investments and (ii) release from the Pledge, (1) Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Pledged Debentures in the case of a Holder of Corporate PIES or (2) Pledged Treasury Securities in the case of a Holder of Treasury PIES, as the case may be, with a liquidation or principal amount equal to the product of (x) the Stated Amount times (y) the number of such Purchase Contracts as to which such Holders have elected to effect a cash settlement pursuant to this Section 5.5(a) and shall instruct the Securities Intermediary to Transfer all such Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Pledged Debentures or Pledged Treasury Securities, as the case may be, to the Purchase Contract Agent for the benefit of such Holders, in each case free and clear of the Pledge created hereby, for distribution to such Holders in accordance with their respective interests. Upon receipt of the proceeds upon the maturity of the Permitted Investments on the Purchase Contract Settlement Date, the Collateral Agent shall (A) instruct the Securities Intermediary to pay the portion of such proceeds and deliver any certified or cashier's checks received, in an aggregate amount equal to the Purchase Price, to the Company on the Purchase Contract Settlement Date, and (B) instruct the Securities Intermediary to release any amounts in respect of the interest earned from such Permitted Investments to the Purchase Contract Agent for distribution to the relevant Holders in accordance with their respective interests. 15 (b) If a Holder of a Corporate PIES notifies the Purchase Contract Agent as provided in paragraph 5.4(a)(i) of the Purchase Contract Agreement of its intention to pay the Purchase Price in cash, but fails to make such payment as required by paragraph 5.4(a)(ii) of the Purchase Contract Agreement, such Holder shall be deemed to have consented to the disposition of the Pledged Preferred Securities or Pledged Debentures of such Holder in accordance with paragraph 5.4(a)(iii) of the Purchase Contract Agreement. (c) If a Holder of a Treasury PIES or Corporate PIES (if a Tax Event Redemption has occurred) notifies the Purchase Contract Agent as provided in paragraph 5.4(d)(i) of the Purchase Contract Agreement of its intention to pay the Purchase Price in cash, but fails to make such payment as required by paragraph 5.4(d)(ii) of the Purchase Contract Agreement, such Holder shall be deemed to have elected to pay the Purchase Price in accordance with paragraph 5.4(d)(iii) of the Purchase Contract Agreement.. (d) Prior to 3:00 p.m., New York City time, on the fourth Business Day immediately preceding the Purchase Contract Settlement Date, the Securities Intermediary shall deliver to the Purchase Contract Agent a notice, substantially in the form of Exhibit E hereto, stating (i) the amount of cash that it has received with respect to the Cash Settlement of Corporate PIES and (ii) the amount of cash that it has received with respect to the Cash Settlement of Treasury PIES. Section 5.6 Early Settlement. Upon written notice to the Collateral Agent by the Purchase Contract Agent that one or more Holders of Securities have elected to effect Early Settlement of their respective obligations under the Purchase Contracts forming a part of such Securities in accordance with the terms of the Purchase Contracts and the Purchase Contract Agreement (setting forth the number of such Purchase Contracts as to which such Holders have elected to effect Early Settlement), and that the Purchase Contract Agent has received from such Holders, and paid to the Company as confirmed in writing by the Company, the related Early Settlement Amounts pursuant to the terms of the Purchase Contracts and the Purchase Contract Agreement and that all conditions to such Early Settlement have been satisfied, then the Collateral Agent shall release from the Pledge, (a0 Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Pledged Debentures in the case of a Holder of Corporate PIES or (b) Pledged Treasury Securities in the case of a Holder of Treasury PIES, as the case may be, with a liquidation or principal amount equal to the product of (i) the Stated Amount times (ii) the number of such Purchase Contracts as to which such Holders have elected to effect Early Settlement and shall instruct the Securities Intermediary to Transfer all such Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Pledged Debentures or Pledged Treasury Securities, as the case may be, to the Purchase Contract Agent for the benefit of such Holders, in each case free and clear of the Pledge created hereby, for distribution to such Holders in accordance with their respective interests. Section 5.7 Application of Proceeds Settlement. (a) If a Holder of Corporate PIES (if a Tax Event Redemption has not occurred and the Trust Preferred Securities or Debentures or security entitlements to either of them are a component of the Corporate PIES) has not elected to make an 16 effective Cash Settlement by notifying the Purchase Contract Agent in the manner provided for in Section 5.4(a)(i) in the Purchase Contract Agreement, or has given such notice but failed to deliver the required cash prior to 11:00 A.M., New York City time, on the fifth Business Day immediately preceding the Purchase Contract Settlement Date, such Holder shall be deemed to have elected to pay for the shares of Common Stock to be issued under such Purchase Contract(s) from the Proceeds of the related Pledged Preferred Securities or Pledged Debentures. In such event, the Collateral Agent shall instruct the Securities Intermediary to Transfer the related Pledged Preferred Securities or Pledged Debentures to the Remarketing Agent for remarketing. Upon receiving such Pledged Preferred Securities or Pledged Debentures, the Remarketing Agent, pursuant to the terms of the Remarketing Agreement, will use its reasonable efforts to remarket such Pledged Preferred Securities or Pledged Debentures on such date at a price of 100% of the aggregate liquidation amount of such Pledged Preferred Securities or aggregate principal amount of such Pledged Debentures, as the case may be. The Remarketing Agent will deposit the entire amount of the Proceeds of such remarketing in the Collateral Account. On the Purchase Contract Settlement Date, the Collateral Agent shall instruct the Securities Intermediary to apply the Proceeds from such remarketing equal to the aggregate liquidation amount of such Pledged Preferred Securities or aggregate principal amount of such Pledged Debentures, as the case may be, to satisfy in full the obligations of such Holders of Corporate PIES to pay the Purchase Price to purchase the Common Stock under the related Purchase Contracts. If the Remarketing Agent advises the Collateral Agent in writing that it cannot remarket the related Pledged Preferred Securities or Pledged Debentures, as the case may be, of such Holders of Corporate PIES at a price equal to 100% of the aggregate liquidation amount of such Pledged Preferred Securities or aggregate principal amount of such Pledged Debentures, thus resulting in a Failed Remarketing and an event of default under the Purchase Contract Agreement and hereunder, the Collateral Agent, for the benefit of the Company shall, at the written direction of the Company, dispose of the Pledged Preferred Securities or Pledged Debentures, as the case may be, in accordance with applicable law and satisfy in full, from such disposition, such Holders' obligation to pay the Purchase Price for the Common Stock. (b) If a Holder of Treasury PIES or Corporate PIES (if a Tax Event Redemption has occurred) has not elected to make an effective cash settlement by notifying the Purchase Contract Agent in the manner provided for in Section 5.4(d)(i) of the Purchase Contract Agreement, or has given such notice but failed to make such payment in the manner required by Section 5.4(d)(ii) of the Purchase Contract Agreement, such Holder shall be deemed to have elected to pay for the shares of Common Stock to be issued under such Purchase Contract(s) from the Proceeds of the related Pledged Treasury Securities or such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be. On the Business Day immediately prior to the Purchase Contract Settlement Date, the Securities Intermediary, at the written direction of the Collateral Agent, shall invest the Cash Proceeds of the maturing Pledged Treasury Securities or such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, in Permitted Investments. Without receiving any instruction from any such Holder of Treasury PIES or Corporate PIES, the Collateral Agent shall apply the Proceeds of the related Pledged Treasury Securities or such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio to the settlement of such Purchase Contracts on the Purchase Contract Settlement 17 Date. In the event the sum of the Proceeds from the related Pledged Treasury Securities or such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio and the investment earnings from the investment in Permitted Investments is in excess of the aggregate Purchase Price of the Purchase Contracts being settled thereby, the Collateral Agent shall instruct the Securities Intermediary to distribute such excess, when received, to the Purchase Contract Agent for the benefit of such Holders for distribution to such Holders in accordance with their respective interests. Section 5.8 Tax Event Redemption. If the Tax Event Redemption shall occur prior to the Purchase Contract Settlement Date, the Securities Intermediary shall apply the Redemption Amount to purchase the Treasury Portfolio and the Securities Intermediary shall credit the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio to the Collateral Account and shall transfer the Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio to the Purchase Contract Agent for distribution to the Holders of the Corporate PIES. Upon credit to the Collateral Account of the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio having a Value equal to the liquidation amount of the Pledged Preferred Securities or the aggregate principal amount of the Pledged Debentures, the Securities Intermediary shall release the Pledged Preferred Securities or the Pledged Debentures, as applicable, from the Collateral Account and shall promptly transfer the Pledged Preferred Securities to the Trust and the Pledged Debentures to the Finance Subsidiary, as applicable. Section 6. Voting Rights -- Trust Preferred Securities and Pledged Debentures. The Purchase Contract Agent may exercise, or refrain from exercising, any and all voting and other consensual rights pertaining to the Pledged Preferred Securities or the Pledged Debentures or any part thereof for any purpose not inconsistent with the terms of this Agreement and in accordance with the terms of the Purchase Contract Agreement; provided, that the Purchase Contract Agent shall not exercise or, as the case may be, shall not refrain from exercising such right if, in the judgment of the Purchase Contract Agent, such action would impair or otherwise have a material adverse effect on the value of all or any of the Pledged Preferred Securities or the Pledged Debentures; and provided, further, that the Purchase Contract Agent shall give the Company and the Collateral Agent at least five days' prior written notice of the manner in which it intends to exercise, or its reasons for refraining from exercising, any such right. Upon receipt of any notices and other communications in respect of any Pledged Preferred Securities or any Pledged Debentures, including notice of any meeting at which holders of Trust Preferred Securities or Debentures are entitled to vote or solicitation of consents, waivers or proxies of holders of Trust Preferred Securities or Debentures, the Collateral Agent shall use reasonable efforts to send promptly to the Purchase Contract Agent such notice or communication, and as soon as reasonably practicable after receipt of a written request therefor from the Purchase Contract Agent, execute and deliver to the Purchase Contract Agent such proxies and other instruments in respect of such Pledged Preferred Securities or Pledged Debentures (in form and substance satisfactory to the Collateral Agent) as are prepared by the Purchase Contract Agent with respect to the Pledged Preferred Securities or Pledged Debentures. Section 7. Rights and Remedies; Distribution of the Debentures; Tax Event Redemption 18 Section 7.1 Rights and Remedies of the Collateral Agent. (a) In addition to the rights and remedies specified in Section 5.5 hereof or otherwise available at law or in equity, after an event of default (as specified in Section 7.1(b) below) hereunder the Collateral Agent shall have all of the rights and remedies with respect to the Collateral of a secured party under the Code (whether or not the Code is in effect in the jurisdiction where the rights and remedies are asserted) and the TRADES Regulations and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted. Without limiting the generality of the foregoing, such remedies may include, to the extent permitted by applicable law, (i) retention of the Pledged Preferred Securities or Pledged Debentures in full satisfaction of the Holders' obligations under the Purchase Contracts or (ii) sale of the Pledged Preferred Securities or Pledged Debentures in one or more public or private sales. (b) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, in the event the Collateral Agent is unable to make payments to the Company on account of the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or on account of principal payments of any Pledged Treasury Securities as provided in Section 3 hereof, in satisfaction of the Obligations of the Holder of the Securities of which such Pledged Treasury Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as applicable, is a part under the related Purchase Contracts, the inability to make such payments shall constitute an event of default hereunder and the Collateral Agent shall have and may exercise, with reference to such Pledged Treasury Securities or such appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as applicable, and such obligations of such Holder, any and all of the rights and remedies available to a secured party under the Code and the TRADES Regulations after default by a debtor, and as otherwise granted herein or under any other law. (c) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably authorized to receive and collect all payments of (i) the liquidation amount of or, cash distributions on, the Pledged Preferred Securities, (ii) the principal amount of the Pledged Treasury Securities, (iii) the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio and (iv) the principal amount of the Pledged Debentures, subject, in each case, to the provisions of Section 3 hereof, and as otherwise granted herein. (d) The Purchase Contract Agent and each Holder of Securities, in the event such Holder becomes the Holder of a Treasury PIES, agrees that, from time to time, upon the written request of the Collateral Agent, the Purchase Contract Agent or such Holder shall execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order to maintain the Pledge, and the perfection and priority thereof, and to confirm the rights of the Collateral Agent hereunder. The Purchase Contract Agent shall have no liability to any Holder for executing any documents or taking any such acts requested by the Collateral Agent hereunder, except for liability for its own negligent act, its own negligent failure to act or its own willful misconduct. 19 Section 7.2 Substitution of Debentures. If the Trust shall have been liquidated prior to the Purchase Contract Settlement Date, the Collateral Agent shall transfer to the Securities Intermediary Debentures having a Value equal to the liquidation amount of the Pledged Preferred Securities for credit to the Collateral Account. Upon credit to the Collateral Account of such Debentures, the Securities Intermediary shall release the Pledged Preferred Securities from the Collateral Account and shall promptly transfer the same to the Trust. Section 7.3 Tax Event Redemption. Upon the occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement Date, the Redemption Price payable on the Tax Event Redemption Date with respect to the Applicable Principal Amount shall be credited to the Collateral Account by the Property Trustee or, upon a dissolution of the Trust and the distribution of the related Debentures, by the Debenture Trustee on or prior to 12:30 p.m., New York City time, by federal funds check or wire transfer of immediately available funds. The Collateral Agent is hereby authorized to present the Pledged Preferred Securities or the Pledged Debentures for payment as may be required by their respective terms. Upon receipt of such funds, the Pledged Preferred Securities or Pledged Debentures, as the case may be, shall be released from the Collateral Account. In the event such funds are credited to the Collateral Account, the Collateral Agent, at the written direction of the Company, shall instruct the Securities Intermediary to (a) apply an amount equal to the Redemption Amount of such Redemption Price to purchase the Treasury Portfolio from the Quotation Agent for credit to the Collateral Account and (b) promptly remit the remaining portion of such Redemption Price to the Purchase Contract Agent for payment to the Holders of Corporate PIES. Section 7.4 Substitutions. Whenever a Holder has the right to substitute Treasury Securities, Trust Preferred Securities, Debentures or security entitlements to any of them or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, for financial assets held in the Collateral Account, such substitution shall not constitute a novation of the security interest created hereby. Section 8. Representations and Warranties; Covenants. Section 8.1 Representations and Warranties. The Holders from time to time, acting through the Purchase Contract Agent as their attorney-in-fact (it being understood that the Purchase Contract Agent shall not be liable for any representation or warranty made by or on behalf of a Holder), hereby represent and warrant to the Collateral Agent, which representations and warranties shall be deemed repeated on each day a Holder Transfers Collateral that: (a) such Holder has the power to grant a security interest in and lien on the Collateral; (b) such Holder is the sole beneficial owner of the Collateral and, in the case of Collateral delivered in physical form, is the sole holder of such Collateral and is the sole beneficial owner of, or has the right to Transfer, the Collateral it Transfers to the Securities Intermediary for credit to the Collateral Account, free and clear of any security interest, lien, encumbrance, call, liability to pay 20 money or other restriction other than the security interest and lien granted under Section 2 hereof; (c) upon the Transfer of the Collateral to the Securities Intermediary for credit to the Collateral Account, the Collateral Agent, for the benefit of the Company, will have a valid and perfected first priority security interest therein (assuming that any central clearing operation or any securities intermediary or other entity not within the control of the Holder involved in the Transfer of the Collateral, including the Collateral Agent and the Securities Intermediary, gives the notices and takes the action required of it hereunder and under applicable law for perfection of that interest and assuming the establishment and exercise of control pursuant to Section 4 hereof); and (d) the execution and performance by the Holder of its obligations under this Agreement will not result in the creation of any security interest, lien or other encumbrance on the Collateral other than the security interest and lien granted under Section 2 hereof or violate any provision of any existing law or regulation applicable to it or of any mortgage, charge, pledge, indenture, contract or undertaking to which it is a party or which is binding on it or any of its assets. Section 8.2 Covenants. The Holders from time to time, acting through the Purchase Contract Agent as their attorney-in-fact (it being understood that the Purchase Contract Agent shall not be liable for any covenant made by or on behalf of a Holder), hereby covenant to the Collateral Agent that for so long as the Collateral remains subject to the Pledge: (a) neither the Purchase Contract Agent nor such Holders will create or purport to create or allow to subsist any mortgage, charge, lien, pledge or any other security interest whatsoever over the Collateral or any part of it other than pursuant to this Agreement; and (b) neither the Purchase Contract Agent nor such Holders will sell or otherwise dispose (or attempt to dispose) of the Collateral or any part of it except for the beneficial interest therein, subject to the Pledge hereunder, transferred in connection with the Transfer of the Securities. Section 9. The Collateral Agent and the Securities Intermediary. It is hereby agreed as follows: Section 9.1 Appointment, Powers and Immunities. The Collateral Agent shall act as agent for the Company hereunder with such powers as are specifically vested in the Collateral Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. The Collateral Agent: (a) shall have no duties or responsibilities except those expressly set forth in 21 this Agreement and no implied covenants or obligations shall be inferred from this Agreement against the Collateral Agent, nor shall the Collateral Agent be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof; (b) shall not be responsible for any recitals contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by it under, this Agreement, the Securities or the Purchase Contract Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement (other than as against the Collateral Agent), the Securities or the Purchase Contract Agreement or any other document referred to or provided for herein or therein or for any failure by the Company or any other Person (except the Collateral Agent) to perform any of its obligations hereunder or thereunder or for the perfection, priority or, except as expressly required hereby, maintenance of any security interest created hereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder (except pursuant to directions furnished under Section 9.2 hereof, subject to Section 9.6 hereof); (d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith or therewith, except for its own negligence or willful misconduct; and (e) shall not be required to advise any party as to selling or retaining, or taking or refraining from taking any action with respect to, any securities or other property deposited hereunder. Subject to the foregoing, during the term of this Agreement, the Collateral Agent shall take all reasonable action in connection with the safekeeping and preservation of the Collateral hereunder. No provision of this Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. In no event shall the Collateral Agent be liable for any amount in excess of the Value of the Collateral. Notwithstanding the foregoing, each of the Collateral Agent and the Securities Intermediary in its individual capacity hereby waives any right of setoff, bankers lien, liens or perfection rights as securities intermediary or any counterclaim with respect to any of the Collateral. Section 9.2 Instructions of the Company. The Company shall have the right, by one or more instruments in writing executed and delivered to the Collateral Agent, to direct the time, method and place of conducting any proceeding for the realization of any right or remedy available to the Collateral Agent, or of exercising any power conferred on the Collateral Agent, or to direct the taking or refraining from taking of any action authorized by this Agreement; provided, however, that (i) such direction shall not conflict with the provisions of any law or of this Agreement and (ii) the Collateral Agent shall be adequately indemnified as provided herein. Nothing in this Section 9.2 shall impair the right of the Collateral Agent in its discretion to take any action or omit to take any action which it deems proper and which is not inconsistent with such direction. Section 9.3 Reliance by Collateral Agent and Securities Intermediary. Each of the Securities Intermediary and the Collateral Agent shall be entitled to rely upon any certification, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex or facsimile) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons (without being required to determine the correctness of any fact stated therein), and upon advice and statements of legal counsel and other experts selected by the Collateral Agent and the Securities Intermediary. As to any matters not ex- 22 pressly provided for by this Agreement, the Collateral Agent and the Securities Intermediary shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions given by the Company in accordance with this Agreement. Section 9.4 Rights in Other Capacities. The Collateral Agent and the Securities Intermediary and their affiliates may (without having to account therefor to the Company) accept deposits from, lend money to, make their investments in and generally engage in any kind of banking, trust or other business with the Purchase Contract Agent, any other Person interested herein and any Holder of Securities (and any of their respective subsidiaries or affiliates) as if it were not acting as the Collateral Agent, and the Collateral Agent, the Securities Intermediary and their affiliates may accept fees and other consideration from the Purchase Contract Agent and any Holder of Securities without having to account for the same to the Company; provided that each of the Securities Intermediary and the Collateral Agent covenants and agrees with the Company that it shall not accept, receive or permit there to be created in favor of itself and shall take no affirmative action to permit there to be created in favor of any other Person, any security interest, lien or other encumbrance of any kind in or upon the Collateral other than the lien created by the Pledge. Section 9.5 Non-Reliance on Collateral Agent and Securities Intermediary. Neither the Securities Intermediary nor the Collateral Agent shall be required to keep itself informed as to the performance or observance by the Purchase Contract Agent or any Holder of Securities of this Agreement, the Purchase Contract Agreement, the Securities or any other document referred to or provided for herein or therein or to inspect the properties or books of the Purchase Contract Agent or any Holder of Securities. Neither the Collateral Agent nor the Securities Intermediary shall have any duty or responsibility to provide the Company with any credit or other information concerning the affairs, financial condition or business of the Purchase Contract Agent or any Holder of Securities (or any of their respective affiliates) that may come into the possession of the Collateral Agent or the Securities Intermediary or any of their respective affiliates. Section 9.6 Compensation and Indemnity. The Company agrees: (i) to pay the Collateral Agent and the Securities Intermediary from time to time such compensation as shall be agreed in writing between the Company and the Collateral Agent or the Securities Intermediary, as the case may be, for all services rendered by them hereunder and (ii) to indemnify the Collateral Agent and the Securities Intermediary for, and to hold each of them harmless from and against, any loss, liability or reasonable out-of-pocket expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of its powers and duties under this Agreement, including the reasonable out-of-pocket costs and expenses (including reasonable fees and expenses of counsel) of defending itself against any claim or liability in connection with the exercise or performance of such powers and duties. Section 9.7 Failure to Act. In the event of any ambiguity in the provisions of this Agreement or any dispute between or conflicting claims by or among the parties hereto or any other Person with respect to any funds or property deposited hereunder, the Collateral Agent and the Securities Intermediary shall be entitled, after prompt notice to the Company and the Purchase Contract Agent, at its sole option, to refuse to comply with any and all claims, demands or instructions with respect 23 to such property or funds so long as such dispute or conflict shall continue, and the Collateral Agent and the Securities Intermediary shall not be or become liable in any way to any of the parties hereto for its failure or refusal to comply with such conflicting claims, demands or instructions. The Collateral Agent and the Securities Intermediary shall be entitled to refuse to act until either (i) such conflicting or adverse claims or demands shall have been finally determined by a court of competent jurisdiction or settled by agreement between the conflicting parties as evidenced in a writing satisfactory to the Collateral Agent or the Securities Intermediary or (ii) the Collateral Agent or the Securities Intermediary shall have received security or an indemnity satisfactory to it sufficient to save it harmless from and against any and all loss, liability or reasonable out-of-pocket expense which it may incur by reason of its acting. The Collateral Agent and the Securities Intermediary may in addition elect to commence an interpleader action or seek other judicial relief or orders as the Collateral Agent or the Securities Intermediary may deem necessary. Notwithstanding anything contained herein to the contrary, neither the Collateral Agent nor the Securities Intermediary shall be required to take any action that is in its opinion contrary to law or to the terms of this Agreement, or which would in its opinion subject it or any of its officers, employees or directors to liability. Section 9.8 Resignation of Collateral Agent and Securities Intermediary. (a) Subject to the appointment and acceptance of a successor Collateral Agent as provided below, (i) the Collateral Agent may resign at any time by giving notice thereof to the Company and the Purchase Contract Agent as attorney-in-fact for the Holders of Securities, (ii) the Collateral Agent may be removed at any time by the Company and (iii) if the Collateral Agent fails to perform any of its material obligations hereunder in any material respect for a period of not less than 20 days after receiving written notice of such failure by the Purchase Contract Agent and such failure shall be continuing, the Collateral Agent may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall promptly notify the Company of any removal of the Collateral Agent pursuant to clause (iii) of the immediately preceding sentence. Upon any such resignation or removal, the Company shall have the right to appoint a successor Collateral Agent. If no successor Collateral Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Collateral Agent's giving of notice of resignation or such removal, then the retiring Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent. The Collateral Agent shall be a bank which has an office in New York, New York with a combined capital and surplus of at least $50,000,000 and shall not be the Purchase Contract Agent or any of its affiliates. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall take all appropriate action to transfer any money and property held by it hereunder (including the Collateral) to such successor Collateral Agent. The retiring Collateral Agent shall, upon such succession, be discharged from its duties and obligations as Collateral Agent hereunder. After any retiring Collateral Agent's resignation hereunder as Collateral Agent, the provisions of this Section 9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Collateral Agent. (b) Subject to the appointment and acceptance of a successor Securities Intermediary as provided below, (i) the Securities Intermediary may resign at any time by giving notice thereof to 24 the Company and the Purchase Contract Agent as attorney-in-fact for the Holders of Securities, (ii) the Securities Intermediary may be removed at any time by the Company and (iii) if the Securities Intermediary fails to perform any of its material obligations hereunder in any material respect for a period of not less than 20 days after receiving written notice of such failure by the Purchase Contract Agent and such failure shall be continuing, the Securities Intermediary may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall promptly notify the Company of any removal of the Securities Intermediary pursuant to clause (iii) of the immediately preceding sentence. Upon any such resignation or removal, the Company shall have the right to appoint a successor Securities Intermediary. If no successor Securities Intermediary shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Securities Intermediary's giving of notice of resignation or such removal, then the retiring Securities Intermediary may petition any court of competent jurisdiction for the appointment of a successor Securities Intermediary. The Securities Intermediary shall be a bank which has an office in New York, New York with a combined capital and surplus of at least $50,000,000 and shall not be the Purchase Contract Agent or any of its affiliates. Upon the acceptance of any appointment as Securities Intermediary hereunder by a successor Securities Intermediary, such successor Securities Intermediary shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Securities Intermediary, and the retiring Securities Intermediary shall take all appropriate action to transfer any money and property held by it hereunder (including the Collateral) to such successor Securities Intermediary. The retiring Securities Intermediary shall, upon such succession, be discharged from its duties and obligations as Securities Intermediary hereunder. After any retiring Securities Intermediary's resignation hereunder as Securities Intermediary, the provisions of this Section 9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Securities Intermediary. Section 9.9 Right to Appoint Agent or Advisor. The Collateral Agent shall have the right to appoint agents or advisors in connection with any of its duties hereunder, and the Collateral Agent shall not be liable for any action taken or omitted by, or in reliance upon the advice of, such agents or advisors selected in good faith. The appointment of agents pursuant to this Section 9.9 shall be subject to prior consent of the Company, which consent shall not be unreasonably withheld. Section 9.10 Survival. The provisions of this Section 9 shall survive termination of this Agreement and the resignation or removal of the Collateral Agent or the Securities Intermediary. Section 9.11 Exculpation. Anything in this Agreement to the contrary notwithstanding, in no event shall the Collateral Agent or the Securities Intermediary or their officers, directors, employees or agents be liable under this Agreement to any third party for indirect, special, punitive, or consequential loss or damage of any kind whatsoever, including lost profits, whether or not the likelihood of such loss or damage was known to the Collateral Agent or the Securities Intermediary, or any of them, incurred without any act or deed that is found to be attributable to gross negligence or willful misconduct on the part of the Collateral Agent or the Securities Intermediary. Section 10. Amendment 25 Section 10.1 Amendment Without Consent of Holders. Without the consent of any Holders, the Company, the Collateral Agent, the Securities Intermediary and the Purchase Contract Agent, at any time and from time to time, may amend this Agreement, in form satisfactory to the Company, the Collateral Agent, the Securities Intermediary and the Purchase Contract Agent, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company; (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company so long as such covenants or such surrender do not adversely affect the validity, perfection or priority of the Pledge created hereunder; (3) to evidence and provide for the acceptance of appointment hereunder by a successor Collateral Agent, Securities Intermediary or Purchase Contract Agent; or (4) to cure any ambiguity (or formal defect), to correct or supplement any provisions herein which may be inconsistent with any other such provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. Section 10.2 Amendment with Consent of Holders. With the consent of the Holders of not less than a majority of the Purchase Contracts at the time outstanding, by Act of said Holders delivered to the Company, the Purchase Contract Agent, the Securities Intermediary or the Collateral Agent, as the case may be, the Company, when duly authorized, the Purchase Contract Agent, the Securities Intermediary and the Collateral Agent may amend this Agreement for the purpose of modifying in any manner the provisions of this Agreement or the rights of the Holders in respect of the Securities; provided, however, that no such supplemental agreement shall, without the unanimous consent of the Holders of each Outstanding Security adversely affected thereby, (1) change the amount or type of Collateral underlying a Security (except for the rights of holders of Corporate PIES to substitute the Treasury Securities for the Pledged Preferred Securities, the Pledged Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, or the rights of Holders of Treasury PIES to substitute Trust Preferred Securities, Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as applicable, for the Pledged Treasury Securities), impair the right of the Holder of any Security to receive distributions on the underlying Collateral or otherwise adversely affect the Holder's rights in or to such Collateral; or 26 (2) otherwise effect any action that would require the consent of the Holder of each Outstanding Security affected thereby pursuant to the Purchase Contract Agreement if such action were effected by an agreement supplemental thereto; or (3) reduce the percentage of Purchase Contracts the consent of whose Holders is required for any such amendment; provided that if any amendment or proposal referred to above would adversely affect only the Corporate PIES or the Treasury PIES, then only the affected class of Holder as of the record date for the Holders entitled to vote thereon will be entitled to vote on such amendment or proposal, and such amendment or proposal shall not be effective except with the consent of Holders of not less than a majority of such class; provided that the unanimous consent of the Holders of each outstanding Purchase Contract of such class affected thereby shall be required to approve any amendment or proposal specified in clauses (1) - (3) above. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such Act shall approve the substance thereof. Section 10.3 Execution of Amendments. In executing any amendment permitted by this Section, the Collateral Agent, the Securities Intermediary and the Purchase Contract Agent shall be entitled to receive and (subject to Section 7.1 of the Purchase Contract Agreement with respect to the Purchase Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent, if any, to the execution and delivery of such amendment have been satisfied. Section 10.4 Effect of Amendments. Upon the execution of any amendment under this Section, this Agreement shall be modified in accordance therewith, and such amendment shall form a part of this Agreement for all purposes; and every Holder of Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered under the Purchase Contract Agreement shall be bound thereby. Section 10.5 Reference to Amendments. Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any amendment pursuant to this Section may, and shall if required by the Collateral Agent or the Purchase Contract Agent, bear a notation in form approved by the Purchase Contract Agent and the Collateral Agent as to any matter provided for in such amendment. If the Company shall so determine, new Security Certificates so modified as to conform, in the opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to any such amendment may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent in accordance with the Purchase Contract Agreement in exchange for Outstanding Security Certificates. 27 Section 11. Miscellaneous Section 11.1 No Waiver. No failure on the part of the Collateral Agent or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Collateral Agent or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law. Section 11.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without limiting the foregoing, the above choice of law is expressly agreed to by the Company, the Securities Intermediary, the Collateral Agent and the Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact, in connection with the establishment and maintenance of the Collateral Account. The Company, the Collateral Agent, the Securities Intermediary and the Holders from time to time of the Securities, acting through the Purchase Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Collateral Agent, the Securities Intermediary and the Holders from time to time of the Securities, acting through the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Section 11.3 Notices. All notices, requests, consents and other communications provided for herein (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. Section 11.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Company, the Collateral Agent, the Securities Intermediary and the Purchase Contract Agent, and the Holders from time to time of the Securities, by their acceptance of the same, shall be deemed to have agreed to be bound by the provisions hereof and to have ratified the agreements of, and the grant of the Pledge hereunder by, the Purchase Contract Agent. 28 Section 11.5 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart. Section 11.6 Severability. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. Section 11.7 Expenses, etc. The Company agrees to reimburse the Collateral Agent and the Securities Intermediary for: (a) all reasonable out-of-pocket costs and expenses of the Collateral Agent (including, without limitation, the reasonable fees and expenses of counsel to the Collateral Agent and the Securities Intermediary), in connection with (i) the negotiation, preparation, execution and delivery or performance of this Agreement and (ii) any modification, supplement or waiver of any of the terms of this Agreement; (b) all reasonable costs and expenses of the Collateral Agent and the Securities Intermediary (including, without limitation, reasonable fees and expenses of counsel) in connection with (i) any enforcement or proceedings resulting or incurred in connection with causing any Holder of Securities to satisfy its obligations under the Purchase Contracts forming a part of the Securities and (ii) the enforcement of this Section 11.7; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any other document referred to herein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated hereby. Section 11.8 Security Interest Absolute. All rights of the Collateral Agent and security interests hereunder, and all obligations of the Holders from time to time hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of any provision of the Purchase Contracts or the Securities or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or any other term of, or any increase in the amount of, all or any of the obligations of Holders of Securities under the related Purchase Contracts, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Purchase Contract Agreement or any Purchase Contract or any other agreement or instrument relating thereto; or (c) any other circumstance which might otherwise constitute a defense available to, or discharge of, a borrower, a guarantor or a pledgor. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. NIPSCO INDUSTRIES, INC. THE CHASE MANHATTAN BANK, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Securities By: ---------------------------------- By: Name: ------------------------------------- Title: Name: Title: Address for Notices: Address for Notices: 801 East 86th Avenue Merrillville, Indiana 46410-6272 450 West 33rd Street New York, New York 10001 Attention: Stephen P. Adik Telecopy: 219-647-6060 Attention: Corporate Trust Group Telecopy: 212-946-8159 THE FIRST NATIONAL BANK OF THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent CHICAGO, as Securities Intermediary By: By: ---------------------------------- ------------------------------------- Name: Name: Title: Title: Address for Notices: Address for Notices: One First National Plaza One First National Plaza Suite 0126 Suite 0126 Chicago, Illinois 60670-0126 Chicago, Illinois 60670-0126 Attention: Global Corporate Services Attention: Global Corporate Services Telecopy: 312-407-1708 Telecopy: 312-407-1708 EXHIBIT A INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT (Establishment of Treasury PIES) The First National Bank of Chicago 1 North State Street, 9th Floor Chicago, Illinois 60602 Attention: Corporate Trust Administration Department Telecopy: 312-407-1708 Re: ________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Please refer to the Pledge Agreement dated as of February __, 1999 (the "Pledge Agreement"), among the Company, you, as Collateral Agent, The First National Bank of Chicago, as Securities Intermediary, and the undersigned, as Purchase Contract Agent and as attorney-in-fact for the holders of PIES from time to time. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. We hereby notify you in accordance with Section 5.2 of the Pledge Agreement that the holder of securities named below (the "Holder") has elected to substitute $__________ Value of Treasury Securities or security entitlements thereto in exchange for [an equal Value of [Pledged Preferred Securities] [Pledged Debentures]] [the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio relating to _____ Corporate PIES] and has delivered to the undersigned a notice stating that the Holder has Transferred such Treasury Securities or security entitlements thereto to the Securities Intermediary, for credit to the Collateral Account. We hereby request that you instruct the Securities Intermediary, upon confirmation that such Treasury Securities or security entitlements thereto have been credited to the Collateral Account, to release to the undersigned [an equal Value of [Pledged Preferred Securities] [Pledged Debentures]] [an appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio relating to __________ Corporate PIES] in accordance with Section 5.2 of the Pledge Agreement. THE CHASE MANHATTAN BANK Date: By: -------------------- ------------------------------------- Name: Title: 2 Please print name and address of Holder electing to substitute Treasury Securities or security entitlements thereto for the [Pledged Preferred Securities] [Pledged Debentures] [appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio]: - ----------------------------------- ---------------------------------------- Name Social Security or other Taxpayer Identification Number, if any - ----------------------------------- Address - ----------------------------------- - ----------------------------------- EXHIBIT B INSTRUCTION FROM COLLATERAL AGENT TO SECURITIES INTERMEDIARY (Establishment of Treasury PIES) The First National Bank of Chicago 1 North State Street, 9th Floor Chicago, Illinois 60602 Attention: Corporate Trust Administration Department Telecopy: 312-407-1708 Re: ________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Securities Account No. _________ entitled "The First National Bank of Chicago, as Collateral Agent, Securities Account (NIPSCO Capital Trust I)" (the "Collateral Account") Please refer to the Pledge Agreement dated as of February __, 1999 (the "Pledge Agreement"), among the Company, you, as Securities Intermediary, The Chase Manhattan Bank, as Purchase Contract Agent and as attorney-in-fact for the holders of PIES from time to time, and the undersigned, as Collateral Agent. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. When you have confirmed that $__________ Value of Treasury Securities or security entitlements thereto has been credited to the Collateral Account by or for the benefit of _________, as Holder of PIES (the "Holder"), you are hereby instructed to release from the Collateral Account [an equal Value of [Trust Preferred Securities or security entitlements thereto] [Debentures or security entitlements thereto]] [the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio relating to ______ Corporate PIES of the Holder] by Transfer to the Purchase Contract Agent. THE FIRST NATIONAL BANK OF CHICAGO Dated: By: -------------------- ------------------------------------- Name: Title: 2 Please print name and address of Holder: - ----------------------------------- ---------------------------------------- Name Social Security or other Taxpayer Identification Number, if any - ----------------------------------- Address - ----------------------------------- - ----------------------------------- EXHIBIT C INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT (Reestablishment of Corporate PIES) The First National Bank of Chicago 1 North State Street, 9th Floor Chicago, Illinois 60602 Attention: Corporate Trust Administration Department Telecopy: 312-407-1708 Re: ________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Please refer to the Pledge Agreement dated as of February __, 1999 (the "Pledge Agreement"), among the Company, you, as Collateral Agent, The First National Bank of Chicago, as Securities Intermediary, and the undersigned, as Purchase Contract Agent and as attorney-in-fact for the holders of PIES from time to time. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. We hereby notify you in accordance with Section 5.3(a) of the Pledge Agreement that the holder of securities listed below (the "Holder") has elected to substitute [$__________ Value of Trust Preferred Securities or security entitlements thereto] [Debentures or security entitlements thereto]] [an appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio relating to _____ Corporate PIES] in exchange for $__________ Value of Pledged Treasury Securities and has delivered to the undersigned a notice stating that the Holder has Transferred such [Trust Preferred Securities or security entitlements thereto] [Debentures or security entitlements thereto] [Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio] to the Securities Intermediary, for credit to the Collateral Account. We hereby request that you instruct the Securities Intermediary, upon confirmation that such [Trust Preferred Securities or security entitlements thereto] [Debentures or security entitlements thereto] [Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio] have been credited to the Collateral Account, to release to the undersigned $__________ Value of Treasury Securities or security entitlements thereto related to _____ Treasury PIES of such Holder in accordance with Section 5.3(a) of the Pledge Agreement. THE CHASE MANHATTAN BANK Date: By: -------------------- ------------------------------------- Name: Title: 2 Please print name and address of Holder electing to substitute [Trust Preferred Securities or security entitlements thereto] [Pledged Debentures or security entitlements thereto] [an appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio] for Pledged Treasury Securities: - ----------------------------------- ---------------------------------------- Name Social Security or other Taxpayer Identification Number, if any - ----------------------------------- Address - ----------------------------------- - ----------------------------------- EXHIBIT D INSTRUCTION FROM COLLATERAL AGENT TO SECURITIES INTERMEDIARY (Reestablishment of Corporate PIES) The First National Bank of Chicago 1 North State Street, 9th Floor Chicago, Illinois 60602 Attention: Corporate Trust Administration Department Telecopy: 312-407-1708 Re: ________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Securities Account No. _________ entitled "The First National Bank of Chicago, as Collateral Agent, Securities Account (NIPSCO Capital Trust I)" (the "Collateral Account") Please refer to the Pledge Agreement dated as of February __, 1999 (the "Pledge Agreement"), among the Company, you, as Securities Intermediary, THE CHASE MANHATTAN BANK, as Purchase Contract Agent and as attorney-in-fact for the holders of PIES from time to time, and the undersigned, as Collateral Agent. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. When you have confirmed that $_________ Value of [Trust Preferred Securities or security entitlements thereto] [Debentures or security entitlements thereto] [an appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio relating to _____ Corporate PIES] has been credited to the Collateral Account by or for the benefit of _________, as Holder of PIES (the "Holder"), you are hereby instructed to release from the Collateral Account $__________ Value of Treasury Securities or security entitlements thereto by Transfer to the Purchase Contract Agent. THE FIRST NATIONAL BANK OF CHICAGO Dated: By: -------------------- ------------------------------------- Name: Title: 2 Please print name and address of Holder: - ----------------------------------- ---------------------------------------- Name Social Security or other Taxpayer Identification Number, if any - ----------------------------------- Address - ----------------------------------- - ----------------------------------- EXHIBIT E NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY TO PURCHASE CONTRACT AGENT (Cash Settlement Amounts) The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Telecopier No.: 212-946-8159 Attention: Corporate Trust Group Re: _________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Please refer to the Pledge Agreement, dated as of February __, 1999 (the "Pledge Agreement"), by and among you, the Company, The First National Bank of Chicago, as Collateral Agent and the undersigned, as Securities Intermediary. Unless otherwise defined herein, terms defined in the Pledge Agreement are used herein as defined therein In accordance with Section 5.5(d) of the Pledge Agreement, we hereby notify you that as of 11:00 a.m., [(on the fifth Business Day immediately preceding the Purchase Contract Settlement Date)], we have received (i) $_____ in immediately available funds paid in an aggregate amount equal to the Purchase Price to the Company on the Purchase Contract Settlement Date with respect to __________ Corporate PIES and (ii) $_________ in immediately available funds paid in an aggregate amount equal to the Purchase Price to the Company on the Purchase Contract Settlement Date with respect to ______ Treasury PIES. THE FIRST NATIONAL BANK OF CHICAGO Date: By: -------------------- ------------------------------------- Name: Title: EX-4.3 6 PLEDGE AGREEMENT Exhibit 4.3 STB DRAFT February 11, 1999 ================================================================================ NIPSCO INDUSTRIES, INC. AND THE CHASE MANHATTAN BANK, As Purchase Contract Agent PURCHASE CONTRACT AGREEMENT Dated as of February 16, 1999 ================================================================================ TABLE OF CONTENTS Page ---- RECITALS .......................................................1 ARTICLE I Definitions and Other Provisions of General Applications Section 1.1. Definitions.....................................................1 Section 1.2. Compliance Certificates and Opinions...........................11 Section 1.3. Form of Documents Delivered to Agent...........................12 Section 1.4. Acts of Holders; Record Dates..................................12 Section 1.5. Notices........................................................13 Section 1.6. Notice to Holders; Waiver......................................15 Section 1.7. Effect of Headings and Table of Contents.......................15 Section 1.8. Successors and Assigns.........................................15 Section 1.9. Separability Clause............................................15 Section 1.10. Benefits of Agreement..........................................15 Section 1.11. Governing Law..................................................16 Section 1.12. Legal Holidays.................................................16 Section 1.13. Counterparts...................................................16 Section 1.14. Inspection of Agreement........................................16 ARTICLE II Certificate Forms Section 2.1. Forms of Certificates Generally................................16 Section 2.2. Form of Agent's Certificate of Authentication..................18 ARTICLE III The Securities Section 3.1. Amount; Form and Denominations.................................18 Section 3.2. Rights and Obligations Evidenced by the Certificates...........18 Section 3.3. Execution, Authentication, Delivery and Dating.................19 Section 3.4. Temporary Certificates.........................................20 Section 3.5. Registration; Registration of Transfer and Exchange............20 Section 3.6. Book-Entry Interests...........................................21 Section 3.7. Notices to Holders.............................................22 Section 3.8. Appointment of Successor Clearing Agency.......................22 Section 3.9. Definitive Certificates........................................22 Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.............23 Section 3.11. Persons Deemed Owners..........................................24 Section 3.12. Cancellation...................................................24 -i- Page ---- Section 3.13. Substitution of Securities.....................................25 Section 3.14. Reestablishment of Corporate PIES..............................26 Section 3.15. Transfer of Collateral upon Occurrence of Termination Event....28 Section 3.16. No Consent to Assumption.......................................28 ARTICLE IV The Preferred Securities Section 4.1. Payment of Distribution; Rights to Distributions Preserved; Distribution Rate Reset; Notice................................29 Section 4.2. Notice and Voting..............................................30 Section 4.3. Distribution of Debentures; Tax Event Redemption...............30 ARTICLE V The Purchase Contracts Section 5.1. Purchase of Shares of Common Stock.............................32 Section 5.2. Contract Adjustment Payments...................................33 Section 5.3. ...............................................................34 Section 5.4. Payment of Purchase Price......................................34 Section 5.5. Issuance of Shares of Common Stock.............................37 Section 5.6. Adjustment of Settlement Rate..................................38 Section 5.7. Notice of Adjustments and Certain Other Events.................43 Section 5.8. Termination Event; Notice......................................43 Section 5.9. Early Settlement...............................................44 Section 5.10. No Fractional Shares...........................................45 Section 5.11. Charges and Taxes..............................................46 ARTICLE VI Remedies Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment Payments and to Purchase Common Stock..........................46 Section 6.2. Restoration of Rights and Remedies.............................46 Section 6.3. Rights and Remedies Cumulative.................................47 Section 6.4. Delay or Omission Not Waiver...................................47 Section 6.5. Undertaking for Costs..........................................47 Section 6.6. Waiver of Stay or Extension Laws...............................47 ARTICLE VII The Agent Section 7.1. Certain Duties and Responsibilities............................48 Section 7.2. Notice of Default..............................................49 -ii- Page ---- Section 7.3. Certain Rights of Agent........................................49 Section 7.4. Not Responsible for Recitals or Issuance of Securities.........50 Section 7.5. May Hold Securities............................................50 Section 7.6. Money Held in Custody..........................................50 Section 7.7. Compensation and Reimbursement.................................50 Section 7.8. Corporate Agent Required; Eligibility..........................51 Section 7.9. Resignation and Removal; Appointment of Successor..............51 Section 7.10. Acceptance of Appointment by Successor.........................52 Section 7.11. Merger, Conversion, Consolidation or Succession to Business....52 Section 7.12. Preservation of Information; Communications to Holders.........53 Section 7.13. No Obligations of Agent........................................53 Section 7.14. Tax Compliance.................................................53 ARTICLE VIII Supplemental Agreements Section 8.1. Supplemental Agreements Without Consent of Holders.............54 Section 8.2. Supplemental Agreements With Consent of Holders................54 Section 8.3. Execution of Supplemental Agreements...........................56 Section 8.4. Effect of Supplemental Agreements..............................56 Section 8.5. Reference to Supplemental Agreements...........................56 ARTICLE IX Consolidation, Merger, Sale or Conveyance Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions................................56 Section 9.2. Rights and Duties of Successor Corporation.....................57 Section 9.3. Opinion of Counsel Given to Agent..............................57 ARTICLE X Covenants Section 10.1. Performance Under Purchase Contracts...........................57 Section 10.2. Maintenance of Office or Agency................................57 Section 10.3. Company to Reserve Common Stock................................58 Section 10.4. Covenants as to Common Stock...................................58 Section 10.5. Statements of Officers of the Company as to Default............58 Section 10.6. ERISA..........................................................59 -iii- EXHIBIT A Form of Corporate PIES Certificate EXHIBIT B Form of Treasury PIES Certificate EXHIBIT C Instruction to Purchase Contract Agent EXHIBIT D Notice from Purchase Contract Agent to Holders (Transfer of Collateral upon Occurrence of a Termination Event) EXHIBIT E Notice to Settle by Separate Cash EXHIBIT F Notice from Purchase Contract Agent to Collateral Agent and Indenture Trustee (Payment of Purchase Contract Settlement Price) -iv- PURCHASE CONTRACT AGREEMENT, dated as of February 16, 1999, between NIPSCO INDUSTRIES, INC., an Indiana corporation (the "Company"), and THE CHASE MANHATTAN BANK, a New York banking corporation, acting as purchase contract agent for the Holders of Securities from time to time (the "Agent"). RECITALS The Company has duly authorized the execution and delivery of this Agreement and the Certificates evidencing the Securities. All things necessary to make the Purchase Contracts, when the Certificates are executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent, as provided in this Agreement, the valid obligations of the Company, and to constitute these presents a valid agreement of the Company, in accordance with its terms, have been done. W I T N E S S E T H : For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed as follows: ARTICLE I Definitions and Other Provisions of General Applications Section 1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, and nouns and pronouns of the masculine gender include the feminine and neuter genders; (b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States; (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Exhibit or other subdivision; (d) the following terms have the meanings given to them in the Declaration: (i) Applicable Ownership Interest; (ii) Applicable Principal Amount; (iii) Authorized Newspaper; (iv) Guarantee; (v) Primary Treasury Dealer; (vi) Quotation Agent; (vii) Redemption Amount; (viii) Redemption Price; (ix) Remarketing; (x) Reset Rate; (xi) Tax Event; (xii) Tax Event Redemption; (xiii) Tax Event Redemption Date; (xiv) Two-Year Benchmark Treasury Rate; (xv) Treasury Portfolio; and (xvi) Treasury Portfolio Purchase Price; and (e) the following terms have the meanings given to them in this Section 1.1(e): "Act," when used with respect to any Holder, has the meaning specified in Section 1.4. "Adjusted Contract Adjustment Payment Rate," with respect to any Reset Transaction, means the rate per annum that is the arithmetic average of the rates quoted by two Reference Dealers selected by the Company or its successor as the rate at which Contract Adjustment Payments should accrue so that the fair market value, expressed in dollars, of a Corporate PIES immediately after the later of (i) public announcement of such Reset Transaction or (ii) public announcement of a change in dividend policy in connection with such Reset Transaction will equal the average Trading Price of a Corporate PIES for the 20 Trading Days immediately preceding the date of public announcement of such Reset Transaction; provided that the Adjusted Contract Adjustment Payment Rate shall not be less than 1.85% per annum. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means the Person named as the "Agent" in the first paragraph of this instrument until a successor Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "Agent" shall mean such Person. "Agreement" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof. "Applicable Market Value" has the meaning specified in Section 5.1. "Bankruptcy Code" means title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws. "Beneficial Owner" means, with respect to a Global Certificate, a Person who is the beneficial owner of such Book-Entry Interest as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a -2- Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "Board of Directors" means the board of directors of the Company or a duly authorized committee of that board. "Board Resolution" means one or more resolutions of the Board of Directors, a copy of which has been certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Agent. "Book-Entry Interest" means a beneficial interest in a Global Certificate, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as described in Section 3.6. "Business Day" means any day other than a Saturday or Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Indenture Trustee, or the principal office of the Property Trustee under the Declaration, is closed for business; provided that for purposes of the second paragraph of Section 1.12 only, the term "Business Day" shall also be deemed to exclude any day on which trading on the New York Stock Exchange, Inc. is closed or suspended. "Cash Settlement" has the meaning set forth in Section 5.4(a)(i). "Certificate" means a Corporate PIES Certificate or a Treasury PIES Certificate. "Clearing Agency" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as a depositary for the Securities and in whose name, or in the name of a nominee of that organization, shall be registered a Global Certificate and which shall undertake to effect book entry transfers and pledges of the Securities. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Price" has the meaning specified in Section 5.1. "Code" means the Internal Revenue Code of 1986, as amended. "Collateral" has the meaning specified in the Pledge Agreement. "Collateral Account" has the meaning specified in the Pledge Agreement. "Collateral Agent" means The First National Bank of Chicago, as Collateral Agent under the Pledge Agreement until a successor Collateral Agent shall have become such pursuant to the -3- applicable provisions of the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person who is then the Collateral Agent thereunder. "Collateral Substitution" has the meaning specified in Section 3.13. "Common Stock" means the Common Shares, without par value, of the Company. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor shall have become such pursuant to the applicable provision of this Agreement, and thereafter "Company" shall mean such successor. "Contract Adjustment Payments" means, (a) if a Reset Transaction has not occurred, the fee payable by the Company in respect of each Purchase Contract, equal to 5.9% per annum of the Stated Amount, or (b) following the occurrence of a Reset Transaction, the Adjusted Contract Adjustment Payment Rate related to such Reset Transaction until any succeeding Reset Transaction shall occur, computed (i) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly period for which such payments are calculated, on the basis of a 30-day month and, for periods of less than a month, the actual number of days elapsed per 30-day month. "Corporate PIES" means the collective rights and obligations of a Holder of a Corporate PIES Certificate in respect of a Preferred Security, the Debentures or an appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, subject in each case to the Pledge thereof, and the related Purchase Contract; provided that the appropriate Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio shall not be subject to the Pledge. "Corporate PIES Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Corporate PIES specified on such certificate. "Corporate PIES Register" and "Corporate PIES Registrar" have the respective meanings specified in Section 3.5. "Corporate Trust Office" means the principal corporate trust office of the Agent at which, at any particular time, its corporate trust business shall be administered, which office at the date hereof is located at 450 West 33rd St., New York, New York, 10001 Attention: Corporate Trust Group. "Coupon Rate" means the percentage rate per annum at which each Debenture will bear interest initially. "Current Market Price" has the meaning specified in Section 5.6(a)(8). "Debentures" means the series of debentures to be issued by the Finance Subsidiary under the Indenture and held by the Property Trustee. -4- "Declaration" means the Amended and Restated Declaration of Trust of NIPSCO Capital Trust I, dated as of February 16, 1999, among the Finance Subsidiary, as the sponsor, the trustees named therein and the holders from time to time of undivided beneficial interests in the assets of the Trust. "Depositary" means DTC until another Clearing Agency becomes its successor. "Dividend Yield," on any security for any period, means the dividends paid or proposed to be paid pursuant to an announced dividend policy on such security for such period divided by, if with respect to dividends paid on such security, the average Closing Price of such security during such period and, if with respect to dividends so proposed to be paid on such security, the Closing Price of such security on the effective date of the related Reset Transaction. "DTC" means The Depository Trust Company, the initial Clearing Agency. "Early Settlement" has the meaning specified in Section 5.9(a). "Early Settlement Amount" has the meaning specified in Section 5.9(a). "Early Settlement Date" has the meaning specified in Section 5.9(a). "Early Settlement Rate" has the meaning specified in Section 5.9(b). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "Expiration Date" has the meaning specified in Section 1.4. "Expiration Time" has the meaning specified in Section 5.6(a)(6). "Finance Subsidiary" means NIPSCO Capital Markets, Inc., an Indiana corporation, until a successor shall have become such pursuant to the Indenture, and thereafter "Finance Subsidiary" shall mean such successor. "Global Certificate" means a Certificate that evidences all or part of the Securities and is registered in the name of a Clearing Agency or a nominee thereof. "Holder," when used with respect to a Security, means the Person in whose name the Security evidenced by a Corporate PIES Certificate and/or a Treasury PIES Certificate is registered in the related Corporate PIES Register and/or the Treasury PIES Register, as the case may be; provided, however, that in determining whether the Holders of the requisite number of Corporate PIES and/or Treasury PIES have voted on any matter, then for the purpose of such -5- determination only (and not for any other purpose hereunder), if the Security remains in the form of one or more Global Certificates and if the Clearing Agency which is the holder of such Global Certificate has sent an omnibus proxy assigning voting rights to the Clearing Agency Participants to whose accounts the Securities are credited on the record date, the term "Holder" shall mean such Clearing Agency Participant acting at the direction of the Beneficial Owners. "Indenture" means the Indenture, dated as of February 14, 1997, between the Finance Subsidiary, the Company and the Indenture Trustee, as amended and supplemented (including any provisions of the TIA that are deemed incorporated therein), pursuant to which the Debentures are to be issued. "Indenture Trustee" means The Chase Manhattan Bank, a New York banking corporation, as trustee under the Indenture, or any successor thereto. "Issuer Order" or "Issuer Request" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or one of its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Agent. "NYSE" has the meaning specified in Section 5.1. "Officers' Certificate" means a certificate signed by the Chairman of the Board, its President or one of its Vice Presidents, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Agent. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company (and who may be an employee of the Company), and who shall be reasonably acceptable to the Agent. An opinion of counsel may rely on certificates as to matters of fact. -6- "Outstanding Securities," with respect to any Corporate PIES or Treasury PIES, means, as of the date of determination, all Corporate PIES or Treasury PIES evidenced by Certificates theretofore authenticated, executed and delivered under this Agreement, except: (i) If a Termination Event has occurred, (A) Treasury PIES and (B) Corporate PIES for which the underlying Preferred Securities or Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, has been theretofore deposited with the Agent in trust for the Holders of such Corporate PIES; (ii) Corporate PIES and Treasury PIES evidenced by Certificates theretofore cancelled by the Agent or delivered to the Agent for cancellation or deemed cancelled pursuant to the provisions of this Agreement; and (iii) Corporate PIES and Treasury PIES evidenced by Certificates in exchange for or in lieu of which other Certificates have been authenticated, executed on behalf of the Holder and delivered pursuant to this Agreement, other than any such Certificate in respect of which there shall have been presented to the Agent proof satisfactory to it that such Certificate is held by a bona fide purchaser in whose hands the Corporate PIES or Treasury PIES evidenced by such Certificate are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite number of the Corporate PIES or Treasury PIES have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Corporate PIES or Treasury PIES owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding Securities, except that, in determining whether the Agent shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Corporate PIES or Treasury PIES which a Responsible Officer of the Agent knows to be so owned shall be so disregarded. Corporate PIES or Treasury PIES so owned which have been pledged in good faith may be regarded as Outstanding Securities if the pledgee establishes to the satisfaction of the Agent the pledgee's right so to act with respect to such Corporate PIES or Treasury PIES and that the pledgee is not the Company or any Affiliate of the Company. "Payment Date" means each February 19, May 19, August 19 and November 19, commencing May 19, 1999. "Permitted Investments" has the meaning set forth in Section 1 of the Pledge Agreement. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof or any other entity of whatever nature. "PIES" means the collective reference to the Corporate PIES and the Treasury PIES. -7- "Plan" means employee benefit plans that are subject to ERISA, plans and individual retirement accounts that are subject to Section 4975 of the Code and entities whose assets are considered assets of such plans. "Pledge" means the pledge under the Pledge Agreement of the Preferred Securities, the Debentures, the Treasury Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, in each case constituting a part of the Securities. "Pledge Agreement" means the Pledge Agreement, dated as of the date hereof, by and among the Company, the Collateral Agent, the Securities Intermediary and the Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Securities. "Pledged Preferred Securities" has the meaning set forth in the Pledge Agreement. "Pledged Debentures" has the meaning set forth in the Pledge Agreement. "Predecessor Certificate" means a Predecessor Corporate PIES Certificate or a Predecessor Treasury PIES Certificate. "Predecessor Corporate PIES Certificate" of any particular Corporate PIES Certificate means every previous Corporate PIES Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Corporate PIES evidenced thereby; and, for the purposes of this definition, any Corporate PIES Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate PIES Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Corporate PIES Certificate. "Predecessor Treasury PIES Certificate" of any particular Treasury PIES Certificate means every previous Treasury PIES Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Treasury PIES evidenced thereby; and, for the purposes of this definition, any Treasury PIES Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury PIES Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Treasury PIES Certificate. "Preferred Securities" means the Preferred Securities of the Trust, each having a stated liquidation amount of $50, representing preferred undivided beneficial interests in the assets of the Trust. "Proceeds" has the meaning set forth in Section 1 of the Pledge Agreement. "Property Trustee" means The Chase Manhattan Bank, as property trustee under the Declaration, or any successor thereto that is a financial institution unaffiliated with the Company. -8- "Purchase Contract," when used with respect to any Security, means the contract forming a part of such Security and obligating the Company to (i) sell and the Holder of such Security to purchase Common Stock and (ii) pay the Holder Contract Adjustment Payments, if any, on the terms and subject to the conditions set forth in Article Five hereof. "Purchase Contract Settlement Date" means February 19, 2003. "Purchase Contract Settlement Fund" has the meaning specified in Section 5.5. "Purchase Price" has the meaning specified in Section 5.1. "Purchased Shares" has the meaning specified in Section 5.6(a)(6). "Record Date" for the Contract Adjustment Payments payable on any Payment Date means, as to any Global Certificate, the Business Day next preceding such Payment Date, and as to any other Certificate, a day selected by the Company which shall be more than one Business Day but less than 60 Business Days prior to such Payment Date. "Reference Dealer" means a dealer engaged in the trading of convertible securities. "Register" means the Corporate PIES Register and the Treasury PIES Register. "Registrar" means the Corporate PIES Registrar and the Treasury PIES Registrar. "Remarketing Agent" has the meaning specified in Section 5.4(b). "Remarketing Agreement" means the Remarketing Agreement dated as of February 16, 1999 by and between the Company, the Finance Subsidiary, the Trust and the Remarketing Agent. "Reorganization Event" has the meaning specified in Section 5.6(b). "Reset Transaction" means a merger, consolidation or statutory share exchange to which the Person that is the issuer of the common stock for which the Purchase Contracts are then to be settled is a party, a sale of all or substantially all assets of such Person, a recapitalization of such common stock or a distribution described in Section 5.6(a)(4) by such Person, after the effective date of which the Purchase Contracts are then to be settled for shares of a Person (i) the common stock of which had a Dividend Yield for the four fiscal quarters immediately preceding the public announcement thereof which was, or (ii) that announces a dividend policy prior to the effective date thereof which policy, if implemented, would result in a Dividend Yield on such common stock for the next four fiscal quarters which would be, more than 250 basis points higher than the Dividend Yield on the common stock for which the Purchase Contracts are to be settled prior to such effective date for the four fiscal quarters immediately preceding such public announcement. -9- "Responsible Officer," when used with respect to the Agent, means any officer of the Agent assigned by the Agent to administer its corporate trust matters. "Security" means a Corporate PIES or a Treasury PIES. "Security Intermediary" means The First National Bank of Chicago, as Securities Intermediary under the Pledge Agreement until a successor Securities Intermediary shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Securities Intermediary" shall mean such successor. "Settlement Rate" has the meaning specified in Section 5.1. "Stated Amount" means $50. "Termination Date" means the date, if any, on which a Termination Event occurs. "Termination Event" means the occurrence of any of the following events: (i) at any time on or prior to the Purchase Contract Settlement Date, a judgment, decree or court order shall have been entered granting relief under the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as properly filed a petition seeking reorganization or liquidation of the Company or any other similar applicable Federal or State law, and, unless such judgment, decree or order shall have been entered within 60 days prior to the Purchase Contract Settlement Date, such decree or order shall have continued undischarged and unstayed for a period of 60 days; or (ii) a judgment, decree or court order for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding up or liquidation of its affairs, shall have been entered, and, unless such judgment, decree or order shall have been entered within 60 days prior to the Purchase Contract Settlement Date, such judgment, decree or order shall have continued undischarged and unstayed for a period of 60 days; or (iii) at any time on or prior to the Purchase Contract Settlement Date, the Company shall file a petition for relief under the Bankruptcy Code, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or liquidation under the Bankruptcy Code or any other similar applicable Federal or State law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due. "Threshold Appreciation Price" has the meaning specified in Section 5.1. "TIA" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "Trading Day" has the meaning specified in Section 5.1. -10- "Trading Price" of a security on any date of determination means (i) the closing sale price (or, if no closing price is reported, the last reported sale price) of a security (regular way) on the NYSE on such date, (ii) if such security is not listed for trading on the NYSE on any such date, the closing sale price as reported in the composite transactions for the principal United States securities exchange on which such security is so listed, (iii) if such security is not so listed on a United States national or regional securities exchange, the closing sale price as reported by the NASDAQ Stock Market, Inc., (iv) if such security is not so reported, the price quoted by Interactive Data Corporation for such security or, if Interactive Data Corporation is not quoting such price, a similar quotation service selected by the Company, (v) if such security is not so quoted, the average of the mid-point of the last bid and ask prices for such security from at least two dealers recognized as market-makers for such security, or (vi) if such security is not so quoted, the average of the last bid and ask prices for such security from a Reference Dealer. "Treasury Security" means zero-coupon U.S. Treasury Securities (Cusip Number ________) which are the principal strip of the __% U. S. Treasury Securities which mature on February 15, 2003. "Treasury PIES" means, following the substitution of one or more Treasury Securities for Preferred Securities, Debentures or for the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, as collateral to secure a holder's obligations under a Purchase Contract, the collective rights and obligations of a Holder of a Treasury PIES Certificate in respect of such Treasury Securities, subject in each case to the Pledge thereof, and the related Purchase Contract. "Treasury PIES Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Treasury PIES specified on such certificate. "Treasury PIES Register" and "Treasury PIES Registrar" have the respective meanings specified in Section 3.5. "Trust" means NIPSCO Capital Trust I, a statutory business trust formed under the laws of the State of Delaware, or any successor thereto by merger or consolidation. "Underwriting Agreement" means the Underwriting Agreement dated February 9, 1999 among the Company, the Trust, the Finance Subsidiary and Lehman Brothers Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated. "Vice President" means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." Section 1.2. Compliance Certificates and Opinions. Except as otherwise expressly provided by this Agreement, upon any application or request by the Company to the Agent to take any action in accordance with any provision of this Agreement, the Company shall furnish to the Agent an Officers' Certificate stating that all -11- conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and, if requested by the Agent, an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he or she has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.3. Form of Documents Delivered to Agent. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. -12- Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.4. Acts of Holders; Record Dates. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Agent and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 7.1) conclusive in favor of the Agent and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Agent deems sufficient. (c) The ownership of Securities shall be proved by the Corporate PIES Register or the Treasury PIES Register, as the case may be. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Certificate shall bind every future Holder of the same Certificate and the Holder of every Certificate issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Certificate. (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Agreement to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of the Outstanding Corporate PIES and the Outstanding Treasury PIES, as the case may be, on such record date, and no other Holders, shall be entitled to take the relevant action with respect to the Corporate PIES or the Treasury PIES, as the case may be, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite number of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and be of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken -13- by Holders of the requisite number of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Agent in writing and to each Holder of Securities in the manner set forth in Section 1.6. With respect to any record date set pursuant to this Section, the Company may designate any date as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Agent in writing, and to each Holder of Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. Section 1.5. Notices. Any notice or communication is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier (with receipt confirmed) or overnight air courier guaranteeing next day delivery, to the others' address; provided that notice shall be deemed given to the Agent only upon receipt thereof: If to the Agent: The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Telecopier No.: 212-946-8159 Attention: Corporate Trust Group If to the Company: NIPSCO Industries, Inc. 801 East 86th Avenue Merrillville, Indiana 46410 Telecopier No.: Attention: If to the Collateral Agent: The First National Bank of Chicago 1 First National Plaza, Suite 0126 Chicago, Illinois 60670 -14- Telecopier No.: 312-407-1708 Attention: Corporate Trust Administration Department If to the Property Trustee: The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Telecopier No.: 212-946-8159 Attention: Corporate Trust Group If to the Indenture Trustee: The Chase Manhattan Bank 450 West 33rd Street New York, New York 10001 Telecopier No.: 212-946-8159 Attention: Corporate Trust Group Section 1.6. Notice to Holders; Waiver. Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at its address as it appears in the applicable Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Agent shall constitute a sufficient notification for every purpose hereunder. Section 1.7. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. -15- Section 1.8. Successors and Assigns. All covenants and agreements in this Agreement by the Company shall bind its successors and assigns, whether so expressed or not. Section 1.9. Separability Clause. In case any provision in this Agreement or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof and thereof shall not in any way be affected or impaired thereby. Section 1.10. Benefits of Agreement. Nothing in this Agreement or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and, to the extent provided hereby, the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Securities evidenced by their Certificates by their acceptance of delivery of such Certificates. Section 1.11. Governing Law. This Agreement and the Securities shall be governed by and construed in accordance with the laws of the State of New York. Section 1.12. Legal Holidays. In any case where any Payment Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Corporate PIES Certificates or the Treasury PIES Certificates) payment of the Contract Adjustment Payments, if any, shall not be made on such date, but such payments shall be made on the next succeeding Business Day with the same force and effect as if made on such Payment Date, provided that no interest shall accrue or be payable by the Company or any Holder for the period from and after any such Payment Date, except that, if such next succeeding Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day with the same force and effect as if made on such Payment Date. In any case where any Purchase Contract Settlement Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement, the Corporate PIES Certificates or the Treasury PIES Certificates) Purchase Contracts shall not be performed on such date, but the Purchase Contracts shall be performed on the immediately following Business Day with the same force and effect as if performed on the Purchase Contract Settlement Date. -16- Section 1.13. Counterparts. This Agreement may be executed in any number of counterparts by the parties hereto on separate counterparts, each of which, when so executed and delivered, shall be deemed an original, but all such counterparts shall together constitute one and the same instrument. Section 1.14. Inspection of Agreement. A copy of this Agreement shall be available at all reasonable times during normal business hours at the Corporate Trust Office for inspection by any Holder or Beneficial Owner. ARTICLE II Certificate Forms Section 2.1. Forms of Certificates Generally. The Corporate PIES Certificates (including the form of Purchase Contract forming part of the Corporate PIES evidenced thereby) shall be in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Corporate PIES are listed or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Corporate PIES Certificates, as evidenced by their execution of the Corporate PIES Certificates. The definitive Corporate PIES Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing the Corporate PIES evidenced by such Corporate PIES Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. The Treasury PIES Certificates (including the form of Purchase Contracts forming part of the Treasury PIES evidenced thereby) shall be in substantially the form set forth in Exhibit B hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Treasury PIES may be listed or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Treasury PIES Certificates, as evidenced by their execution of the Treasury PIES Certificates. The definitive Treasury PIES Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing the Treasury PIES evidenced by such Treasury PIES Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. -17- Every Global Certificate authenticated, executed on behalf of the Holders and delivered hereunder shall bear a legend in substantially the following form: "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." Section 2.2. Form of Agent's Certificate of Authentication. The form of the Agent's certificate of authentication of the Corporate PIES shall be in substantially the form set forth on the form of the Corporate PIES Certificates. The form of the Agent's certificate of authentication of the Treasury PIES shall be in substantially the form set forth on the form of the Treasury PIES Certificates. -18- ARTICLE III The Securities Section 3.1. Amount; Form and Denominations. The aggregate number of Securities evidenced by Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to 6,900,000 except for Certificates authenticated, executed and delivered upon registration of transfer of, in exchange for, or in lieu of, other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9 or 8.5. The Certificates shall be issuable only in registered form and only in denominations of a single Corporate PIES or Treasury PIES and any integral multiple thereof. Section 3.2. Rights and Obligations Evidenced by the Certificates. Each Corporate PIES Certificate shall evidence the number of Corporate PIES specified therein, with each such Corporate PIES representing the ownership by the Holder thereof of a beneficial interest in a Preferred Security, a Debenture or the Applicable Ownership Interest of the Treasury Portfolio, as the case may be, subject to the Pledge of such Preferred Security, such Debenture or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder thereof and the Company under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf of, the Holder of each Corporate PIES shall pledge, pursuant to the Pledge Agreement, the Preferred Security, the Debenture or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, forming a part of such Corporate PIES, to the Collateral Agent and grant to the Collateral Agent a security interest in the right, title and interest of such Holder in such Preferred Security, such Debenture or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, for the benefit of the Company, to secure the obligation of the Holder under each Purchase Contract to purchase the Common Stock of the Company. Prior to the purchase of shares of Common Stock under each Purchase Contract, such Purchase Contracts shall not entitle the Holder of a Corporate PIES Certificate to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as a stockholder in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as a stockholder of the Company. Each Treasury PIES Certificate shall evidence the number of Treasury PIES specified therein, with each such Treasury PIES representing the ownership by the Holder thereof of a 1/20 undivided beneficial interest in a Treasury Security with a principal amount equal to $1,000, subject to the Pledge of such Treasury Security by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder thereof and the Company under one -19- Purchase Contract. Prior to the purchase, if any, of shares of Common Stock under each Purchase Contract, such Purchase Contract shall not entitle the Holder of a Treasury PIES Certificate to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as a stockholder in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as a stockholder of the Company. Section 3.3. Execution, Authentication, Delivery and Dating. Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the execution and delivery of this Agreement, and at any time and from time to time thereafter, the Company may deliver Certificates executed by the Company to the Agent for authentication, execution on behalf of the Holders and delivery, together with its Issuer Order for authentication of such Certificates, and the Agent in accordance with such Issuer Order shall authenticate, execute on behalf of the Holders and deliver such Certificates. The Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents. The signature of any of these officers on the Certificates may be manual or facsimile. Certificates bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificates No Purchase Contract evidenced by a Certificate shall be valid until such Certificate has been executed on behalf of the Holder by the manual signature of an authorized signatory of the Agent, as such Holder's attorney-in-fact. Such signature by an authorized signatory of the Agent shall be conclusive evidence that the Holder of such Certificate has entered into the Purchase Contracts evidenced by such Certificate. Each Certificate shall be dated the date of its authentication. No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by an authorized signatory of the Agent by manual signature, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. Section 3.4. Temporary Certificates. Pending the preparation of definitive Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu of such definitive Certificates, temporary Certificates which are in substantially the form set -20- forth in Exhibit A or Exhibit B hereto, as the case may be, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Corporate PIES or Treasury PIES are listed, or as may, consistently herewith, be determined by the officers of the Company executing such Certificates, as evidenced by their execution of the Certificates. If temporary Certificates are issued, the Company will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the Corporate Trust Office, at the expense of the Company and without charge to the Holder. Upon surrender for cancellation of any one or more temporary Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, one or more definitive Certificates of like tenor and denominations and evidencing a like number of Corporate PIES or Treasury PIES, as the case may be, as the temporary Certificate or Certificates so surrendered. Until so exchanged, the temporary Certificates shall in all respects evidence the same benefits and the same obligations with respect to the Corporate PIES or Treasury PIES, as the case may be, evidenced thereby as definitive Certificates. Section 3.5. Registration; Registration of Transfer and Exchange. The Agent shall keep at the Corporate Trust Office a register (the "Corporate PIES Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of Corporate PIES Certificates and of transfers of Corporate PIES Certificates (the Agent, in such capacity, the "Corporate PIES Registrar") and a register (the "Treasury PIES Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of the Treasury PIES Certificates and transfers of Treasury PIES Certificates (the Agent, in such capacity, the "Treasury PIES Registrar"). Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the designated transferee or transferees, and deliver, in the name of the designated transferee or transferees, one or more new Certificates of any authorized denominations, like tenor, and evidencing a like number of Corporate PIES or Treasury PIES, as the case may be. At the option of the Holder, Certificates may be exchanged for other Certificates, of any authorized denominations and evidencing a like number of Corporate PIES or Treasury PIES, as the case may be, upon surrender of the Certificates to be exchanged at the Corporate Trust Office. Whenever any Certificates are so surrendered for exchange, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver the Certificates which the Holder making the exchange is entitled to receive. -21- All Certificates issued upon any registration of transfer or exchange of a Certificate shall evidence the ownership of the same number of Corporate PIES or Treasury PIES, as the case may be, and be entitled to the same benefits and subject to the same obligations, under this Agreement as the Corporate PIES or Treasury PIES, as the case may be, evidenced by the Certificate surrendered upon such registration of transfer or exchange. Every Certificate presented or surrendered for registration of transfer or for exchange shall (if so required by the Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Agent duly executed, by the Holder thereof or its attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of a Certificate, but the Company and the Agent may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Certificates, other than any exchanges pursuant to Sections 3.6 and 8.5 not involving any transfer. Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder and deliver any Certificate in exchange for any other Certificate presented or surrendered for registration of transfer or for exchange on or after the Business Day immediately preceding the earlier of the Purchase Contract Settlement Date or the Termination Date. In lieu of delivery of a new Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Agent shall (i) if the Purchase Contract Settlement Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Securities evidenced by such other Certificate or (ii) if a Termination Event shall have occurred prior to the Purchase Contract Settlement Date, transfer the Preferred Securities, the Debentures, the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Treasury Securities, as the case may be, evidenced thereby, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article Five hereof. Section 3.6. Book-Entry Interests. The Certificates, on original issuance, will be issued in the form of one or more fully registered Global Certificates, to be delivered to the Depositary by, or on behalf of, the Company. Such Global Certificate shall initially be registered on the books and records of the Company in the name of Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive a definitive Certificate representing such Beneficial Owner's interest in such Global Certificate, except as provided in Section 3.9. The Agent shall enter into an agreement with the Depositary if so requested by the Company. Unless and until definitive, fully registered Certificates have been issued to Beneficial Owners pursuant to Section 3.9: (a) the provisions of this Section 3.6 shall be in full force and effect; -22- (b) the Company shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including the payment of Contract Adjustment Payments, if any, and receiving approvals, votes or consents hereunder) as the Holder of the Securities and the sole holder of the Global Certificate(s) and shall have no obligation to the Beneficial Owners; (c) to the extent that the provisions of this Section 3.6 conflict with any other provisions of this Agreement, the provisions of this Section 3.6 shall control; and (d) the rights of the Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. Section 3.7. Notices to Holders. Whenever a notice or other communication to the Holders is required to be given under this Agreement, the Company or the Company's agent shall give such notices and communications to the Holders and, with respect to any Securities registered in the name of a Clearing Agency or the nominee of a Clearing Agency, the Company or the Company's agent shall, except as set forth herein, have no obligations to the Beneficial Owners. Section 3.8. Appointment of Successor Clearing Agency. If any Clearing Agency elects to discontinue its services as securities depositary with respect to the Securities, the Company may, in its sole discretion, appoint a successor Clearing Agency with respect to the Securities. Section 3.9. Definitive Certificates. If (i) a Clearing Agency elects to discontinue its services as securities depositary with respect to the Securities and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 3.8 or (ii) there shall have occurred and be continuing a default by the Company in respect of its obligations under one or more Purchase Contracts, then upon surrender of the Global Certificates representing the Securities by the Clearing Agency, accompanied by registration instructions, the Company shall cause definitive Certificates to be delivered to Beneficial Owners in accordance with the instructions of the Clearing Agency. The Company shall not be liable for any delay in delivery of such instructions and may conclusively rely on and shall be protected in relying on, such instructions. Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates. If any mutilated Certificate is surrendered to the Agent, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, a new Certificate, evidencing the same number of Corporate PIES or Treasury PIES, as the case may be, and bearing a Certificate number not contemporaneously outstanding. -23- If there shall be delivered to the Company and the Agent (i) evidence to their satisfaction of the destruction, loss or theft of any Certificate, and (ii) such security or indemnity as may be required by them to hold each of them and any agent of any of them harmless, then, in the absence of notice to the Company or the Agent that such Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver to the Holder, in lieu of any such destroyed, lost or stolen Certificate, a new Certificate, evidencing the same number of Corporate PIES or Treasury PIES, as the case may be, and bearing a Certificate number not contemporaneously outstanding. Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder, and deliver to the Holder, a Certificate on or after the Business Day immediately preceding the earlier of the Purchase Contract Settlement Date or the Termination Date. In lieu of delivery of a new Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Agent shall (i) if the Purchase Contract Settlement Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Securities evidenced by such Certificate, or (ii) if a Termination Event shall have occurred prior to the Purchase Contract Settlement Date, transfer the Preferred Securities, the Debentures, the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Treasury Securities, as the case may be, evidenced thereby, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article Five hereof. Upon the issuance of any new Certificate under this Section, the Company and the Agent may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Agent) connected therewith. Every new Certificate issued pursuant to this Section in lieu of any destroyed, lost or stolen Certificate shall constitute an original additional contractual obligation of the Company and of the Holder in respect of the Security evidenced thereby, whether or not the destroyed, lost or stolen Certificate (and the Securities evidenced thereby) shall be at any time enforceable by anyone, and shall be entitled to all the benefits and be subject to all the obligations of this Agreement equally and proportionately with any and all other Certificates delivered hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates. Section 3.11. Persons Deemed Owners. Prior to due presentment of a Certificate for registration of transfer, the Company and the Agent, and any agent of the Company or the Agent, may treat the Person in whose name such -24- Certificate is registered as the owner of the Corporate PIES or Treasury PIES evidenced thereby, for the purpose of receiving distributions on the Preferred Securities, the Debentures, or on the maturing quarterly interest strips of the Treasury Portfolio, as applicable, receiving payments of Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any distributions on the Preferred Securities, the Debentures, Treasury Portfolio or the Contract Adjustment Payments payable in respect of the Purchase Contracts constituting a part of the Corporate PIES or Treasury PIES evidenced thereby shall be overdue and notwithstanding any notice to the contrary, and neither the Company nor the Agent, nor any agent of the Company or the Agent, shall be affected by notice to the contrary. Notwithstanding the foregoing, with respect to any Global Certificate, nothing herein shall prevent the Company, the Agent or any agent of the Company or the Agent, from giving effect to any written certification, proxy or other authorization furnished by any Clearing Agency (or its nominee), as a Holder, with respect to such Global Certificate or impair, as between such Clearing Agency and owners of beneficial interests in such Global Certificate, the operation of customary practices governing the exercise of rights of such Clearing Agency (or its nominee) as Holder of such Global Certificate. Section 3.12. Cancellation. All Certificates surrendered for delivery of shares of Common Stock on or after the Purchase Contract Settlement Date, upon the transfer of Preferred Securities, Debentures, the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Treasury Securities, as the case may be, after the occurrence of a Termination Event or pursuant to an Early Settlement, or upon the registration of a transfer or exchange of a Security, or a Collateral Substitution or the re-establishment of a Corporate PIES shall, if surrendered to any Person other than the Agent, be delivered to the Agent and, if not already cancelled, shall be promptly cancelled by it. The Company may at any time deliver to the Agent for cancellation any Certificates previously authenticated, executed and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the Agent. No Certificates shall be authenticated, executed on behalf of the Holder and delivered in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Agent shall be destroyed by the Agent unless otherwise directed by Issuer Order. If the Company or any Affiliate of the Company shall acquire any Certificate, such acquisition shall not operate as a cancellation of such Certificate unless and until such Certificate is delivered to the Agent cancelled or for cancellation. Section 3.13. Substitution of Securities. A Holder may separate the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as applicable, from the related Purchase Contracts in respect of a Corporate PIES by substituting for such Preferred Securities, -25- Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, Treasury Securities in an aggregate principal amount equal to the aggregate liquidation amount of such Preferred Securities, the aggregate principal amount of such Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as applicable (a "Collateral Substitution"), at any time from and after the date of this Agreement and on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date in the case of the Preferred Securities and the Debentures and on or prior to the second Business Day immediately preceding the Purchase Contract Settlement Date in the case of the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, in each case by (a) depositing with the Securities Intermediary Treasury Securities having an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Securities or the aggregate principal amount of the Debentures comprising part of such Corporate PIES or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio comprising part of such Corporate PIES, as the case may be, and (b) transferring the related Corporate PIES to the Agent accompanied by a notice to the Agent, substantially in the form of Exhibit C hereto, stating that the Holder has transferred the relevant amount of Treasury Securities to the Securities Intermediary and requesting that the Agent instruct the Collateral Agent to release the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, underlying such Corporate PIES, whereupon the Agent shall promptly give such instruction to the Collateral Agent, substantially in the form of Exhibit A to the Pledge Agreement. Upon receipt of the Treasury Securities described in clause (a) above and the instruction described in clause (b) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will cause the Securities Intermediary to release to the Agent, on behalf of the Holder, Preferred Securities, Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, having a corresponding aggregate liquidation amount of such Preferred Securities, aggregate principal amount of such Debentures, or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Agent shall promptly: (i) cancel the related Corporate PIES; (ii) transfer the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, to the Holder; and (iii) authenticate, execute on behalf of such Holder and deliver a Treasury PIES Certificate executed by the Company in accordance with Section 3.3 evidencing the same number of Purchase Contracts as were evidenced by the cancelled Corporate PIES. Holders who elect to separate the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, from the related -26- Purchase Contract and to substitute Treasury Securities for such Preferred Securities or Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, shall be responsible for any fees or expenses payable to the Collateral Agent for its services as Collateral Agent in respect of the substitution, and the Company shall not be responsible for any such fees or expenses. Holders may make Collateral Substitutions (i) only in integral multiples of 20 Corporate PIES if Treasury Securities are being substituted for Preferred Securities or Debentures, or (ii) only in integral multiples of 160,000 Corporate PIES if Treasury Securities are being substituted for the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio. In the event a Holder making a Collateral Substitution pursuant to this Section 3.13 fails to effect a book-entry transfer of the Corporate PIES or fails to deliver a Corporate PIES Certificate(s) to the Agent after depositing Treasury Securities with the Collateral Agent, the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, constituting a part of such Corporate PIES, and any distributions on such Preferred Securities, Debentures or the Applicable Ownership Interest of the Treasury Portfolio, as the case may be, shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until such Corporate PIES is so transferred or the Corporate PIES Certificate is so delivered, as the case may be, or, with respect to a Corporate PIES Certificate, such Holder provides evidence satisfactory to the Company and the Agent that such Corporate PIES Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company. Except as described in this Section 3.13, for so long as the Purchase Contract underlying a Corporate PIES remains in effect, such Corporate PIES shall not be separable into its constituent parts, and the rights and obligations of the Holder in respect of the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, and the Purchase Contract comprising such Corporate PIES may be acquired, and may be transferred and exchanged, only as a Corporate PIES. Section 3.14. Reestablishment of Corporate PIES. A Holder of a Treasury PIES may recreate Corporate PIES at any time (i) on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date, if a Tax Event Redemption has not occurred, and (ii) on or prior to the second Business Day immediately preceding the Purchase Contract Settlement Date, if a Tax Event Redemption has occurred, in each case by (a) depositing with the Securities Intermediary Preferred Securities, Debentures or the appropriate Applicable Ownership Interest (as defined in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, having an aggregate liquidation amount in the case of the Preferred Securities, an aggregate principal amount in the case of the Debentures or an aggregate Applicable Ownership Interest (as defined in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, equal to the aggregate principal amount at -27- maturity of the Treasury Securities comprising part of the Treasury PIES and (b) transferring the related Treasury PIES to the Agent accompanied by a notice to the Agent, substantially in the form of Exhibit C hereto, stating that the Holder has transferred the relevant amount of Preferred Securities, Debentures or the appropriate Applicable Ownership Interest (as defined in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, to the Securities Intermediary and requesting that the Agent instruct the Collateral Agent to release the Treasury Securities underlying such Treasury PIES, whereupon the Agent shall promptly give such instruction to the Collateral Agent, substantially in the form of Exhibit C to the Pledge Agreement. Upon receipt of the Preferred Securities, the Debentures or the appropriate Applicable Ownership Interest (as defined in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, described in clause (a) above and the instruction described in clause (b) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will cause the Securities Intermediary to effect the release of the Treasury Securities having a corresponding aggregate principal amount at maturity from the Pledge to the Agent free and clear of the Company's security interest therein, and upon receipt thereof the Agent shall promptly: (i) cancel the related Treasury PIES; (ii) transfer the Treasury Securities to the Holder; and (iii) authenticate, execute on behalf of such Holder and deliver a Corporate PIES Certificate executed by the Company in accordance with Section 3.3 evidencing the same number of Purchase Contracts as were evidenced by the cancelled Treasury PIES. Holders who elect to recreate Corporate PIES shall be responsible for any fees or expenses payable to the Collateral Agent for its services as Collateral Agent in respect of the substitution, and the Company shall not be responsible for any such fees or expenses. Holders of Treasury PIES may reestablish Corporate PIES in integral multiples of 20 Treasury PIES for 20 Corporate PIES if a Tax Event Redemption has not occurred, and in integral multiples of 160,000 Treasury PIES for 160,000 Corporate PIES if a Tax Event Redemption has occurred. Except as provided in this Section 3.14, for so long as the Purchase Contract underlying a Treasury PIES remains in effect, such Treasury PIES shall not be separable into its constituent parts and the rights and obligations of the Holder of such Treasury PIES in respect of the 1/20 of a Treasury Security and the Purchase Contract comprising such Treasury PIES may be acquired, and may be transferred and exchanged, only as a Treasury PIES. Section 3.15. Transfer of Collateral upon Occurrence of Termination Event. Upon the occurrence of a Termination Event and the transfer to the Agent of the Preferred Securities, the Debentures, the appropriate Applicable Ownership Interest of the Treasury Portfolio or the Treasury Securities, as the case may be, underlying the Corporate PIES and the -28- Treasury PIES pursuant to the terms of the Pledge Agreement, the Agent shall request transfer instructions with respect to such Preferred Securities or Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio or Treasury Securities, as the case may be, from each Holder by written request, substantially in the form of Exhibit D hereto, mailed to such Holder at its address as it appears in the Corporate PIES Register or the Treasury PIES Register, as the case may be. Upon book-entry transfer of the Corporate PIES or Treasury PIES or delivery of a Corporate PIES Certificate or Treasury PIES Certificate to the Agent with such transfer instructions, the Agent shall transfer the Preferred Securities, the Debentures, the appropriate Applicable Ownership Interest of the Treasury Portfolio or Treasury Securities, as the case may be, underlying such Corporate PIES or Treasury PIES, as the case may be, to such Holder by book-entry transfer, or other appropriate procedures, in accordance with such instructions. In the event a Holder of Corporate PIES or Treasury PIES fails to effect such transfer or delivery, the Preferred Securities, the Debentures, the appropriate Applicable Ownership Interest of the Treasury Portfolio or Treasury Securities, as the case may be, underlying such Corporate PIES or Treasury PIES, as the case may be, and any distributions thereon, shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until the earlier of (a) such Corporate PIES or Treasury PIES are transferred or the Corporate PIES Certificate or Treasury PIES Certificate is surrendered or such Holder provides satisfactory evidence that such Corporate PIES Certificate or Treasury PIES Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company and (b) the expiration of the time period specified in the abandoned property laws of the relevant State. Section 3.16. No Consent to Assumption. Each Holder of a Security, by acceptance thereof, shall be deemed expressly to have withheld any consent to the assumption under Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or its trustee, receiver, liquidator or a person or entity performing similar functions in the event that the Company becomes the debtor under the Bankruptcy Code or subject to other similar state or federal law providing for reorganization or liquidation. ARTICLE IV The Preferred Securities Section 4.1. Payment of Distribution; Rights to Distributions Preserved; Distribution Rate Reset; Notice. A distribution on any Preferred Security, any Debenture or on the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, which is paid on any Payment Date shall, subject to receipt thereof by the Agent from the Collateral Agent as provided by the terms of the Pledge Agreement, be paid to the Person in whose name the Corporate PIES Certificate (or one or more Predecessor Corporate PIES Certificates) of which such Preferred -29- Security, such Debenture or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, is a part is registered at the close of business on the Record Date for such Payment Date. Each Corporate PIES Certificate evidencing Preferred Securities or Debentures delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Corporate PIES Certificate shall carry the rights to distributions accrued and unpaid, and to accrue distributions, which were carried by the Preferred Securities or Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio underlying such other Corporate PIES Certificate. In the case of any Corporate PIES with respect to which Cash Settlement of the underlying Purchase Contract is effected on or prior to the fifth Business Day immediately preceding the Purchase Contract Settlement Date pursuant to prior notice, or with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date, or with respect to which a Collateral Substitution is effected, in each case on a date that is after any Record Date and on or prior to the next succeeding Payment Date, distributions on the Preferred Securities, the Debentures or on the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, underlying such Corporate PIES otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Cash Settlement or Early Settlement or Collateral Substitution, and such distributions shall, subject to receipt thereof by the Agent, be payable to the Person in whose name the Corporate PIES Certificate (or one or more Predecessor Corporate PIES Certificates) was registered at the close of business on the Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Corporate PIES with respect to which Cash Settlement or Early Settlement of the underlying Purchase Contract is effected on or prior to the fifth Business Day immediately preceding the Purchase Contract Settlement Date or an Early Settlement Date, as the case may be, or with respect to which a Collateral Substitution has been effected, distributions on the related Preferred Securities or Debentures or on the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, that would otherwise be payable after the Purchase Contract Settlement Date or Early Settlement Date shall not be payable hereunder to the Holder of such Corporate PIES; provided, however, that to the extent that such Holder continues to hold the separated Preferred Securities or Debentures that formerly comprised a part of such Holder's Corporate PIES, such Holder shall be entitled to receive the distributions on such separated Preferred Securities or Debentures. The applicable Coupon Rate on the Debentures on and after the Purchase Contract Settlement Date shall be reset on the third Business Day immediately preceding the Purchase Contract Settlement Date equal to the Reset Rate (such Reset Rate to be in effect on and after the Purchase Contract Settlement Date). Not later than 15 calendar days nor more than 30 calendar days prior to the third Business Day immediately preceding the Purchase Contract Settlement Date, the Company shall request DTC (or any successor Clearing Agency), to notify the Beneficial Owners or Clearing Agency Participants holding Corporate PIES or Treasury PIES of the procedures to be followed by -30- Holders of Corporate PIES who intend to effect the settlement of their obligations under the Purchase Contracts underlying such Corporate PIES with separate cash on or prior to the fifth Business Day prior to the Purchase Contract Settlement Date. Section 4.2. Notice and Voting. Under the terms of the Pledge Agreement, the Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Preferred Securities or Pledged Debentures, as the case may be, but only to the extent instructed in writing by the Holders as described below. Upon receipt of notice of any meeting at which holders of Preferred Securities or Debentures are entitled to vote or upon any solicitation of consents, waivers or proxies of holders of Preferred Securities or Debentures, the Agent shall, as soon as practicable thereafter, mail to the Holders of Corporate PIES a notice (a) containing such information as is contained in the notice or solicitation, (b) stating that each Holder on the record date set by the Agent therefor (which, to the extent possible, shall be the same date as the record date for determining the holders of Preferred Securities or Debentures, as the case may be, entitled to vote) shall be entitled to instruct the Agent as to the exercise of the voting rights pertaining to such Preferred Securities or Debentures underlying their Corporate PIES and (c) stating the manner in which such instructions may be given. Upon the written request of the Holders of Corporate PIES on such record date received by the Agent at least six days prior to such meeting, the Agent shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such requests, the maximum number of Preferred Securities or Debentures, as the case may be, as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of a Corporate PIES, the Agent shall abstain from voting the Preferred Securities or Debentures underlying such Corporate PIES. The Company hereby agrees, if applicable, to solicit Holders of Corporate PIES to timely instruct the Agent in order to enable the Agent to vote such Preferred Securities or Debentures and the Trust shall covenant to such effect in the Declaration. Section 4.3. Distribution of Debentures; Tax Event Redemption. Upon the liquidation of the Trust in accordance with the Declaration, a principal amount at maturity of Debentures constituting the assets of the Trust and underlying the Preferred Securities equal to the aggregate liquidation amount of the Pledged Preferred Securities shall be delivered to the Securities Intermediary in exchange for the Pledged Preferred Securities. Thereafter, the Debentures will be substituted for the Pledged Preferred Securities as the Collateral, and will be held by the Securities Intermediary in the Collateral Account in accordance with the terms of the Pledge Agreement to secure the obligations of each Holder of a Corporate PIES to purchase the Common Stock of the Company under the Purchase Contracts constituting a part of such Corporate PIES. Following the liquidation of the Trust, the Holders and the Collateral Agent shall have such security interests, rights and obligations with respect to the Debentures as the Holders and the Collateral Agent had in respect of the Preferred Securities subject to the Pledge thereof as provided in Articles II, III, IV, V and VI of the Pledge Agreement. The Company may cause to be made in any Corporate PIES Certificates thereafter to be issued such change in phraseology and form (but not in substance) as may be appropriate to -31- reflect the liquidation of the Trust and the substitution of Debentures for Preferred Securities as Collateral. Upon the occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement Date, the Redemption Price payable on the Tax Event Redemption Date with respect to the Applicable Principal Amount shall be deposited in the Collateral Account in exchange for the Pledged Preferred Securities or the Pledged Debentures. Thereafter, pursuant to the terms of the Pledge Agreement, the Collateral Agent shall cause the Securities Intermediary to apply an amount equal to the Redemption Amount of such Redemption Price to purchase on behalf of the Holders of Corporate PIES the Treasury Portfolio and promptly remit the remaining portion of such Redemption Price, if any, to the Agent for payment to the Holders of such Corporate PIES. The Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio will be substituted as Collateral for the Pledged Preferred Securities or the Pledged Debentures, and will be held by the Collateral Agent in accordance with the terms of the Pledge Agreement to secure the obligation of each Holder of a Corporate PIES to purchase the Common Stock of the Company under the Purchase Contract constituting a part of such Corporate PIES. Following the occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement Date, the Holders of Corporate PIES and the Collateral Agent shall have such security interest rights and obligations with respect to the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio as the Holders of Corporate PIES and the Collateral Agent had in respect of the Preferred Securities or Debentures, as the case may be, subject to the Pledge thereof as provided in Articles II, III, IV, V, and VI of the Pledge Agreement, and any reference herein to the Preferred Securities or the Debentures shall be deemed to be reference to such Treasury Portfolio. The Company may cause to be made in any Corporate PIES Certificates thereafter to be issued such change in phraseology and form (but not in substance) as may be appropriate to reflect the liquidation of the Trust and the substitution of the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio for Preferred Securities or Debentures as Collateral. ARTICLE V The Purchase Contracts Section 5.1. Purchase of Shares of Common Stock. Each Purchase Contract shall, unless an Early Settlement has occurred in accordance with Section 5.9 hereof, obligate the Holder of the related Security to purchase, and the Company to sell, on the Purchase Contract Settlement Date at a price equal to the Stated Amount (the "Purchase Price"), a number of newly issued shares of Common Stock equal to the Settlement Rate unless, on or prior to the Purchase Contract Settlement Date, there shall have occurred a Termination Event with respect to the Security of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal to or greater than $31.0500 (the "Threshold Appreciation Price"), 1.6103 shares of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation -32- Price, but is greater than $26.3125, the number of shares of Common Stock equal to the Stated Amount divided by the Applicable Market Value and (c) if the Applicable Market Value is less than or equal to $26.3125, 1.9002 share of Common Stock per Purchase Contract, in each case subject to adjustment as provided in Section 5.6 (and in each case rounded upward or downward to the nearest 1/10,000th of a share). As provided in Section 5.10, no fractional shares of Common Stock will be issued upon settlement of Purchase Contracts. The "Applicable Market Value" means the average of the Closing Price per share of Common Stock on each of the 20 Trading Days ending on the third Trading Day immediately preceding the Purchase Contract Settlement Date. The "Closing Price" of the Common Stock on any date of determination means (i) the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date, (ii) if the Common Stock is not listed for trading on the NYSE on any such date, the closing sale price as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, (iii) if the Common Stock is not so listed on a United States national or regional securities exchange, the closing sale price as reported by The Nasdaq Stock Market, (iv) if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or (v) if such bid price is not available, the average of the mid-point of the last bid and ask prices of the Common Stock on such date from at least three nationally recognized independent investment banking firms retained for this purpose by the Company. A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. Each Holder of a Corporate PIES or a Treasury PIES, by its acceptance thereof, irrevocably authorizes the Agent to enter into and perform the related Purchase Contract on its behalf as its attorney-in-fact (including the execution of Certificates on behalf of such Holder), agrees to be bound by the terms and provisions thereof, covenants and agrees to perform its obligations under such Purchase Contracts, and consents to the provisions hereof, irrevocably authorizes the Agent as its attorney-in-fact to enter into and perform this Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and consents to and agrees to be bound by the Pledge of the Preferred Securities, the Debentures, the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Treasury Securities pursuant to the Pledge Agreement; provided that upon a Termination Event, the rights of the Holder of such Security under the Purchase Contract may be enforced without regard to any other rights or obligations. Each Holder of a Corporate PIES or a Treasury PIES, by its acceptance thereof, further covenants and agrees, that to the extent and in the manner provided in Section 5.4 and the Pledge Agreement, but subject to the terms thereof, payments in respect of the Preferred Securities or the Debentures or the Proceeds of the Treasury Securities or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio on the Purchase Contract Settlement Date shall be paid by the Collateral -33- Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Upon registration of transfer of a Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee) by the terms of this Agreement, the Purchase Contracts underlying such Certificate and the Pledge Agreement and the transferor shall be released from the obligations under this Agreement, the Purchase Contracts underlying the Certificates so transferred and the Pledge Agreement. The Company covenants and agrees, and each Holder of a Certificate, by its acceptance thereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. Section 5.2. Contract Adjustment Payments. The Company shall pay, on each Payment Date, the Contract Adjustment Payments payable in respect of each Purchase Contract to the Person in whose name a Certificate (or one or more Predecessor Certificates) is registered at the close of business on the Record Date next preceding such Payment Date. The Contract Adjustment Payments will be payable at the office of the Agent in The City of New York maintained for that purpose or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such Person's address as it appears on the Corporate PIES Register or Treasury PIES Register. If any date on which Contract Adjustment Payments are to be made on the Purchase Contracts related to the PIES is not a Business Day, then payment of the Contract Adjustment Payments payable on such date will be made on the next day that is a Business Day (and without any interest in respect of any such delay), except that, if such Business Day is in the next calendar year, such payment will be made on the preceding Business Day. Upon the occurrence of a Termination Event, the Company's obligation to pay Contract Adjustment Payments (including any accrued Contract Adjustment Payments) shall cease. Each Certificate delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of (including as a result of a Collateral Substitution or the re-establishment of a Corporate PIES) any other Certificate shall carry the rights to Contract Adjustment Payments accrued and unpaid, and to accrue Contract Adjustment Payments, which were carried by the Purchase Contracts underlying such other Certificates. Subject to Section 5.9, in the case of any Security with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date that is after any Record Date and on or prior to the next succeeding Payment Date, Contract Adjustment Payments, if any, otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement, and such Contract Adjustment Payments shall be paid to the Person in whose name the Certificate evidencing such Security (or one or more Predecessor Certificates) is registered at the close of business on such Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security with respect to which Early Settlement of the underlying Purchase Contract is effected on an -34- Early Settlement Date, Contract Adjustment Payments that would otherwise be payable after the Early Settlement Date with respect to such Purchase Contract shall not be payable. Section 5.3. [Intentionally omitted]. Section 5.4. Payment of Purchase Price. (a) (i) Unless a Tax Event Redemption has occurred or a Holder settles the underlying Purchase Contract through the early delivery of cash to the Purchase Contract Agent in the manner described in Section 5.9, each Holder of a Corporate PIES who intends to pay in cash shall notify the Agent by use of a notice in substantially the form of Exhibit E hereto of its intention to pay in cash ("Cash Settlement") the Purchase Price for the shares of Common Stock to be purchased pursuant to a Purchase Contract. Such notice shall be given prior to 5:00 p.m., New York City time, on the seventh Business Day immediately preceding the Purchase Contract Settlement Date. Prior to 11:00 a.m., New York City time, on the next succeeding Business Day, the Agent shall notify the Collateral Agent and the Indenture Trustee of the receipt of such notices from Holders intending to make a Cash Settlement. (ii) A Holder of a Corporate PIES who has so notified the Agent of its intention to make a Cash Settlement shall pay the Purchase Price to the Securities Intermediary for deposit in the Collateral Account prior to 11:00 a.m., New York City time, on the fifth Business Day immediately preceding the Purchase Contract Settlement Date in lawful money of the United States by certified or cashiers' check or wire transfer, in each case in immediately available funds payable to or upon the order of the Securities Intermediary. Any cash received by the Collateral Agent shall be invested promptly by the Securities Intermediary in Permitted Investments and paid to the Company on the Purchase Contract Settlement Date in settlement of the Purchase Contract in accordance with the terms of this Agreement and the Pledge Agreement. Any funds received by the Securities Intermediary in respect of the investment earnings from the investment in such Permitted Investments, shall be distributed to the Agent when received for payment to the Holder of the related Corporate PIES. (iii) If a Holder of a Corporate PIES fails to notify the Agent of its intention to make a Cash Settlement in accordance with paragraph (a)(i) above, or does notify the Agent as provided in paragraph (a)(i) above of its intention to pay the Purchase Price in cash, but fails to make such payment as required by paragraph (a)(ii) above, such Holder shall be deemed to have consented to the disposition of the Pledged Preferred Securities or the Pledged Debentures pursuant to the Remarketing as described in paragraph (b) below. (iv) Promptly after 11:00 a.m., New York City time, on the fifth Business Day preceding the Purchase Contract Settlement Date, the Agent, based on notices received by the Agent pursuant to Section 5.4(a) hereof and notice from the Securities Intermediary regarding cash received by it prior to such time, shall notify the Collateral Agent and the Indenture Trustee of the number of Preferred Securities or Debentures to be tendered for purchase in the Remarketing in a notice substantially in the form of Exhibit F hereto. -35- (b) In order to dispose of the Preferred Securities or Debentures, as the case may be, of Corporate PIES Holders who have not notified the Agent of their intention to effect a Cash Settlement as provided in paragraph (a)(i) above, or who have so notified the Agent but fail to make such payment as required by paragraph (a)(ii) above, the Company shall Lehman Brothers, Inc. (the "Remarketing Agent") pursuant to the Remarketing Agreement to sell such Preferred Securities or Debentures. In order to facilitate the remarketing, the Agent, based on the notices specified in Section 5.4(a)(iv), shall notify the Remarketing Agent, promptly after 11:00 a.m., New York City time, on the fifth Business Day immediately preceding the Purchase Contract Settlement Date, of the aggregate number of Preferred Securities or Debentures that are a component of Corporate PIES to be remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the Pledge Agreement, shall cause such Preferred Securities or Debentures to be presented to the Remarketing Agent for remarketing. Upon receipt of such notice from the Agent and such Preferred Securities or Debentures, the Remarketing Agent shall, on the third Business Day immediately preceding the Purchase Contract Settlement Date, use commercially reasonable efforts to remarket such Preferred Securities or Debentures on such date at a price of 100% of the aggregate stated liquidation amount of such Preferred Securities or principal amount at maturity of such Debentures. The proceeds equal thereto shall automatically be applied by the Collateral Agent, in accordance with the Pledge Agreement, to satisfy in full such Corporate PIES Holders' obligations to pay the Purchase Price for the Common Stock under the related Purchase Contracts on the Purchase Contract Settlement Date. Corporate PIES Holders whose Preferred Securities or Debentures are so remarketed shall not be responsible for the payment of any remarketing fee in connection therewith. If, in spite of using their reasonable efforts, the Remarketing Agent cannot remarket the related Preferred Securities or Debentures of such Holders of Corporate PIES at a price of 100% of the aggregate stated liquidation amount of such Preferred Securities or principal amount at maturity of such Debentures, the remarketing shall be deemed to have failed (a "Failed Remarketing") and in accordance with the terms of the Pledge Agreement the Collateral Agent, for the benefit of the Company, shall exercise its rights as a secured party with respect to such Preferred Securities or Debentures, including those actions specified in paragraph (c) below; provided, that if upon a Failed Remarketing the Collateral Agent exercises such rights for the benefit of the Company with respect to such Preferred Securities or Debentures, any accrued and unpaid distributions on such Preferred Securities or Debentures shall become payable by the Company to the Agent for payment to the Beneficial Owner of the Corporate PIES to which such Preferred Securities or Debentures relate. The Company shall cause a notice of such Failed Remarketing to be published on the second Business Day immediately preceding the Purchase Contract Settlement Date in a daily newspaper in the English language of general circulation in The City of New York, which is expected to be The Wall Street Journal. (c) With respect to any Preferred Securities or Debentures which are subject to a Failed Remarketing, the Collateral Agent for the benefit of the Company reserves all of its rights as a secured party with respect thereto and, subject to applicable law and paragraph (g) below, may, among other things, (i) retain the Preferred Securities or Debentures in full satisfaction of the Holders' obligations under the Purchase Contracts or (ii) sell the Preferred Securities or Debentures in one or more public or private sales. -36- (d) (i) Unless a Holder of Treasury PIES or Corporate PIES (if a Tax Event Redemption has occurred) settles the underlying Purchase Contract through the early delivery of cash to the Purchase Contract Agent in the manner described in Section 5.9, each Holder of a Treasury PIES or Corporate PIES (if a Tax Event Redemption has occurred) who intends to pay in cash shall notify the Agent by use of a notice in substantially the form of Exhibit E hereto of its intention to pay in cash the Purchase Price for the shares of Common Stock to be purchased pursuant to a Purchase Contract. Such notice shall be given on or prior to 5:00 p.m., New York City time, on the second Business Day immediately preceding the Purchase Contract Settlement Date. (ii) A Holder of a Treasury PIES or Corporate PIES (if a Tax Event Redemption has occurred) who has so notified the Agent of its intention to make a Cash Settlement in accordance with paragraph (d)(i) above shall pay the Purchase Price to the Securities Intermediary for deposit in the Collateral Account prior to 11:00 a.m., New York City time, on the Business Day immediately preceding the Purchase Contract Settlement Date in lawful money of the United States by certified or cashiers' check or wire transfer, in each case in immediately available funds payable to or upon the order of the Securities Intermediary. Any cash received by the Collateral Agent shall be invested promptly by the Securities Intermediary in Permitted Investments and paid to the Company on the Purchase Contract Settlement Date in settlement of the Purchase Contract in accordance with the terms of this Agreement and the Pledge Agreement. Any funds received by the Securities Intermediary in respect of the investment earnings from the investment in such Permitted Investments shall be distributed to the Agent when received for payment to the Holder. (iii) If a Holder of a Treasury PIES or a Holder of a Corporate PIES (if a Tax Event Redemption has occurred) fails to notify the Agent of its intention to make a Cash Settlement in accordance with paragraph (d)(i) above, or does notify the Agent as provided in paragraph (d)(i) above of its intention to pay the Purchase Price in cash, but fails to make such payment as required by paragraph (d)(ii) above, then upon the maturity of the Pledged Treasury Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, held by the Securities Intermediary on the Business Day immediately prior to the Purchase Contract Settlement Date, the principal amount of the Treasury Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, received by the Securities Intermediary shall be invested promptly in Permitted Investments. On the Purchase Contract Settlement Date an amount equal to the Purchase Price shall be remitted to the Company as payment thereof without receiving any instructions from the Holder. In the event the sum of the proceeds from the related Pledged Treasury Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, and the investment earnings earned from such investments is in excess of the aggregate Purchase Price of the Purchase Contracts being settled thereby, the Collateral Agent shall cause the Securities Intermediary to distribute such excess to the Agent for the benefit of the Holder of the related Treasury PIES or Corporate PIES when received. -37- (e) Any distribution to Holders of excess funds and interest described above shall be payable at the office of the Agent in The City of New York maintained for that purpose or, at the option of the Holder, by check mailed to the address of the Person entitled thereto at such address as it appears on the Register. (f) Upon Cash Settlement of any Purchase Contract, (i) the Collateral Agent will in accordance with the terms of the Pledge Agreement cause the Pledged Preferred Securities, the Pledged Debentures, the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the Pledged Treasury Securities, as the case may be, underlying the relevant Security to be released from the Pledge free and clear of any security interest of the Company and transferred to the Agent for delivery to the Holder thereof or its designee as soon as practicable and (ii) subject to the receipt thereof, the Agent shall, by book-entry transfer, or other appropriate procedures, in accordance with written instructions provided by the Holder thereof, transfer such Preferred Securities or Debentures, the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or such Treasury Securities, as the case may be (or, if no such instructions are given to the Agent by the Holder, the Agent shall hold such Preferred Securities or Debentures or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or such Treasury Securities, as the case may be, and any distribution thereon, in the name of the Agent or its nominee in trust for the benefit of such Holder until the expiration of the time period specified in the abandoned property laws of the relevant State). (g) The obligations of the Holders to pay the Purchase Price are non-recourse obligations and, except to the extent paid by Early Settlement or Cash Settlement, are payable solely out of the proceeds of any Collateral pledged to secure the obligations of the Holders and in no event will Holders be liable for any deficiency between the proceeds of the disposition of Collateral and the Purchase Price. Section 5.5. Issuance of Shares of Common Stock. Unless a Termination Event or an Early Settlement shall have occurred, subject to Section 5.6(b), the Company shall issue and deposit with the Agent, for the benefit of the Holders of the Outstanding Securities, one or more certificates representing the newly issued shares of Common Stock registered in the name of the Agent (or its nominee) as custodian for the Holders (such certificates for shares of Common Stock, together with any dividends or distributions for which a record date and payment date for such dividend or distribution has occurred after the Purchase Contract Settlement Date, being hereinafter referred to as the "Purchase Contract Settlement Fund") to which the Holders are entitled hereunder. Subject to the foregoing, upon surrender of a Certificate to the Agent on or after the Purchase Contract Settlement Date, together with settlement instructions thereon duly completed and executed, the Holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Common Stock which such Holder is entitled to receive pursuant to the provisions of this Article Five (after taking into account all Securities then held by such Holder), together with cash in lieu of fractional shares as provided in Section 5.10 and any dividends or distributions with respect to such shares constituting part of the Purchase Contract Settlement Fund, but without -38- any interest thereon, and the Certificate so surrendered shall forthwith be cancelled. Such shares shall be registered in the name of the Holder or the Holder's designee as specified in the settlement instructions provided by the Holder to the Agent. If any shares of Common Stock issued in respect of a Purchase Contract are to be registered to a Person other than the Person in whose name the Certificate evidencing such Purchase Contract is registered, no such registration shall be made unless the Person requesting such registration has paid any transfer and other taxes required by reason of such registration in a name other than that of the registered Holder of the Certificate evidencing such Purchase Contract or has established to the satisfaction of the Company that such tax either has been paid or is not payable. Section 5.6. Adjustment of Settlement Rate. (a) Adjustments for Dividends, Distributions, Stock Splits, Etc. (1) In case the Company shall pay or make a dividend or other distribution on the Common Stock in Common Stock, the Settlement Rate in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by dividing such Settlement Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (2) In case the Company shall issue rights, options or warrants to all holders of its Common Stock (not being available on an equivalent basis to Holders of the Securities upon settlement of the Purchase Contracts underlying such Securities) entitling them, for a period expiring within 45 days after the record date for the determination of stockholders entitled to receive such rights, options or warrants, to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants (other than pursuant to a dividend reinvestment plan), the Settlement Rate in effect at the opening of business on the day following the date fixed for such determination shall be increased by dividing such Settlement Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following the date fixed for such -39- determination. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Company shall not issue any such rights, options or warrants in respect of shares of Common Stock held in the treasury of the Company. (3) In case outstanding shares of Common Stock shall be subdivided or split into a greater number of shares of Common Stock, the Settlement Rate in effect at the opening of business on the day following the day upon which such subdivision or split becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Settlement Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision, split or combination becomes effective. (4) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness or assets (including securities, but excluding any rights or warrants referred to in paragraph (2) of this Section, any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in paragraph (1) of this Section), the Settlement Rate shall be adjusted so that the same shall equal the rate determined by dividing the Settlement Rate in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the date fixed for such determination less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such distribution. In any case in which this paragraph (4) is applicable, paragraph (2) of this Section shall not be applicable. (5) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock (I) cash (excluding any cash that is distributed in a Reorganization Event to which Section 5.6(b) applies or as part of a distribution referred to in paragraph (4) of this Section) in an aggregate amount that, combined together with the aggregate amount of any other distributions to all holders of its Common Stock made exclusively in cash (other than in connection with a Reorganization Event) within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this Section has been made and (II) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender or exchange offer by the Company or any of its subsidiaries for all or any portion of the Common Stock concluded within the 12 months preceding the date of payment of the distribution -40- described in Clause (I) above and in respect of which no adjustment pursuant to this paragraph (5) or paragraph (4) or paragraph (6) of this Section has been made, exceeds 15% of the product of the Current Market Price per share of the Common Stock on the date for the determination of holders of shares of Common Stock entitled to receive such distribution times the number of shares of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date for determination, the Settlement Rate shall be increased so that the same shall equal the rate determined by dividing the Settlement Rate in effect immediately prior to the close of business on the date fixed for determination of the stockholders entitled to receive such distribution by a fraction (i) the numerator of which shall be equal to the Current Market Price per share of the Common Stock on the date fixed for such determination less an amount equal to the quotient of (x) the combined amount distributed or payable in the transactions described in clauses (I) and (II) above and (y) the number of shares of Common Stock outstanding on such date for determination and (ii) the denominator of which shall be equal to the Current Market Price per share of the Common Stock on such date for determination. (6) In case a tender or exchange offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares) of (I) an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) that combined together with the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender or exchange offer, by the Company or any subsidiary of the Company for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has been made and (II) the aggregate amount of any distributions to all holders of the Company's Common Stock made exclusively in cash within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has been made, exceeds 15% of the product of the Current Market Price per share of the Common Stock as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender or exchange offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Settlement Rate shall be adjusted so that the same shall equal the rate determined by dividing the Settlement Rate immediately prior to the close of business on the date of the Expiration Time by a fraction (i) the numerator of which shall be equal to (A) the product of (I) the Current Market Price per share of the Common Stock on the date of the Expiration Time and (II) the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time less (B) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the transactions described in clauses (I) and (II) above (assuming in the case of clause (I) the -41- acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares), and (ii) the denominator of which shall be equal to the product of (A) the Current Market Price per share of the Common Stock as of the Expiration Time and (B) the number of shares of Common Stock outstanding (including any tendered shares) as of the Expiration Time less the number of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares"). (7) The reclassification of Common Stock into securities including securities other than Common Stock (other than any reclassification upon a Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve (a) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of stockholders entitled to receive such distribution" and the "date fixed for such determination" within the meaning of paragraph (4) of this Section), and (b) a subdivision, split or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision or split becomes effective" or "the day upon which such combination becomes effective", as the case may be, and "the day upon which such subdivision, split or combination becomes effective" within the meaning of paragraph (3) of this Section). (8) The "Current Market Price" per share of Common Stock on any day means the average of the daily Closing Prices for the five consecutive Trading Days selected by the Company commencing not more than 30 Trading Days before, and ending not later than, the earlier of the day in question and the day before the "ex date" with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term "ex date", when used with respect to any issuance or distribution, shall mean the first date on which the Common Stock trades regular way on such exchange or in such market without the right to receive such issuance or distribution. (9) All adjustments to the Settlement Rate shall be calculated to the nearest 1/10,000th of a share of Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment in the Settlement Rate shall be required unless such adjustment would require an increase or decrease of at least one percent thereof; provided, however, that any adjustments which by reason of this subparagraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment. If an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an adjustment shall also be made to the Applicable Market Value solely to determine which of clauses (a), (b) or (c) of the definition of Settlement Rate in Section 5.1 will apply on the Purchase Contract Settlement Date. Such adjustment shall be made by multiplying the Applicable Market Value by a fraction of which the numerator shall be the Settlement Rate immediately after such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and the denominator shall be the Settlement Rate immediately before such adjustment; provided, however, that if such adjustment to the Settlement Rate is required to be -42- made pursuant to the occurrence of any of the events contemplated by paragraph (1), (2), (3), (4), (5), (7) or (10) of this Section 5.6(a) during the period taken into consideration for determining the Applicable Market Value, appropriate and customary adjustments shall be made to the Settlement Rate. (10) The Company may make such increases in the Settlement Rate, in addition to those required by this Section, as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reason. (b) Adjustment for Consolidation, Merger or Other Reorganization Event. In the event of (i) any consolidation or merger of the Company with or into another Person (other than a merger or consolidation in which the Company is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Company or another corporation), (ii) any sale, transfer, lease or conveyance to another Person of the property of the Company as an entirety or substantially as an entirety, (iii) any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition) or (iv) any liquidation, dissolution or winding up of the Company other than as a result of or after the occurrence of a Termination Event (any such event, a "Reorganization Event"), the Settlement Rate will be adjusted to provide that each Holder of Securities will receive on the Purchase Contract Settlement Date with respect to each Purchase Contract forming a part thereof, the kind and amount of securities, cash and other property receivable upon such Reorganization Event (without any interest thereon, and without any right to dividends or distribution thereon which have a record date that is prior to the Purchase Contract Settlement Date) by a Holder of the number of shares of Common Stock issuable on account of each Purchase Contract if the Purchase Contract Settlement Date had occurred immediately prior to such Reorganization Event assuming such Holder of Common Stock is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a "Constituent Person"), or an Affiliate of a Constituent Person to the extent such Reorganization Event provides for different treatment of Common Stock held by Affiliates of the Company and non-affiliates and such Holder failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such Reorganization Event (provided that if the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by other than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this Section the kind and amount of securities, cash and other property receivable upon such Reorganization Event by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). In the event of such a Reorganization Event, the Person formed by such consolidation, merger or exchange or the Person which acquires the assets of the Company or, in the event of a liquidation or dissolution of the Company, the Company or a -43- liquidating trust created in connection therewith, shall execute and deliver to the Agent an agreement supplemental hereto providing that the Holders of each Outstanding Security shall have the rights provided by this Section 5.6(b). Such supplemental agreement shall provide for adjustments which, for events subsequent to the effective date of such supplemental agreement, shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section. The above provisions of this Section shall similarly apply to successive Reorganization Events. Section 5.7. Notice of Adjustments and Certain Other Events. (a) Whenever the Settlement Rate is adjusted as herein provided, the Company shall: (i) forthwith compute the adjusted Settlement Rate in accordance with Section 5.6 and prepare and transmit to the Agent an Officers' Certificate setting forth the Settlement Rate, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and (ii) within 10 Business Days following the occurrence of an event that requires an adjustment to the Settlement Rate pursuant to Section 5.6 (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), provide a written notice to the Holders of the Securities of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the Settlement Rate was determined and setting forth the adjusted Settlement Rate. (b) The Agent shall not at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Settlement Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at the time be issued or delivered with respect to any Purchase Contract; and the Agent makes no representation with respect thereto. The Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock pursuant to a Purchase Contract or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Section 5.8. Termination Event; Notice. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay any Contract Adjustment Payments, if the Company shall have such obligation, and the rights and obligations of Holders to purchase Common Stock, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Purchase Contract Settlement Date, a Termination Event shall have occurred. Upon and after the occurrence of a Termination Event, the Securities shall thereafter represent the right to receive the Preferred Securities or the -44- Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, forming a part of such Securities in the case of Corporate PIES, or Treasury Securities in the case of Treasury PIES, in accordance with the provisions of Section 5.4 of the Pledge Agreement. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Agent, the Collateral Agent and the Holders, at their addresses as they appear in the Register. Section 5.9. Early Settlement. (a) Subject to and upon compliance with the provisions of this Section 5.9, at the option of the Holder thereof, Purchase Contracts underlying Securities may be settled early ("Early Settlement") in the case of Corporate PIES (unless a Tax Event Redemption has occurred) on or prior to the seventh Business Day immediately preceding the Purchase Contract Settlement Date and in the case of Treasury PIES on or prior to the second Business Day immediately preceding the Purchase Contract Settlement Date, in each case, as provided herein; and that if a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES, Purchase Contracts, underlying Corporate PIES may be settled early, on or prior to the second Business Day immediately preceding the Purchase Contract Settlement Date, but only in an aggregate amount of $8,000,000 or in an integral multiple thereof. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts, the Holder of the Certificate evidencing Securities shall deliver such Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early on the reverse thereof duly completed and accompanied by payment (payable to the Company in immediately available funds) in an amount (the "Early Settlement Amount") equal to (i) the product of (A) the Stated Amount times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement plus (ii) if such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date next preceding any Payment Date to the opening of business on such Payment Date, an amount equal to the sum of (x) the Contract Adjustment Payments payable on such Payment Date with respect to such Purchase Contracts plus (y) in the case of a Corporate PIES Certificate, the distributions on the related Preferred Securities or Debentures payable on such Payment Date. Except as provided in the immediately preceding sentence and subject to the second to last paragraph of Section 5.2, no payment or adjustment shall be made upon Early Settlement of any Purchase Contract on account of any Contract Adjustment Payments accrued on such Purchase Contract or on account of any dividends on the Common Stock issued upon such Early Settlement. If the foregoing requirements are first satisfied with respect to Purchase Contracts underlying any Securities at or prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the "Early Settlement Date" with respect to such Securities and if such requirements are first satisfied after 5:00 p.m., New York City time, on a Business Day or on a day that is not a Business Day, the "Early Settlement Date" with respect to such Securities shall be the next succeeding Business Day. (b) Upon Early Settlement of Purchase Contracts by a Holder of the related Securities, the Company shall issue, and the Holder shall be entitled to receive, 1.6103 shares of -45- Common Stock on account of each Purchase Contract as to which Early Settlement is effected (the "Early Settlement Rate"). The Early Settlement Rate shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted. (c) No later than the third Business Day after the applicable Early Settlement Date the Company shall cause (i) the shares of Common Stock issuable upon Early Settlement of Purchase Contracts to be issued and delivered, together with payment in lieu of any fraction of a share, as provided in Section 5.10, and (ii) the related Preferred Securities or Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, in the case of Corporate PIES, or the related Treasury Securities, in the case of Treasury PIES, to be released from the Pledge by the Collateral Agent and transferred, in each case, to the Agent for delivery to the Holder thereof or its designee. (d) Upon Early Settlement of any Purchase Contracts, and subject to receipt of shares of Common Stock from the Company and the Preferred Securities, the Debentures, the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Treasury Securities, as the case may be, from the Securities Intermediary, as applicable, the Agent shall, in accordance with the instructions provided by the Holder thereof on the applicable form of Election to Settle Early on the reverse of the Certificate evidencing the related Securities, (i) transfer to the Holder the Preferred Securities, the Debentures, the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or Treasury Securities, as the case may be, forming a part of such Securities, and (ii) deliver to the Holder a certificate or certificates for the full number of shares of Common Stock issuable upon such Early Settlement, together with payment in lieu of any fraction of a share, as provided in Section 5.10. (e) In the event that Early Settlement is effected with respect to Purchase Contracts underlying less than all the Securities evidenced by a Certificate, upon such Early Settlement the Company shall execute and the Agent shall authenticate, countersign and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Securities as to which Early Settlement was not effected. Section 5.10. No Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued or delivered upon settlement on the Purchase Contract Settlement Date or upon Early Settlement of any Purchase Contracts. If Certificates evidencing more than one Purchase Contract shall be surrendered for settlement at one time by the same Holder, the number of full shares of Common Stock which shall be delivered upon settlement shall be computed on the basis of the aggregate number of Purchase Contracts evidenced by the Certificates so surrendered. Instead of any fractional share of Common Stock which would otherwise be deliverable upon settlement of any Purchase Contracts on the Purchase Contract Settlement Date or upon Early Settlement, the Company, through the Agent, shall make a cash payment in respect of such fractional interest in an amount equal to the value of such fractional shares times the Applicable Market Value. The Company shall provide the Agent from time to time with -46- sufficient funds to permit the Agent to make all cash payments required by this Section 5.10 in a timely manner. Section 5.11. Charges and Taxes. The Company will pay all stock transfer and similar taxes attributable to the initial issuance and delivery of the shares of Common Stock pursuant to the Purchase Contracts; provided, however, that the Company shall not be required to pay any such tax or taxes which may be payable in respect of any exchange of or substitution for a Certificate evidencing a Security or any issuance of a share of Common Stock in a name other than that of the registered Holder of a Certificate surrendered in respect of the Securities evidenced thereby, other than in the name of the Agent, as custodian for such Holder, and the Company shall not be required to issue or deliver such share certificates or Certificates unless or until the Person or Persons requesting the transfer or issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. ARTICLE VI Remedies Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment Payments and to Purchase Common Stock. In the event that Contract Adjustment Payments shall constitute a component of Corporate PIES or Treasury PIES, the Holder of any Corporate PIES or Treasury PIES shall have the right, which is absolute and unconditional (subject to the payment by a holder of Contract Adjustment Payments pursuant to Section 5.9(a)), to receive payment of each installment of the Contract Adjustment Payments with respect to the Purchase Contract constituting a part of such Security on the respective Payment Date for such Security and to purchase Common Stock pursuant to such Purchase Contract and, in each such case, to institute suit for the enforcement of any such payment and right to purchase Common Stock, and such rights shall not be impaired without the consent of such Holder. Section 6.2. Restoration of Rights and Remedies. If any Holder has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case, subject to any determination in such proceeding, the Company and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted. -47- Section 6.3. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates in the last paragraph of Section 3.10, no right or remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 6.4. Delay or Omission Not Waiver. No delay or omission of any Holder to exercise any right or remedy upon a default shall impair any such right or remedy or constitute a waiver of any such right. Every right and remedy given by this Article or by law to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Holders. Section 6.5. Undertaking for Costs. All parties to this Agreement agree, and each Holder of Corporate PIES or Treasury PIES, by its acceptance of such Corporate PIES or Treasury PIES shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Agent for any action taken, suffered or omitted by it as Agent, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Agent, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of distributions on any Preferred Securities or Contract Adjustment Payments, if any, on any Purchase Contract on or after the respective Payment Date therefor in respect of any Security held by such Holder, or for enforcement of the right to purchase shares of Common Stock under the Purchase Contracts constituting part of any Security held by such Holder. Section 6.6. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Agreement; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to -48- the Agent or the Holders, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VII The Agent Section 7.1. Certain Duties and Responsibilities. (a) (1) The Agent undertakes to perform, with respect to the Securities, such duties and only such duties as are specifically set forth in this Agreement and the Pledge Agreement, and no implied covenants or obligations shall be read into this Agreement against the Agent; and (2) in the absence of bad faith or negligence on its part, the Agent may, with respect to the Securities, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Agent and conforming to the requirements of this Agreement, but in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Agent, the Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. (b) No provision of this Agreement shall be construed to relieve the Agent from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Agent was negligent in ascertaining the pertinent facts; and (3) no provision of this Agreement shall require the Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if adequate indemnity is not provided to it. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Agent shall be subject to the provisions of this Section. (d) The Agent is authorized to execute and deliver the Pledge Agreement in its capacity as Agent. -49- Section 7.2. Notice of Default. Within 30 days after the occurrence of any default by the Company hereunder of which a Responsible Officer of the Agent has actual knowledge, the Agent shall transmit by mail to the Company and the Holders of Securities, as their names and addresses appear in the Register, notice of such default hereunder, unless such default shall have been cured or waived. Section 7.3. Certain Rights of Agent. Subject to the provisions of Section 7.1: (a) the Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer Request, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Agreement the Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of the Company; (d) the Agent may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Agent, in its discretion, may make reasonable further inquiry or investigation into such facts or matters related to the execution, delivery and performance of the Purchase Contracts as it may see fit, and, if the Agent shall determine to make such further inquiry or investigation, it shall be given a reasonable opportunity to examine the books, records and premises of the Company, personally or by agent or attorney; and (f) the Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or an Affiliate and the Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney or an Affiliate appointed with due care by it hereunder. -50- Section 7.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Certificates shall be taken as the statements of the Company, and the Agent assumes no responsibility for their accuracy. The Agent makes no representations as to the validity or sufficiency of either this Agreement or of the Securities, or of the Pledge Agreement or the Pledge. The Agent shall not be accountable for the use or application by the Company of the proceeds in respect of the Purchase Contracts. Section 7.5. May Hold Securities. Any Registrar or any other agent of the Company, or the Agent and its Affiliates, in their individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company, the Collateral Agent or any other Person with the same rights it would have if it were not Registrar or such other agent, or the Agent. Section 7.6. Money Held in Custody. Money held by the Agent in custody hereunder need not be segregated from the other funds except to the extent required by law or provided herein. The Agent shall be under no obligation to invest or pay interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 7.7. Compensation and Reimbursement. The Company agrees: (1) to pay to the Agent from time to time reasonable compensation for all services rendered by it hereunder; (2) except as otherwise expressly provided for herein, to reimburse the Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Agent in accordance with any provision of this Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Agent and any predecessor Agent for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. -51- Section 7.8. Corporate Agent Required; Eligibility. There shall at all times be an Agent hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having (or being a member of a bank holding company having) a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority and having a Corporate Trust Office in the Borough of Manhattan, The City of New York, if there be such a corporation in the Borough of Manhattan, The City of New York, qualified and eligible under this Article and willing to act on reasonable terms. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 7.9. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Agent and no appointment of a successor Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Agent in accordance with the applicable requirements of Section 7.10. (b) The Agent may resign at any time by giving written notice thereof to the Company 60 days prior to the effective date of such resignation. If the instrument of acceptance by a successor Agent required by Section 7.10 shall not have been delivered to the Agent within 30 days after the giving of such notice of resignation, the resigning Agent may petition any court of competent jurisdiction for the appointment of a successor Agent. (c) The Agent may be removed at any time by Act of the Holders of a majority in number of the Outstanding Securities delivered to the Agent and the Company. (d) If at any time (1) the Agent fails to comply with Section 310(b) of the TIA, as if the Agent were an indenture trustee under an indenture qualified under the TIA, after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Agent shall cease to be eligible under Section 7.8 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Agent or of its property shall be appointed or -52- any public officer shall take charge or control of the Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Agent and the appointment of a successor Agent. (e) If the Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Agent for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Agent and shall comply with the applicable requirements of Section 7.10. If no successor Agent shall have been so appointed by the Company and accepted appointment in the manner required by Section 7.10, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Agent. (f) The Company shall give, or shall cause such successor Agent to give, notice of each resignation and each removal of the Agent and each appointment of a successor Agent by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the applicable Register. Each notice shall include the name of the successor Agent and the address of its Corporate Trust Office. Section 7.10. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Agent, every such successor Agent so appointed shall execute, acknowledge and deliver to the Company and to the retiring Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Agent shall become effective and such successor Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, agencies and duties of the retiring Agent; but, on the request of the Company or the successor Agent, such retiring Agent shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Agent all the rights, powers and trusts of the retiring Agent and shall duly assign, transfer and deliver to such successor Agent all property and money held by such retiring Agent hereunder. (b) Upon request of any such successor Agent, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Agent all such rights, powers and agencies referred to in paragraph (a) of this Section. (c) No successor Agent shall accept its appointment unless at the time of such acceptance such successor Agent shall be qualified and eligible under this Article. -53- Section 7.11. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Agent shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Agent, shall be the successor of the Agent hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, with the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been authenticated and executed on behalf of the Holders, but not delivered, by the Agent then in office, any successor by merger, conversion or consolidation to such Agent may adopt such authentication and execution and deliver the Certificates so authenticated and executed with the same effect as if such successor Agent had itself authenticated and executed such Securities. Section 7.12. Preservation of Information; Communications to Holders. (a) The Agent shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders received by the Agent in its capacity as Registrar. (b) If three or more Holders (herein referred to as "applicants") apply in writing to the Agent, and furnish to the Agent reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Agreement or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Agent shall mail to all the Holders copies of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Agent of the materials to be mailed and of payment, or provision for the payment, of the reasonable expenses of such mailing. Section 7.13. No Obligations of Agent. Except to the extent otherwise expressly provided in this Agreement, the Agent assumes no obligations and shall not be subject to any liability under this Agreement, the Pledge Agreement or any Purchase Contract in respect of the obligations of the Holder of any Security thereunder. The Company agrees, and each Holder of a Certificate, by his acceptance thereof, shall be deemed to have agreed, that the Agent's execution of the Certificates on behalf of the Holders shall be solely as agent and attorney-in-fact for the Holders, and that the Agent shall have no obligation to perform such Purchase Contracts on behalf of the Holders, except to the extent expressly provided in Article Five hereof. Anything in this Agreement to the contrary notwithstanding, in no event shall the Agent or its officers, employees or agents be liable under this Agreement to any third party for indirect, special, punitive, or consequential loss or damage of any kind whatsoever, including lost profits, whether or not the likelihood of such loss or damage was known to the Agent, incurred without any act or deed that is found to be attributable to gross negligence or willful misconduct on the part of the Agent. -54- Section 7.14. Tax Compliance. (a) The Company will comply with all applicable certification, information reporting and withholding (including "backup" withholding) requirements imposed by applicable tax laws, regulations or administrative practice with respect to (i) any payments made with respect to the Securities or (ii) the issuance, delivery, holding, transfer, redemption or exercise of rights under the Securities. Such compliance shall include, without limitation, the preparation and timely filing of required returns and the timely payment of all amounts required to be withheld to the appropriate taxing authority or its designated agent. (b) The Agent shall comply with any written direction received from the Company with respect to the execution or certification of any required documentation and the application of such requirements to particular payments or Holders or in other particular circumstances, and may for purposes of this Agreement rely on any such direction in accordance with the provisions of Section 7.1(a)(2) hereof. (c) The Agent shall maintain all appropriate records documenting compliance with such requirements, and shall make such records available, on written request, to the Company or its authorized representative within a reasonable period of time after receipt of such request. ARTICLE VIII Supplemental Agreements Section 8.1. Supplemental Agreements Without Consent of Holders. Without the consent of any Holders, the Company and the Agent, at any time and from time to time, may enter into one or more agreements supplemental hereto, in form satisfactory to the Company and the Agent, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Certificates; or (2) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (3) to evidence and provide for the acceptance of appointment hereunder by a successor Agent; or (4) to make provision with respect to the rights of Holders pursuant to the requirements of Section 5.6(b); or -55- (5) except as provided for in Section 5.6, to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders. Section 8.2. Supplemental Agreements With Consent of Holders. With the consent of the Holders of not less than a majority of the outstanding Purchase Contracts voting together as one class, by Act of said Holders delivered to the Company and the Agent, the Company, when authorized by a Board Resolution, and the Agent may enter into an agreement or agreements supplemental hereto for the purpose of modifying in any manner the terms of the Purchase Contracts, or the provisions of this Agreement or the rights of the Holders in respect of the Securities; provided, however, that, except as contemplated herein, no such supplemental agreement shall, without the unanimous consent of the Holders of each outstanding Purchase Contract affected thereby, (1) change any Payment Date; (2) change the amount or the type of Collateral required to be Pledged to secure a Holder's obligations under the Purchase Contract, impair the right of the Holder of any Purchase Contract to receive distributions on the related Collateral (except for the rights of Holders of Corporate PIES to substitute the Treasury Securities for the Pledged Preferred Securities or Pledged Debentures or the Applicable Ownership Interest of the Treasury Portfolio or the rights of holders of Treasury PIES to substitute Preferred Securities, Debentures or the Applicable Ownership Interest of the Treasury Portfolio for the Pledged Treasury Securities) or otherwise adversely affect the Holder's rights in or to such Collateral or adversely alter the rights in or to such Collateral; (3) reduce any Contract Adjustment Payments or change any place where, or the coin or currency in which, any Contract Adjustment Payment is payable; (4) impair the right to institute suit for the enforcement of any Purchase Contract; (5) reduce the number of shares of Common Stock to be purchased pursuant to any Purchase Contract, increase the price to purchase shares of Common Stock upon settlement of any Purchase Contract, change the Purchase Contract Settlement Date or otherwise adversely affect the Holder's rights under any Purchase Contract; or (6) reduce the percentage of the outstanding Purchase Contracts the consent of whose Holders is required for any such supplemental agreement; -56- provided that if any amendment or proposal referred to above would adversely affect only the Corporate PIES or the Treasury PIES, then only the affected class of Holder as of the record date for the Holders entitled to vote thereon will be entitled to vote on such amendment or proposal, and such amendment or proposal shall not be effective except with the consent of Holders of not less than a majority of such class; provided that the unanimous consent of the Holders of each outstanding Purchase Contract of such class affected thereby shall be required to approve any amendment or proposal specified in clauses (1) - (6) above. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such Act shall approve the substance thereof. Section 8.3. Execution of Supplemental Agreements. In executing, or accepting the additional agencies created by, any supplemental agreement permitted by this Article or the modifications thereby of the agencies created by this Agreement, the Agent shall be entitled to receive, and (subject to Section 7.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. The Agent may, but shall not be obligated to, enter into any such supplemental agreement which affects the Agent's own rights, duties or immunities under this Agreement or otherwise. Section 8.4. Effect of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Holder of Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered hereunder, shall be bound thereby. Section 8.5. Reference to Supplemental Agreements. Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any supplemental agreement pursuant to this Article may, and shall if required by the Agent, bear a notation in form approved by the Agent as to any matter provided for in such supplemental agreement. If the Company shall so determine, new Certificates so modified as to conform, in the opinion of the Agent and the Company, to any such supplemental agreement may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent in exchange for Outstanding Certificates. -57- ARTICLE IX Consolidation, Merger, Sale or Conveyance Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions. The Company covenants that it will not merge or consolidate with any other Person or sell, assign, transfer, lease or convey all or substantially all of its properties and assets to any Person or group of affiliated Persons in one transaction or a series of related transactions, unless (i) either the Company shall be the continuing corporation, or the successor (if other than the Company) shall be a corporation organized and existing under the laws of the United States of America or a State thereof or the District of Columbia and such corporation shall expressly assume all the obligations of the Company under the Purchase Contracts, this Agreement and the Pledge Agreement by one or more supplemental agreements in form reasonably satisfactory to the Agent and the Collateral Agent, executed and delivered to the Agent and the Collateral Agent by such corporation, and (ii) the Company or such successor corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale, assignment, transfer, lease or conveyance, be in default in the performance of any covenant or condition hereunder, under any of the Securities or under the Pledge Agreement. Section 9.2. Rights and Duties of Successor Corporation. In case of any such consolidation, merger, sale, assignment, transfer, lease or conveyance and upon any such assumption by a successor corporation in accordance with Section 9.1, such successor corporation shall succeed to and be substituted for the Company with the same effect as if it had been named herein as the Company. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of NIPSCO Industries, Inc., any or all of the Certificates evidencing Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Agent; and, upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Agreement prescribed, the Agent shall authenticate and execute on behalf of the Holders and deliver any Certificates which previously shall have been signed and delivered by the officers of the Company to the Agent for authentication and execution, and any Certificate evidencing Securities which such successor corporation thereafter shall cause to be signed and delivered to the Agent for that purpose. All the Certificates issued shall in all respects have the same legal rank and benefit under this Agreement as the Certificates theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Certificates had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, assignment, transfer, lease or conveyance such change in phraseology and form (but not in substance) may be made in the Certificates evidencing Securities thereafter to be issued as may be appropriate. -58- Section 9.3. Opinion of Counsel Given to Agent. The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, assignment, transfer, lease or conveyance, and any such assumption, complies with the provisions of this Article and that all conditions precedent to the consummation of any such consolidation, merger, sale, assignment, transfer, lease or conveyance have been met. ARTICLE X Covenants Section 10.1. Performance Under Purchase Contracts. The Company covenants and agrees for the benefit of the Holders from time to time of the Securities that it will duly and punctually perform its obligations under the Purchase Contracts in accordance with the terms of the Purchase Contracts and this Agreement. Section 10.2. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York an office or agency where Certificates may be presented or surrendered for acquisition of shares of Common Stock upon settlement of the Purchase Contracts on the Purchase Contract Settlement Date or Early Settlement and for transfer of Collateral upon occurrence of a Termination Event, where Certificates may be surrendered for registration of transfer or exchange, for a Collateral Substitution or re-establishment of a Corporate PIES and where notices and demands to or upon the Company in respect of the Securities and this Agreement may be served. The Company will give prompt written notice to the Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Agent as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where Certificates may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Agent of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates as the place of payment for the Securities the Corporate Trust Office and appoints the Agent at its Corporate Trust Office as paying agent in such city. -59- Section 10.3. Company to Reserve Common Stock. The Company shall at all times prior to the Purchase Contract Settlement Date reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock the full number of shares of Common Stock issuable against tender of payment in respect of all Purchase Contracts constituting a part of the Securities evidenced by Outstanding Certificates. Section 10.4. Covenants as to Common Stock. The Company covenants that all shares of Common Stock which may be issued against tender of payment in respect of any Purchase Contract constituting a part of the Outstanding Securities will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable. Section 10.5. Statements of Officers of the Company as to Default. The Company will deliver to the Agent, within 120 days after the end of each fiscal year of the Company (which as of the date hereof is December 31) ending after the date hereof, an Officers' Certificate (one of the signers of which shall be the principal executive officer, principal financial officer or principal accounting officer of the Company), stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. Section 10.6. ERISA. Each Holder from time to time of the Securities which is a Plan hereby represents that its acquisition of the Corporate PIES and the holding of the same satisfies the applicable fiduciary requirements of ERISA and that it is entitled to exemption relief from the prohibited transaction provisions of ERISA and the Code in accordance with one or more prohibited transaction exemptions or otherwise will not result in a nonexempt prohibited transaction. -60- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. NIPSCO INDUSTRIES, INC. By: ------------------------------------ Name: Title: THE CHASE MANHATTAN BANK, as Purchase Contract Agent By: ------------------------------------ Name: Title: -61- EXHIBIT A FACE OF CORPORATE PIES CERTIFICATE "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." No. _______ Cusip No.______ Number of Corporate PIES ________ NIPSCO INDUSTRIES, INC. NIPSCO CAPITAL TRUST I Corporate PIES This Corporate PIES Certificate certifies that Cede & Co. is the registered Holder of the number of Corporate PIES set forth above. Each Corporate PIES consists of (i) either (a) beneficial ownership by the Holder of one Preferred Security (the "Preferred Security") of NIPSCO Capital Trust I, a Delaware statutory business trust (the "Trust"), having a stated liquidation amount of $50, subject to the Pledge of such Preferred Security by such Holder pursuant to the Pledge Agreement or (b) upon the occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement Date, the appropriate Applicable Ownership Interest of the Treasury Portfolio, subject to the Pledge of such Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio by such Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with NIPSCO Industries, Inc., an Indiana corporation (the "Company"). All capitalized terms used herein which are defined in the Purchase Contract Agreement (as defined on the reverse hereof) have the meaning set forth therein. Pursuant to the Pledge Agreement, the Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, constituting part of each Corporate PIES evidenced hereby have been pledged to the Collateral Agent, for the benefit of the Company, to secure the obligations of the Holder under the Purchase Contract comprising a portion of such Corporate PIES. The Pledge Agreement provides that all payments of the liquidation amount with respect to any of the Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, or cash distributions on any Pledged Preferred Securities (as defined in the Pledge Agreement) or the appropriate Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio, as the case may be, constituting part of the Corporate PIES received by the Securities Intermediary shall be paid by wire transfer in same day funds (i) in the case of (A) cash distributions with respect to Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio, as the case may be, and (B) any payments of the liquidation amount with respect to any Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, that have been released from the Pledge pursuant to the Pledge Agreement, to the Agent to the account designated by the Agent, no later than 2:00 p.m., New York City time, on the Business Day such payment is received by the Securities Intermediary (provided that in the event such payment is received by the Securities Intermediary on a day that is not a Business Day or after 12:30 p.m., New York City time, on a Business Day, then such payment shall be made no later than 10:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in the case of payments of the liquidation amount with respect to any of the Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, to the Company on the Purchase Contract Settlement Date (as described herein) in accordance with the terms of the Pledge Agreement, in full satisfaction of the respective obligations of the Holders of the Corporate PIES of which such Pledged Preferred Securities or the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, are a part under the Purchase Contracts forming a part of such Corporate PIES. Distributions on any Preferred Security or the appropriate Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio, as the case may be, forming part of a Corporate PIES evidenced hereby, which are payable quarterly in arrears on February 19, May 19, August 19 and November 19 of each year, commencing May 19, 1999 (a "Payment Date"), shall, subject to receipt thereof by the Agent from the Securities Intermediary, be paid to the Person in whose name this Corporate PIES Certificate (or a Predecessor Corporate PIES Certificate) is registered at the close of business on the Record Date for such Payment Date. Each Purchase Contract evidenced hereby obligates the Holder of this Corporate PIES Certificate to purchase, and the Company to sell, on February 19, 2003 (the "Purchase Contract A-2 Settlement Date"), at a price equal to $50 (the "Stated Amount"), a number of Common Shares, without par value ("Common Stock"), of the Company, equal to the Settlement Rate, unless on or prior to the Purchase Contract Settlement Date there shall have occurred a Termination Event or an Early Settlement with respect to the Corporate PIES of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The purchase price (the "Purchase Price") for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Purchase Contract Settlement Date by separate cash or by application of payment received in respect of the liquidation amount with respect to any Pledged Preferred Securities pursuant to the Remarketing or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, pledged to secure the obligations under such Purchase Contract of the Holder of the Corporate PIES of which such Purchase Contract is a part. The Company shall pay, on each Payment Date, in respect of each Purchase Contract forming part of a Corporate PIES evidenced hereby an amount (the "Contract Adjustment Payments") equal to (a) if a Reset Transaction has not occurred, 1.85% per annum of the Stated Amount or (b) following the occurrence of a Reset Transaction, the Adjusted Contract Adjustment Payment Rate related to such Reset Transaction until any such succeeding Reset Transaction shall occur (computed on the basis of (i) for any full quarterly period, a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly period, a 30-day month and for periods less than a month, the actual number of days elapsed per 30-day period). Such Contract Adjustment Payments shall be payable to the Person in whose name this Corporate PIES Certificate (or a Predecessor Corporate PIES Certificate) is registered at the close of business on the Record Date for such Payment Date. Distributions on the Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio, as the case may be, and Contract Adjustment Payments will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Corporate PIES Register. Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Agent by manual signature, this Corporate PIES Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose. A-3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. NIPSCO INDUSTRIES, INC. By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts evidenced hereby) By: THE CHASE MANHATTAN BANK, not individually but solely as Attorney-in-Fact of such Holder By: ------------------------------------ Name: Title: Dated: AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Corporate PIES Certificates referred to in the within mentioned Purchase Contract Agreement. By: THE CHASE MANHATTAN BANK, as Purchase Contract Agent By: ------------------------------------ Authorized Officer A-4 (FORM OF REVERSE OF CORPORATE PIES CERTIFICATE) Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of February 16, 1999 (as may be supplemented from time to time, the "Purchase Contract Agreement"), between the Company and The Chase Manhattan Bank, as Purchase Contract Agent (including its successors hereunder, the "Agent"), to which Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Agent, the Company, and the Holders and of the terms upon which the Corporate PIES Certificates are, and are to be, executed and delivered. Each Purchase Contract evidenced hereby obligates the Holder of this Corporate PIES Certificate to purchase, and the Company to sell, on the Purchase Contract Settlement Date at a price equal to the Stated Amount (the "Purchase Price"), a number of shares of Common Stock of the Company equal to the Settlement Rate, unless, on or prior to the Purchase Contract Settlement Date, there shall have occurred a Termination Event with respect to the Security of which such Purchase Contract is a part or an Early Settlement shall have occurred. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal to or greater than $31.0500 (the "Threshold Appreciation Price"), 1.6103 shares of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $26.3125, the number of shares of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value and (c) if the Applicable Market Amount is less than or equal to $26.3125, 1.9002 shares of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. Each Purchase Contract evidenced hereby, which is settled either through Early Settlement or Cash Settlement, shall obligate the Holder of the related Corporate PIES to purchase at the Purchase Price, and the Company to sell, a number of newly issued shares of Common Stock equal to the Early Settlement Rate or the Settlement Rate, as applicable. The "Applicable Market Value" means the average of the Closing Price per share of Common Stock on each of the 20 Trading Days ending on the third Trading Day immediately preceding the Purchase Contract Settlement Date or any applicable Early Settlement Date. The "Closing Price" of the Common Stock on any date of determination means (i) the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date, (ii) if the Common Stock is not listed for trading on the NYSE on any such date, the closing sale price as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, (iii) if the Common Stock is not so listed on a United States national or regional securities exchange, the closing sale price as reported by The Nasdaq Stock Market, (iv) if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or A-5 (v) if such bid price is not available, the average of the mid-point of the last bid and ask prices of the Common Stock on such date from at least three nationally recognized independent investment banking firms retained for this purpose by the Company. A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. In accordance with the terms of the Purchase Contract Agreement, the Holder of this Corporate PIES Certificate may pay the Purchase Price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby by effecting a Cash Settlement or an Early Settlement or from the proceeds of the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or a remarketing of the related Pledged Preferred Securities. A Holder of Corporate PIES who does not effect, on or prior to 11:00 a.m. New York City time on the fifth Business Day immediately preceding the Purchase Contract Settlement Date (or in the event a Tax Event Redemption has occurred, the Business Day prior to the Purchase Contract Settlement Date), an effective Cash Settlement or an Early Settlement, shall pay the Purchase Price for the shares of Common Stock to be issued under the related Purchase Contract from the proceeds of the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio or the sale of the related Pledged Preferred Securities held by the Collateral Agent. Such sale will be made by the Remarketing Agent pursuant to the terms of the Remarketing Agreement on the third Business Day prior to the Purchase Contract Settlement Date. If, as provided in the Purchase Contract Agreement, upon the occurrence of a Failed Remarketing the Collateral Agent, for the benefit of the Company, exercises its rights as a secured creditor with respect to the Pledged Preferred related to this Corporate PIES certificate, any accrued and unpaid distributions on such Pledged Preferred Securities will become payable by the Company to the holder of this Corporate PIES Certificate in the manner provided for in the Purchase Contract Agreement. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment of the aggregate purchase price for the shares of Common Stock to be purchased thereunder in the manner herein set forth. Each Purchase Contract evidenced hereby and all obligations and rights of the Company and the Holder thereunder shall terminate if a Termination Event shall occur. Upon the occurrence of a Termination Event, the Company shall give written notice to the Agent and to the Holders, at their addresses as they appear in the Corporate PIES Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Preferred Security or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio forming a part of each Corporate PIES from the Pledge. A Corporate PIES shall thereafter represent the right to receive the Preferred Security or the appropriate Applicable Ownership Interest of the Treasury Portfolio forming a part of such Corporate PIES in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. A-6 Under the terms of the Pledge Agreement, the Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Preferred Securities. Upon receipt of notice of any meeting at which holders of Preferred Securities are entitled to vote or upon the solicitation of consents, waivers or proxies of holders of Preferred Securities, the Agent shall, as soon as practicable thereafter, mail to the Corporate PIES Holders a notice (a) containing such information as is contained in the notice or solicitation, (b) stating that each Corporate PIES Holder on the record date set by the Agent therefor (which, to the extent possible, shall be the same date as the record date for determining the holders of Preferred Securities entitled to vote) shall be entitled to instruct the Agent as to the exercise of the voting rights pertaining to the Preferred Securities constituting a part of such Holder's Corporate PIES and (c) stating the manner in which such instructions may be given. Upon the written request of the Corporate PIES Holders on such record date, the Agent shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such requests, the maximum number of Preferred Securities as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of a Corporate PIES, the Agent shall abstain from voting the Preferred Security evidenced by such Corporate PIES. Upon the liquidation of the Trust, a principal amount of the Debentures constituting the assets of the Trust and underlying the Preferred Securities equal to the aggregate liquidation amount of the Pledged Preferred Securities shall be delivered to the Securities Intermediary in exchange for the Pledged Preferred Securities. Thereafter, the Debentures shall be held by the Securities Intermediary to secure the obligations of each Holder of Corporate PIES to purchase shares of Common Stock under the Purchase Contracts constituting a part of such Corporate PIES. Following the liquidation of the Trust, the Holders and the Collateral Agent shall have such security interests, rights and obligations with respect to the Debentures as the Holders and the Collateral Agent had in respect of the Pledged Preferred Securities, any reference herein to the Preferred Securities shall be deemed to be a reference to the Debentures and any reference herein to the liquidation amount of the Preferred Securities shall be deemed to be a reference to the principal amount of the Debentures. Upon the occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement Date, the Redemption Price payable on the Tax Event Redemption Date with respect to the Applicable Principal Amount of Debentures shall be delivered to the Securities Intermediary in exchange for the Pledged Preferred Securities. Thereafter, pursuant to the terms of the Pledge Agreement, the Securities Intermediary will apply an amount equal to the Redemption Amount of such Redemption Price to purchase, the Treasury Portfolio and promptly (a) transfer the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio to the Collateral Account to secure the obligations of each Holder of Corporate PIES to purchase shares of Common Stock under the Purchase Contracts constituting a part of such Corporate PIES, (b) transfer the Applicable Ownership Interest (as specified in clause (B) of the definition of such term) of the Treasury Portfolio to the Agent for the benefit of the Holders of such Corporate PIES and (iii) remit the remaining portion of such Redemption Price to the Agent for payment to the Holders of such Corporate PIES. A-7 Following the occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement Date, the Holders of Corporate PIES and the Collateral Agent shall have such security interest rights and obligations with respect to the Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio as the Holder of Corporate PIES and the Collateral Agent had in respect of the Preferred Securities or Debentures, as the case may be, subject to the Pledge thereof as provided in Articles II, III, IV, V and VI, of the Pledge Agreement and any reference herein to the Preferred Securities shall be deemed to be a reference to such Treasury Portfolio. The Corporate PIES Certificates are issuable only in registered form and only in denominations of a single Corporate PIES and any integral multiple thereof. The transfer of any Corporate PIES Certificate will be registered and Corporate PIES Certificates may be exchanged as provided in the Purchase Contract Agreement. The Corporate PIES Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange, but the Company and the Agent may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. A holder who elects to substitute a Treasury Security for Preferred Securities or the appropriate Applicable Ownership Interest of the Treasury Portfolio, thereby creating Treasury PIES, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying a Corporate PIES remains in effect, such Corporate PIES shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Corporate PIES in respect of the Preferred Security or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, and Purchase Contract constituting such Corporate PIES may be transferred and exchanged only as a Corporate PIES. The holder of a Corporate PIES may substitute for the Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio securing its obligation under the related Purchase Contract Treasury Securities in an aggregate principal amount equal to the aggregate liquidation amount of the Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. From and after such Collateral Substitution, the Security for which such Pledged Treasury Securities secures the holder's obligation under the Purchase Contract shall be referred to as a "Treasury PIES." A Holder may make such Collateral Substitution only in integral multiples of 20 Corporate PIES for 20 Treasury PIES; provided, however, that if a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES, a Holder may make such Collateral Substitution only in integral multiples of 160,000 Corporate PIES for 160,000 Treasury PIES. Such Collateral Substitution may cause the equivalent aggregate principal amount of this Certificate to be increased or decreased; provided, however, this Corporate PIES Certificate shall not represent more than ____ Corporate PIES. All such adjustments to the equivalent aggregate principal amount of this Corporate PIES Certificate shall be duly recorded by placing an appropriate notation on the Schedule attached hereto. A-8 A Holder of Treasury PIES may recreate Corporate PIES by delivering to the Securities Intermediary Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, with an aggregate liquidation amount, in the case of such Preferred Securities, or with the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, in the case of such appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, equal to the aggregate principal amount of the Pledged Treasury Securities in exchange for the release of such Pledged Treasury Securities in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. The Company shall pay, on each Payment Date, the Contract Adjustment Payments payable in respect of each Purchase Contract to the Person in whose name the Corporate PIES Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Corporate PIES Register. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay any Contract Adjustment Payments, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Purchase Contract Settlement Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Agent, the Collateral Agent and the Holders, at their addresses as they appear in the Corporate PIES Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, from the Pledge in accordance with the provisions of the Pledge Agreement. Subject to and upon compliance with the provisions of the Purchase Contract Agreement, at the option of the Holder thereof, Purchase Contracts underlying Securities may be settled early ("Early Settlement") as provided in the Purchase Contract Agreement; provided, however, that if a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES, Holders may settle early Corporate PIES only in integral multiples of 160,000 Corporate PIES. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts evidenced by this Corporate PIES Certificate, the Holder of this Corporate PIES Certificate shall deliver this Corporate PIES Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early set forth below duly completed and accompanied by payment in the form of immediately available funds payable to the order of the Company in an amount (the "Early Settlement Amount") equal to (i) the product of (A) the Stated Amount times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement, plus (ii) if such delivery is made with respect to any Purchase Contracts during the period from the close of A-9 business on any Record Date for any Payment Date to the opening of business on such Payment Date, an amount equal to the Contract Adjustment Payments payable on such Payment Date with respect to such Purchase Contracts. Upon Early Settlement of Purchase Contracts by a Holder of the related Securities, the Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio underlying such Securities shall be released from the Pledge as provided in the Pledge Agreement and the Holder shall be entitled to receive a number of shares of Common Stock on account of each Purchase Contract forming part of a Corporate PIES as to which Early Settlement is effected equal to the Early Settlement Rate. The Early Settlement Rate shall initially be equal to 1.6103 shares of Common Stock and shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted as provided in the Purchase Contract Agreement. Upon registration of transfer of this Corporate PIES Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be released from the obligations under the Purchase Contracts evidenced by this Corporate PIES Certificate. The Company covenants and agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Corporate PIES Certificate, by its acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Corporate PIES evidenced hereby on its behalf as its attorney-in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company or its trustee in the event that the Company becomes the subject of a case under the Bankruptcy Code, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform his obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, authorizes the Agent to enter into and perform the Purchase Contract Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and consents to the Pledge of the Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, underlying this Corporate PIES Certificate pursuant to the Pledge Agreement. The Holder further covenants and agrees that, to the extent and in the manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect to the aggregate liquidation amount of the Pledged Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, on the Purchase Contract Settlement Date shall be paid by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of a majority of the Purchase Contracts. A-10 The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. The Company, the Agent and its Affiliates and any agent of the Company or the Agent may treat the Person in whose name this Corporate PIES Certificate is registered as the owner of the Corporate PIES evidenced hereby for the purpose of receiving payments of distributions payable quarterly on the Preferred Securities, receiving payments of Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any payments in respect thereof be overdue and notwithstanding any notice to the contrary, and neither the Company, the Agent nor any such agent shall be affected by notice to the contrary. The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of shares of Common Stock. A copy of the Purchase Contract Agreement is available for inspection at the offices of the Agent. A-11 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - ---------------Custodian--------------- (cust) (minor) Under Uniform Gifts to Minors Act of ______________ ___________________________________________________ TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. ------------------------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto _______________________________________________________________ ________________________________________________________________________________ (Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Please Print or Type Name and Address Including Postal Zip Code of Assignee) the within Treasury PIES Certificates and all rights thereunder, hereby irrevocably constituting and appointing ________________________________________ attorney to transfer said Treasury PIES Certificates on the books of [Name of Company] with full power of substitution in the premises. Dated: --------------------- ------------------------------------------------ Signature NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Corporate PIES Certificates in every particular, without alteration or enlargement or any change whatsoever. Signature Guarantee: --------------------------------------- A-12 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon settlement on or after the Purchase Contract Settlement Date of the Purchase Contracts underlying the number of Corporate PIES evidenced by this Corporate PIES Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: ------------------------- ---------------------------------------- Signature Signature Guarantee: -------------------- (if assigned to another person) If shares are to be registered in the name of and delivered to a REGISTERED HOLDER Person other than the Holder, please (i) print such Person's name and address and (ii) provide a guarantee of your signature: Please print name and address of Registered Holder: - ------------------------------------- ---------------------------------------- Name Name - ------------------------------------- ---------------------------------------- Address Address - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- Social Security or other Taxpayer Identification ---------------------------------------- Number, if any A-13 ELECTION TO SETTLE EARLY The undersigned Holder of this Corporate PIES Certificate hereby irrevocably exercises the option to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Corporate PIES evidenced by this Corporate PIES Certificate specified below. The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Corporate PIES Certificate representing any Corporate PIES evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Pledged Preferred Securities or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: --------------------- ------------------------------------------------ Signature Signature Guarantee: --------------------------------------- A-14 Number of Securities evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected: If shares of Common Stock or REGISTERED HOLDER Corporate PIES Certificates are to be registered in the name of and delivered to and Pledged Preferred Securities, or the Applicable Ownership Interest of the Treasury Portfolio, as the case may be, are to be transferred to a Person other than the Holder, please print such Person's name and address: Please print name and address of Registered Holder: - ------------------------------------- ---------------------------------------- Name Name - ------------------------------------- ---------------------------------------- Address Address - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- Social Security or other Taxpayer Identification ---------------------------------------- Number, if any A-15 Transfer Instructions for Pledged Preferred Securities or the Applicable Ownership Interest of the Treasury Portfolio, as the case may be, Transferable Upon Early Settlement or a Termination Event: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-16 [TO BE ATTACHED TO GLOBAL CERTIFICATES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE The following increases or decreases in this Global Certificate have been made: ================================================================================ Number of Amount of Amount of PIES decrease in increase in evidenced by Number of Number of this Signature of PIES PIES Global authorized evidenced by evidenced by Certificate officer of the the following such Trustee or Global Global decrease or Securities Date Certificate Certificate increase Custodian - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ A-17 EXHIBIT B FACE OF TREASURY PIES CERTIFICATE "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." No. _____ Cusip No. ________ Number of Treasury PIES _________ NIPSCO INDUSTRIES, INC. NIPSCO CAPITAL TRUST I Treasury PIES This Treasury PIES Certificate certifies that Cede & Co. is the registered Holder of the number of Treasury PIES set forth above. Each Treasury PIES consists of (i) a 1/20 undivided beneficial ownership interest of a Treasury Security having a principal amount at maturity equal to $1,000, subject to the Pledge of such Treasury Security by such Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with NIPSCO Industries, Inc., an Indiana corporation (the "Company"). All capitalized terms used herein which are defined in the Purchase Contract Agreement (as defined on the reverse hereof) have the meaning set forth therein. Pursuant to the Pledge Agreement, the Treasury Securities constituting part of each Treasury PIES evidenced hereby have been pledged to the Collateral Agent, for the benefit of the Company, to secure the obligations of the Holder under the Purchase Contract comprising a portion of such Treasury PIES. Each Purchase Contract evidenced hereby obligates the Holder of this Treasury PIES Certificate to purchase, and the Company, to sell, on February 19, 2003 (the "Purchase Contract Settlement Date"), at a price equal to $50 (the "Stated Amount"), a number of Common Shares, without par value ("Common Stock"), of the Company equal to the Settlement Rate, unless on or prior to the Purchase Contract Settlement Date there shall have occurred a Termination Event or an Early Settlement with respect to the Treasury PIES of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The purchase price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Purchase Contract Settlement Date by application of the Proceeds from the Treasury Securities pledged to secure the obligations under such Purchase Contract in accordance with the terms of the Pledge Agreement. The Company shall pay on each Payment Date in respect of each Purchase Contract evidenced hereby an amount (the "Contract Adjustment Payments") equal to (a) if a Reset Transaction has not occurred, 1.85% per annum of the Stated Amount or (b) following the occurrence of a Reset Transaction, the Adjusted Contract Adjustment Payment Rate related to such Reset Transaction until any such succeeding Reset Transaction shall occur (computed on the basis of (i) for any full quarterly period, a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly period, a 30-day month and for periods less than a month, the actual number of days elapsed per 30-day period), as the case may be. Such Contract Adjustment Payments shall be payable to the Person in whose name this Treasury PIES Certificate (or a Predecessor Treasury PIES Certificate) is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Treasury PIES Register. Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Agent by manual signature, this Treasury PIES Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose. B-2 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. NIPSCO INDUSTRIES, INC. By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts) By: THE CHASE MANHATTAN BANK, not individually but solely as Attorney-in-Fact of such Holder By: ------------------------------------ Name: Title: Dated: B-3 AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Treasury PIES referred to in the within-mentioned Purchase Contract Agreement. By: THE CHASE MANHATTAN BANK, as Purchase Contract Agent By: ------------------------------------ Authorized Officer B-4 (REVERSE OF TREASURY PIES CERTIFICATE) Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of February 16, 1999 (as may be supplemented from time to time, the "Purchase Contract Agreement") between the Company and The Chase Manhattan Bank, as Purchase Contract Agent (including its successors thereunder, herein called the "Agent"), to which the Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Agent, the Company and the Holders and of the terms upon which the Treasury PIES Certificates are, and are to be, executed and delivered. Each Purchase Contract evidenced hereby obligates the Holder of this Treasury PIES Certificate to purchase, and the Company to sell, on the Purchase Contract Settlement Date at a price equal to the Stated Amount (the "Purchase Price") a number of shares of Common Stock of the Company equal to the Settlement Rate, unless on or prior to the Purchase Contract Settlement Date, there shall have occurred a Termination Event with respect to the Security of which such Purchase Contract is a part or an Early Settlement shall have occurred. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal to or greater than $31.0500 (the "Threshold Appreciation Price"), 1.6103 shares of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $26.3125, the number of shares of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value and (c) if the Applicable Market Amount is less than or equal to $26.3125, then 1.9002 shares of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. Each Purchase Contract evidenced hereby, which is settled either through Early Settlement or Cash Settlement, shall obligate the Holder of the related Treasury PIES to purchase at the Purchase Price for cash, and the Company to sell, a number of newly issued shares of Common Stock equal to the Early Settlement Rate or the Settlement Rate, as applicable. The "Applicable Market Value" means the average of the Closing Prices per share of Common Stock on each of the 20 Trading Days ending on the third Trading Day immediately preceding the Purchase Contract Settlement Date or any applicable Early Settlement Date. The "Closing Price" of the Common Stock on any date of determination means the (i) closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date, (ii) if the Common Stock is not listed for trading on the NYSE on any such date, the closing sale price as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, (iii) if the Common Stock is not so listed on a United States national or regional securities exchange, the closing sale price as reported by The Nasdaq Stock Market, (iv) if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or (v) if such bid price is not available, the average of the mid-point of the last bid and ask prices of the Common Stock on such date from at least three nationally recognized independent B-5 investment banking firms retained for this purpose by the Company. A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock. In accordance with the terms of the Purchase Contract Agreement, the Holder of this Treasury PIES shall pay the Purchase Price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby either by effecting a Cash Settlement or an Early Settlement of each such Purchase Contract or by applying a principal amount of the Pledged Treasury Securities underlying such Holder's Treasury PIES equal to the Stated Amount of such Purchase Contract to the purchase of the Common Stock. A Holder of Treasury PIES who does not effect, on or prior to 11:00 a.m. New York City time on the Business Day immediately preceding the Purchase Contract Settlement Date, an effective Cash Settlement or an Early Settlement, shall pay the Purchase Price for the shares of Common Stock to be issued under the related Purchase Contract from the proceeds of the Pledged Treasury Securities. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment of the aggregate purchase price for the shares of Common Stock to be purchased thereunder in the manner herein set forth. Each Purchase Contract evidenced hereby and all obligations and rights of the Company and the Holder thereunder shall terminate if a Termination Event shall occur. Upon the occurrence of a Termination Event, the Company shall give written notice to the Agent and to the Holders, at their addresses as they appear in the Treasury PIES Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Treasury Securities (as defined in the Pledge Agreement) forming a part of each Treasury PIES. A Treasury PIES shall thereafter represent the right to receive the interest in the Treasury Security forming a part of such Treasury PIES, in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. The Treasury PIES Certificates are issuable only in registered form and only in denominations of a single Treasury PIES and any integral multiple thereof. The transfer of any Treasury PIES Certificate will be registered and Treasury PIES Certificates may be exchanged as provided in the Purchase Contract Agreement. The Treasury PIES Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange, but the Company and the Agent may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. A Holder who elects to substitute Preferred Securities, Debentures or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case may be, for Treasury Securities, thereby recreating Corporate PIES, shall be responsible for any fees or expenses associated therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying a Treasury PIES remains in effect, such Treasury PIES shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Treasury PIES in respect of B-6 the Treasury Security and the Purchase Contract constituting such Treasury PIES may be transferred and exchanged only as a Treasury PIES. A Holder of Treasury PIES may recreate Corporate PIES by delivering to the Collateral Agent Preferred Securities or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, with a liquidation amount, in the case of such Preferred Securities, with a principal amount in the case of such Debentures, or with the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, in the case of such appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, equal to the aggregate principal amount at maturity of the Pledged Treasury Securities in exchange for the release of such Pledged Treasury Securities in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. From and after such substitution, the Holder's Security shall be referred to as an "Corporate PIES." Such substitution may cause the equivalent aggregate principal amount of this Certificate to be increased or decreased; provided, however, this Treasury PIES Certificate shall not represent more than ____ Treasury PIES. All such adjustments to the equivalent aggregate principal amount of this Treasury PIES Certificate shall be duly recorded by placing an appropriate notation on the Schedule attached hereto. A Holder of a Corporate PIES may recreate a Treasury PIES by delivering to the Collateral Agent Treasury Securities in an aggregate principal amount equal to the aggregate liquidation amount of the Pledged Preferred Securities, the aggregate principal amount at maturity of the Pledged Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, in exchange for the release of such Pledged Preferred Securities, Pledged Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be, in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. Any such recreation of a Treasury PIES may be effected only in multiples of 20 Corporate PIES for 20 Treasury PIES; provided, however, if a Tax Event Redemption has occurred and the Treasury Portfolio has become a component of the Corporate PIES, a Holder may recreate Corporate PIES in integral multiples of 160,000 Corporate PIES for 160,000 Treasury PIES. The Company shall pay, on each Payment Date, the Contact Adjustment Payments payable in respect of each Purchase Contract to the Person in whose name the Treasury PIES Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Treasury PIES Register. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay Contract Adjustment Payments, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Purchase Contract Settlement Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Agent, the Collateral B-7 Agent and the Holders, at their addresses as they appear in the Treasury PIES Register. Upon the occurrence of a Termination Event, the Collateral Agent shall release the Treasury Securities from the Pledge in accordance with the provisions of the Pledge Agreement. Subject to and upon compliance with the provisions of the Purchase Contract Agreement, at the option of the Holder thereof, Purchase Contracts underlying Securities may be settled early ("Early Settlement") as provided in the Purchase Contract Agreement. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts evidenced by this Treasury PIES the Holder of this Treasury PIES Certificate shall deliver this Treasury PIES Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early set forth below duly completed and accompanied by payment in the form of immediately available funds payable to the order of the Company in an amount (the "Early Settlement Amount") equal to (i) the product of (A) $50 times (B) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement, plus (ii) if such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date for any Payment Date to the opening of business on such Payment Date, an amount equal to the Contract Adjustment Payments payable, if any, on such Payment Date with respect to such Purchase Contracts. Upon Early Settlement of Purchase Contracts by a Holder of the related Securities, the Pledged Treasury Securities underlying such Securities shall be released from the Pledge as provided in the Pledge Agreement and the Holder shall be entitled to receive a number of shares of Common Stock on account of each Purchase Contract forming part of a Treasury PIES as to which Early Settlement is effected equal to 1.6103 shares of Common Stock per Purchase Contract (the "Early Settlement Rate"). The Early Settlement Rate shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted as provided in the Purchase Contract Agreement. Upon registration of transfer of this Treasury PIES Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be released from the obligations under the Purchase Contracts evidenced by this Treasury PIES Certificate. The Company covenants and agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Treasury PIES Certificate, by its acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Treasury PIES evidenced hereby on its behalf as its attorney-in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company or its trustee in the event that the Company becomes the subject of a case under the Bankruptcy Code, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform its obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, authorizes the Agent to enter into and perform the Purchase Contract Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and consents to the Pledge of the Treasury Securities underlying this Treasury PIES Certificate pursuant to the Pledge Agreement. The Holder further covenants and agrees, that, to the extent and in the manner provided in the Purchase Contract B-8 Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect to the aggregate principal amount of the Pledged Treasury Securities on the Purchase Contract Settlement Date shall be paid by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments. Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of a majority of the Purchase Contracts. The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. The Company, the Agent and its Affiliates and any agent of the Company or the Agent may treat the Person in whose name this Treasury PIES Certificate is registered as the owner of the Treasury PIES evidenced hereby for the purpose of receiving payments of interest on the Treasury Securities, receiving payments of Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever, whether or not any payments in respect thereof be overdue and notwithstanding any notice to the contrary, and neither the Company, the Agent nor any such agent shall be affected by notice to the contrary. The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of shares of Common Stock. A copy of the Purchase Contract Agreement is available for inspection at the offices of the Agent. B-9 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - ---------------Custodian--------------- (cust) (minor) Under Uniform Gifts to Minors Act of ______________ ___________________________________________________ TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. ------------------------- FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto _______________________________________________________________ ________________________________________________________________________________ (Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Please Print or Type Name and Address Including Postal Zip Code of Assignee) the within Treasury PIES Certificates and all rights thereunder, hereby irrevocably constituting and appointing ________________________________________ attorney to transfer said Treasury PIES Certificates on the books of [Name of Company] with full power of substitution in the premises. Dated: --------------------- ------------------------------------------------ Signature NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Treasury PIES Certificates in every particular, without alteration or enlargement or any change whatsoever. Signature Guarantee: --------------------------------------- B-10 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon settlement on or after the Purchase Contract Settlement Date of the Purchase Contracts underlying the number of Treasury PIES evidenced by this Treasury PIES Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: ------------------------- ---------------------------------------- Signature Signature Guarantee: -------------------- (if assigned to another person) If shares are to be registered in the name of and delivered to a REGISTERED HOLDER Person other than the Holder, please (i) print such Person's name and address and (ii) provide a guarantee of your signature: Please print name and address of Registered Holder: - ------------------------------------- ---------------------------------------- Name Name - ------------------------------------- ---------------------------------------- Address Address - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- Social Security or other Taxpayer Identification ---------------------------------------- Number, if any B-11 ELECTION TO SETTLE EARLY The undersigned Holder of this Treasury PIES Certificate irrevocably exercises the option to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Treasury PIES evidenced by this Treasury PIES Certificate specified below. The option to effect Early Settlement may be exercised only with respect to Purchase Contracts underlying Treasury PIES with an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Treasury PIES Certificate representing any Treasury PIES evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Pledged Treasury Securities deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto. Dated: --------------------- ------------------------------------------------ Signature Signature Guarantee: --------------------------------------- B-12 Number of Securities evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected: If shares of Common Stock or REGISTERED HOLDER Treasury PIES Certificates are to be registered in the name of and delivered to and Pledged Treasury Securities are to be transferred to a Person other than the Holder, please print such Person's name and address: Please print name and address of Registered Holder: - ------------------------------------- ---------------------------------------- Name Name - ------------------------------------- ---------------------------------------- Address Address - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- - ------------------------------------- ---------------------------------------- Social Security or other Taxpayer Identification ---------------------------------------- Number, if any Transfer Instructions for Pledged Treasury Securities Transferable Upon Early Settlement or a Termination Event: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- B-13 [TO BE ATTACHED TO GLOBAL CERTIFICATES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE The following increases or decreases in this Global Certificate have been made: ================================================================================ Number of Amount of Amount of PIES decrease in increase in evidenced by Number of Number of this Signature of PIES PIES Global authorized evidenced by evidenced by Certificate officer of the the following such Trustee or Global Global decrease or Securities Date Certificate Certificate increase Custodian - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ================================================================================ EXHIBIT C INSTRUCTION TO PURCHASE CONTRACT AGENT THE CHASE MANHATTAN BANK 450 West 33rd Street New York, New York 10001 Attention: Corporate Trust Group Re: ________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I The undersigned Holder hereby notifies you that it has delivered to The First National Bank of Chicago, as Securities Intermediary, for credit to the Collateral Account, $______ aggregate [principal] [liquidation] amount of [Preferred Securities, Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be,] [Treasury Securities] in exchange for the [Pledged Preferred Securities, Pledged Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be,] [Pledged Treasury Securities] held in the Collateral Account, in accordance with the Pledge Agreement, dated as of February 16, 1999 (the "Pledge Agreement"; unless otherwise defined herein, terms defined in the Pledge Agreement are used herein as defined therein), between you, the Company, the Collateral Agent and the Securities Intermediary. The undersigned Holder has paid all applicable fees relating to such exchange. The undersigned Holder hereby instructs you to instruct the Collateral Agent to release to you on behalf of the undersigned Holder the [Pledged Preferred Securities, Pledged Debentures or the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio, as the case may be,] [Pledged Treasury Securities] related to such [Corporate PIES] [Treasury PIES]. Date: --------------------- ------------------------------------------------ Signature Signature Guarantee: ------------------- Please print name and address of Registered Holder: - ------------------------------------ ------------------------------------ Name Social Security or other Taxpayer Identification Number, if any Address - ------------------------------------ - ------------------------------------ - ------------------------------------ C-2 EXHIBIT D NOTICE FROM PURCHASE CONTRACT AGENT TO HOLDERS (Transfer of Collateral upon Occurrence of a Termination Event) [HOLDER] - --------------------------- - --------------------------- Attention: Telecopy: ------------ Re: PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Please refer to the Purchase Contract Agreement, dated as of February 16, 1999 (the "Purchase Contract Agreement"; unless otherwise defined herein, terms defined in the Purchase Contract Agreement are used herein as defined therein), among the Company and the undersigned, as Purchase Contract Agent and as attorney-in-fact for the holders of PIES from time to time. We hereby notify you that a Termination Event has occurred and that [the Preferred Securities] [the Debentures] [the appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio] [the Treasury Securities] underlying your ownership interest in _____ [Corporate PIES] [Treasury PIES] have been released and are being held by us for your account pending receipt of transfer instructions with respect to such [Preferred Securities] [Debentures] [appropriate Applicable Ownership Interest (as specified in clause (A) of the definition of such term) of the Treasury Portfolio] [Treasury Securities] (the "Released Securities"). Pursuant to Section 3.15 of the Purchase Contract Agreement, we hereby request written transfer instructions with respect to the Released Securities. Upon receipt of your instructions and upon transfer to us of your [Corporate PIES] [Treasury PIES] effected through book-entry or by delivery to us of your [Corporate PIES Certificate] [Treasury PIES Certificate], we shall transfer the Released Securities by book-entry transfer, or other appropriate procedures, in accordance with your instructions. In the event you fail to effect such transfer or delivery, the Released Securities and any distributions thereon, shall be held in our name, or a nominee in trust for your benefit, until such time as such [Corporate PIES] [Treasury PIES] are transferred or your [Corporate PIES Certificate] [Treasury PIES Certificate] is surrendered or satisfactory evidence is provided that such your [Corporate PIES Certificate] [Treasury PIES Certificate] has been destroyed, lost or stolen, together with any indemnification that we or the Company may require. D-1 Date: By: THE CHASE MANHATTAN BANK ---------------------- ---------------------------------------- Name: Title: D-2 EXHIBIT E NOTICE TO SETTLE BY SEPARATE CASH THE CHASE MANHATTAN BANK 450 West 33rd Street New York, N.Y. 10001 Attention: Corporate Trust Group Re: ________ PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I The undersigned Holder hereby irrevocably notifies you in accordance with Section 5.4 of the Purchase Contract Agreement, dated as of February 16, 1999 (the "Purchase Contract Agreement"; unless otherwise defined herein, terms defined in the Purchase Contract Agreement are used herein as defined therein), between the Company and yourselves, as Purchase Contract Agent and as Attorney-in-Fact for the Holders of the Purchase Contracts, that such Holder has elected to pay to the Securities Intermediary for deposit in the Collateral Account, on or prior to 11:00 a.m. New York City time, on the [fifth Business Day] [Business Day] immediately preceding the Purchase Contract Settlement Date (in lawful money of the United States by certified or cashiers' check or wire transfer, in immediately available funds), $______ as the Purchase Price for the shares of Common Stock issuable to such Holder by the Company under the related Purchase Contract on the Purchase Contract Settlement Date. The undersigned Holder hereby instructs you to notify promptly the Collateral Agent of the undersigned Holders election to make such cash settlement with respect to the Purchase Contracts related to such Holder's [Corporate PIES] [Treasury PIES]. Date: --------------------- ------------------------------------------------ Signature Signature Guarantee: ------------------- Please print name and address of Registered Holder: EXHIBIT F NOTICE FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT AND INDENTURE TRUSTEE (Payment of Purchase Contract Settlement Price) The First National Bank of Chicago 1 North State Street, 9th Floor Chicago, Illinois 60602 Attention: Corporate Trust Administration Department Telecopy: 312-407-1708 The Chase Manhattan Bank 450 West 33rd Street New York, NY 10001 Attention: Corporate Trust Group Telecopy: 212-946-8159 Re: PIES of NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Trust I Please refer to the Purchase Contract Agreement dated as of February 16, 1999 (the "Purchase Contract Agreement"; unless otherwise defined herein, terms defined in the Purchase Contract Agreement are used herein as defined therein), between the Company and the undersigned, as Purchase Contract Agent and as attorney-in-fact for the holders of PIES from time to time. In accordance with Section 5.4 of the Purchase Contract Agreement and, based on instructions and Cash Settlements received from Holders of Corporate PIES as of 11:00 a.m, [DATE (fifth Business Day immediately preceding the Purchase Contract Settlement Date)], we hereby notify you that [_____ Preferred Securities][____ Debentures] are to be tendered for purchase in the Remarketing. Date: By: THE CHASE MANHATTAN BANK -------------------- -------------------------------- Name: Title: F-1 EX-4.4 7 REMARKETING AGREEMENT EXHIBIT 4.4 NIPSCO INDUSTRIES, INC. NIPSCO CAPITAL MARKETS, INC. NIPSCO CAPITAL TRUST I 6,000,000 PREMIUM INCOME EQUITY SECURITIES(SM) ("PIES(SM)")* Consisting of 6,000,000 Corporate PIES UNDERWRITING AGREEMENT February 9, 1999 LEHMAN BROTHERS INC. GOLDMAN, SACHS & CO. AND MORGAN STANLEY & CO. INCORPORATED, c/o Lehman Brothers Inc. Three World Financial Center New York, New York 10285 Dear Sirs: NIPSCO Industries, Inc., an Indiana corporation (the "Company"), and NIPSCO Capital Trust I, a Delaware statutory business trust (the "Trust" and, together with the Company, the "PIES Issuers") propose to sell to you (the "Underwriters") 6,000,000 Premium Income Equity Securities ("PIES") (the "Firm PIES"). In addition, the PIES Issuers propose to grant to the Underwriters an option to purchase up to an additional 900,000 PIES on the terms and for the purposes set forth in Section 3 (the "Option PIES"). The Firm PIES and the Option PIES, if purchased, are hereinafter collectively called the "PIES." Capitalized terms used herein without definition shall be used as defined in the Final Prospectus (as hereinafter defined). Each PIES will initially consist of a unit (a "Corporate PIES") comprised of (a) a stock purchase contract (a "Purchase Contract") under which (i) the holder will purchase from the Company on February 16, 2003, for $50, a number of common shares, without par value, of the Company (the "Common Stock"), equal to the Settlement Rate as set forth in the Purchase Contract Agreement (as hereinafter defined) and (ii) the Company will pay to the holder contract adjustment payments and (b) a Trust Preferred Security (a "Trust Preferred Security"), having a stated liquidation amount of $50 per Trust Preferred Security, representing an undivided beneficial ownership interest in the assets of the Trust. In accordance with the terms of a Purchase Contract Agreement (the "Purchase Contract Agreement") to be entered into between the Company and The - -------- * "Premium Income Equity Securities" and "PIES" are service marks owned by Lehman Brothers Inc. 2 Chase Manhattan Bank, as Purchase Contract Agent (the "Purchase Contract Agent"), the holders of the PIES will pledge the Trust Preferred Securities to The First National Bank of Chicago, as Collateral Agent (the "Collateral Agent"), pursuant to a Pledge Agreement (the "Pledge Agreement") to be entered into among the Company, the Purchase Contract Agent, The First National Bank of Chicago, as Securities Intermediary (the "Securities Intermediary"), and the Collateral Agent, to secure the holders' obligations to purchase Common Stock under the Purchase Contracts. NIPSCO Capital Markets, Inc., an Indiana corporation and a wholly-owned subsidiary of the Company ("Capital Markets" and, together with the Company and the Trust, the "Issuers") will own all of the beneficial ownership interests represented by the common securities (the "Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities") of the Trust. Concurrently with the issuance of the Trust Preferred Securities and Capital Markets' purchase of all of the Common Securities, the Trust will invest the proceeds of each thereof in Capital Markets' Debentures due 2005 (the "Debentures") to be issued pursuant to an Indenture, dated as of February 14, 1997 (the "Indenture"), between Capital Markets, the Company and The Chase Manhattan Bank, as trustee (the "Indenture Trustee"). Capital Markets will guarantee (the "Guarantee") the Trust Securities to the extent set forth in a Guarantee Agreement (the "Guarantee Agreement") to be entered into between Capital Markets and The Chase Manhattan Bank, as trustee (the "Guarantee Trustee"), for the benefit of the holders from time to time of the Trust Securities. The Trust Securities will be issued pursuant to the amended and restated declaration of trust of the Trust (the "Amended Declaration"), among Capital Markets, as Sponsor, Stephen P. Adik, Francis P. Girot, Jr. and Arthur A. Paquin, as trustees (the "Regular Trustees"), The Chase Manhattan Bank, as property trustee (the "Property Trustee"), Chase Manhattan Bank Delaware as the Delaware trustee (the "Delaware Trustee" and, together with the Property Trustee and the Regular Trustees, the "Trustees"), and the holders from time to time of undivided beneficial ownership interests in the assets of the Trust. This is to confirm the agreement concerning the purchase of the PIES by the Underwriters. 1. Representations, Warranties and Agreements of the Company and Capital Markets. The Company and Capital Markets jointly represent, warrant and agree that: (a) A registration statement on Form S-3 (File No. 333-69279) and an amendment or amendments thereto with respect to the PIES have (i) been prepared by the Issuers in conformity with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. The registration statement, as amended at the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies in all other material respects with such Rule. The Issuers propose to file with the Commission pursuant to Rule 424(b) under the Securities Act ("Rule 424(b)") a supplement to the form of prospectus included in the 3 registration statement relating to the initial offering of the PIES and the plan of distribution thereof and has previously advised you of all further information (financial and other) with respect to the Issuers to be set forth therein. The term "Registration Statement" means the registration statement, as amended at the date of this Agreement and as amended from time to time hereafter, including the exhibits thereto, and all documents incorporated therein by reference pursuant to Item 12 of Form S-3 (the "Incorporated Documents"), and such prospectus as then amended, including the Incorporated Documents, is hereinafter referred to as the "Basic Prospectus"; and such supplemented form of prospectus, in the form in which it shall be filed with the Commission pursuant to Rule 424(b) (including the Basic Prospectus as so supplemented), is hereinafter called the "Final Prospectus". The Basic Prospectus, as the same may be amended or supplemented from time to time, including, without limitation, by any preliminary form of prospectus supplement relating to the Corporate PIES, which has heretofore been filed pursuant to Rule 424(b) is hereinafter called the "Interim Prospectus". Any reference herein to the Registration Statement, any Interim Prospectus or the Final Prospectus shall be deemed to refer to and include the Incorporated Documents which were filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before the date of this Agreement, the issue date of any Interim Prospectus or the issue date of the Final Prospectus, as the case may be; and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement, any Interim Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any Incorporated Documents under the Exchange Act after the date of this Agreement or the issue date of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the case may be, and deemed to be incorporated therein by reference. Copies of the Registration Statement and the amendment or amendments to such Registration Statement have been delivered by Issuers to the Underwriters. (b) Giving effect to the interpretations of the requirements of the Securities Act reflected in the Company's letter requesting "no-action" submitted to the staff of the Commission (the "Staff"), dated April 27, 1992, as supplemented by letters dated July 9, 1992 and September 21, 1992 (the "No-Action Request") and the Staff's response thereto dated September 25, 1992 (the "Staff Response"), (i) each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Interim Prospectus or Final Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) each part of the Registration Statement, when such part became effective, did not contain and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) any Interim Prospectus complied and the Registration Statement and the Final Prospectus comply, and, as amended or supplemented, if applicable, will comply in all material respects with the Securities 4 Act and the Rules and Regulations and (iv) any Interim Prospectus did not contain and the Final Prospectus does not contain and, as it may be amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; provided that no representation and warranty is made as to the statement of eligibility and qualification on Form T-1 of the Indenture Trustee, the Property Trustee or the Guarantee Trustee under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or as to information contained in or omitted from the Registration Statement or the Final Prospectus in reliance upon and in conformity with written information furnished to the Issuers by any Underwriter specifically for inclusion therein; the Indenture, the Guarantee Agreement and the Amended Declaration shall have been qualified under and will comply in all material respects with the Trust Indenture Act and the applicable rules and regulations thereunder; and the Commission has not issued an order preventing or suspending the use of the Registration Statement, any Interim Prospectus or the Final Prospectus. (c) Each of the Company and Capital Markets, Northern Indiana Public Service Company ("Northern Indiana"), Bay State Gas Company ("Bay State") and IWC Resources Corporation ("IWCR" and, together with Northern Indiana and Bay State, the "Significant Subsidiaries") has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Final Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each other subsidiary (as defined in Section 16) of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation. (d) The Company has an authorized capitalization as set forth in the Final Prospectus; all of the issued capital shares of the Company and each wholly-owned subsidiary of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and except as set forth in Exhibit 21 to the most recent Form 10-K of the Company, all of the issued common shares of Northern Indiana and Indianapolis Water Company ("IWC") and all the issued capital shares of each other subsidiary of the Company (except for directors' qualifying shares and except as set forth or incorporated by reference in the Registration Statement) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. 5 (e) Northern Indiana and IWCR constitute the only "significant subsidiaries" (as such term is defined in Rule 1-02 of Regulation S-X) of the Company. (f) The unissued shares of Common Stock to be issued and sold by the Company pursuant to the Purchase Contracts have been duly and validly authorized and reserved for issuance and, when issued and delivered in accordance with the provisions of the Purchase Contracts, will be duly and validly issued, fully paid and non-assessable. (g) The Corporate PIES have been duly authorized by the Company, and when duly executed by the Company (assuming due execution by the Purchase Contract Agent as attorney-in-fact for the holders thereof and due authentication by the Purchase Contract Agent) and delivered by the Company and upon payment therefor as set forth herein, will be duly and validly issued and outstanding, and will constitute valid and binding obligations of the Company entitled to the benefits of the Purchase Contract Agreement and enforceable against the Company in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (h) The Indenture has been duly authorized by Capital Markets and the Company and (assuming due execution and delivery by the Indenture Trustee) constitutes a valid and binding agreement of each of Capital Markets and the Company enforceable against Capital Markets and the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; and the Debentures have been duly authorized by Capital Markets and, when duly executed, authenticated, issued and delivered as contemplated by the Indenture against payment of the agreed consideration therefor, will be duly and validly issued and outstanding, and will constitute valid and binding obligations of Capital Markets entitled to the benefits of the Indenture and the Support Agreement, dated April 4, 1989, as amended as of May 15, 1989, December 10, 1990 and February 14, 1991 (the "Support Agreement"), between the Company and Capital Markets, and enforceable in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 6 (i) The Amended Declaration has been duly authorized by Capital Markets, and when duly executed by the proper officers of Capital Markets and the Regular Trustees (assuming due execution and delivery by the Property Trustee and the Delaware Trustee) and delivered by Capital Markets, will constitute a valid and binding agreement of Capital Markets, enforceable against Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (j) The Guarantee Agreement has been duly authorized by Capital Markets and, when duly executed by the proper officers of Capital Markets (assuming due execution and delivery by the Guarantee Trustee) and delivered by Capital Markets, will constitute a valid and binding agreement of Capital Markets enforceable against Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (k) The Purchase Contract Agreement has been duly authorized by the Company and, when duly executed by the proper officers of the Company (assuming due execution and delivery by the Purchase Contract Agent) and delivered by the Company, will constitute a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (l) The Pledge Agreement has been duly authorized by the Company and, when duly executed by the proper officers of the Company (assuming due execution and delivery by the Purchase Contract Agent, the Securities Intermediary and the Collateral Agent) and delivered by the Company, will constitute a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (m) This Agreement has been duly authorized, executed and delivered by each of the Company and Capital Markets; and the Remarketing Agreement (the "Remarketing Agreement") to be entered into by the Company, the Trust, Capital 7 Markets and Lehman Brothers Inc., as Remarketing Agent, has been duly authorized by the Company and Capital Markets and will be, when executed and delivered by the Company and Capital Markets, duly executed and delivered by the Company and Capital Markets. (n) The Corporate PIES, the Indenture, the Debentures, the Trust Preferred Securities, the Common Stock to be issued and sold pursuant to the Purchase Contracts, the Purchase Contract Agreement, the Amended Declaration, the Guarantee Agreement, the Support Agreement, the Pledge Agreement and the Remarketing Agreement, when the Corporate PIES are delivered pursuant to this Agreement, will conform to the descriptions thereof contained in the Final Prospectus. (o) The execution, delivery and performance of this Agreement, the Indenture, the Amended Declaration, the Guarantee Agreement, the Support Agreement, the Purchase Contract Agreement, the Pledge Agreement and the Remarketing Agreement by the Company and Capital Markets, as applicable, and the consummation by the Company and Capital Markets of the transactions contemplated hereby and thereby and the issuance and delivery of the Corporate PIES, the Debentures and the Common Stock to be issued and sold pursuant to the Purchase Contracts (the "Transactions") will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties or assets; and except for the registration of the Debentures, the Guarantees, the Purchase Contracts, the Common Stock to be issued and sold pursuant to the Purchase Contracts, the PIES and the obligations of the Company pursuant to the Support Agreement under the Securities Act, the qualification of the Indenture, the Amended Declaration and the Guarantee Agreement under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state securities laws in connection with the purchase of the Corporate PIES by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the Transactions. (p) There are no contracts, agreements or understandings between (i) the Company or Capital Markets and (ii) any person granting such person the right to require the Company or Capital Markets to file a registration statement under the 8 Securities Act with respect to any securities of the Company or Capital Markets owned or to be owned by such person or to require the Company or Capital Markets to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company or Capital Markets under the Securities Act. (q) Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements included or incorporated by reference in the Final Prospectus, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, which could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries taken as a whole or upon the ability of the Company or Capital Markets to perform their obligations under this Agreement (a "Material Adverse Effect"), otherwise than as set forth or contemplated in the Final Prospectus; and, since the respective dates as of which information is given in the Final Prospectus, there has not been any material change in the consolidated share capital or long-term debt of the Company and its subsidiaries or the consolidated share capital or long-term debt of any Significant Subsidiary or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries (taken as a whole), otherwise than as set forth or contemplated in the Final Prospectus. (r) The financial statements filed as part of the Registration Statement or incorporated by reference in the Final Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby, at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved and, with respect to financial statements included in periodic reports filed by the Company pursuant to Section 13 or 15(d) of the Exchange Act with the Commission on and after September 25, 1992, contain the information requested by the Staff in the Staff Response to be so included; and the supporting schedules included or incorporated by reference in the Final Prospectus present fairly the information required to be stated therein. (s) Arthur Andersen LLP, who have certified certain financial statements of the Company, whose report appears in the Final Prospectus or is incorporated by reference therein and who have delivered the initial letter referred to in Section 8(i) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations, and KPMG Peat Marwick, LLP, who have certified certain financial statements of Bay State, whose report appears in the Final Prospectus or is 9 incorporated by reference therein and who have delivered the initial KPMG letter referred to in Section 8(j) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (t) Each of the Company and each Significant Subsidiary has good and marketable title in fee simple to such of its fixed assets as are real property and good and marketable title to its other assets reflected in the most recent consolidated balance sheet incorporated by reference in the Final Prospectus, except properties and assets that are leased or that are sold or otherwise disposed of in the ordinary course of business after the date of said balance sheet, subject to no mortgages, liens, charges or encumbrances of any kind whatsoever ("Liens") other than Liens permitted under the Indenture. (u) Other than as set forth or incorporated by reference in the Final Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or to which any property or asset of the Company or any of its subsidiaries is the subject which could reasonably be expected individually or in the aggregate to have a Material Adverse Effect; and to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (v) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have been satisfied. (w) There are no contracts or other documents which are required to be described in the Final Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Final Prospectus or filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules and Regulations. (x) None of the Company nor any Significant Subsidiary has any material contingent liability which is not disclosed in the Final Prospectus. (y) None of the Company nor any Significant Subsidiary (i) is in violation of its charter or by-laws or similar constitutive documents, (ii) is in default in any respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject, except where such defaults, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, or (iii) is in violation in any material respect of any law, ordinance, governmental rule, regulation or court decree to which it or its properties or assets may be subject or has failed to obtain any material license, permit, 10 certificate, franchise or other governmental authorization or permit necessary to the ownership of its properties or assets or to the conduct of its business, except where such violations or failures, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (z) Neither the Company nor any subsidiary of the Company is an "investment company" within the meaning of such term under the Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations of the Commission thereunder; the Commission has issued an order (the "Order") exempting Capital Markets from all of the provisions of the 1940 Act; the Order is in full force and effect; Capital Markets will continue to comply with the terms and conditions of the Order, or otherwise remain exempt from all of the provisions of the 1940 Act, so long as any PIES or Debentures are outstanding; and Capital Markets will apply the proceeds of the sale of the Debentures in the manner described in the Final Prospectus and in accordance with the provisions of Rule 3a-5 under the 1940 Act. (aa) The Support Agreement has been duly authorized by Capital Markets and the Company and constitutes a valid and binding agreement of each of Capital Markets and the Company enforceable against Capital Markets and the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Company's obligations under the Support Agreement will rank prior to the equity securities of the Company and equal with all other unsecured and unsubordinated indebtedness of the Company, whether now or hereafter outstanding; and the Debentures and the Guarantee will be entitled to the benefits of the Support Agreement, the obligations of Capital Markets under the Debentures and the Guarantees will be deemed to be "Debt" (as defined in the Support Agreement) for purposes of the Support Agreement and the holders of the Debentures and the Guarantee will be entitled to the rights of "Lenders" (as defined in the Support Agreement) under the Support Agreement. (bb) Each of the Company and each Significant Subsidiary has statutory authority, franchises and consents free from burdensome restrictions and adequate for the conduct of the business in which it is engaged. (cc) Except for the Company's ownership of the voting securities of the Northern Indiana and IWCR, as and to the extent described in the Final Prospectus, no person or corporation which is a "holding company" or a "subsidiary company" of a "holding company" (as such terms are defined in the Public Utility Holding Company Act of 1935, as amended (the "1935 Act")), directly or indirectly owns, controls or holds with power to vote 10% or more of the outstanding voting securities 11 of the Company or any Significant Subsidiary; the Company is a "holding company" (as such term is defined in the 1935 Act) but is exempt from all provisions of the 1935 Act pursuant to Section 3(a)(1) thereof except Section 9(a)(2) thereof; neither Northern Indiana nor IWCR is a "holding company" as defined in the 1935 Act; and Bay State is a "holding company" but is exempt from all provisions of the 1935 Act pursuant to Section 3(a)(2) thereof except Section 9(a)(2) thereof. (dd) The Final Prospectus accurately describes the most restrictive of the existing limitations on the payment of dividends by Northern Indiana on its common shares held by the Company. 2. Representations, Warranties and Agreements of the Company, Capital Markets and the Trust. The Company, Capital Markets and the Trust, jointly and severally, represent, warrant and agree that: (a) The Trust has been duly created and is validly existing as a statutory business trust in good standing under the Business Trust Act of the State of Delaware (the "Delaware Trust Act") with the trust power and authority to own property and conduct its business as described in the Final Prospectus, and has conducted and will conduct no business other than the transactions contemplated by this Agreement as described in the Final Prospectus; the Trust is not a party to or bound by any agreement or instrument and after the Trust executes the Amended Declaration, the Trust will not be a party to or bound by any agreement or instrument other than this Agreement, the Remarketing Agreement, the Amended Declaration and the other agreements entered into in connection with the transactions contemplated hereby; the Trust has no liabilities or obligations other than those arising out of the transactions contemplated by this Agreement, the Remarketing Agreement and the Amended Declaration and described in the Final Prospectus; and the Trust is not a party to or subject to any action, suit or proceeding of any nature. (b) The Amended Declaration has been duly authorized by Capital Markets, as Sponsor, and, when duly executed and delivered by Capital Markets, as Sponsor, and the Regular Trustees (assuming due authorization, execution and delivery by the Property Trustee and the Delaware Trustee), will constitute a valid and binding obligation of the Trust, enforceable against the Trust in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing, and will conform to the description thereof contained in the Final Prospectus. (c) The Trust Securities, upon issuance and delivery and payment therefor in the manner described herein, will be duly authorized, validly issued, fully paid and, in the case of the Preferred Securities, non-assessable and will conform to the descriptions contained in the Final Prospectus. 12 (d) This Agreement has been duly authorized, executed and delivered by the Trust; and the Remarketing Agreement has been duly authorized by the Trust and will be, when delivered by the Trust, duly executed and delivered by the Trust. (e) The execution, delivery and performance of this Agreement, the Amended Declaration, the Remarketing Agreement and the Trust Securities by the Trust, the purchase of the Debentures by the Trust from Capital Markets, the distribution of the Debentures upon the liquidation of the Trust in the circumstances contemplated by the Amended Declaration, and the consummation by the Trust of the transactions contemplated herein and in the Amended Declaration and the Remarketing Agreement (the "Trust Transactions"), will not result in a violation of any statute or order, rule or regulation of any court or governmental agency or body having jurisdiction over the Trust or any of its assets; and except for the registration of the Trust Preferred Securities under the Securities Act, the qualification of the Amended Declaration under the Trust Indenture Act, and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act or under applicable state securities laws in connection with the purchase and distribution of the Trust Preferred Securities by the Underwriters, no consent, approval, authorization or order of or filing or registration with, any such court or governmental agency or body is required for the Trust Transactions. (f) The Trust is not an "investment company" within the meaning of such term under the Investment Company Act and the rules and regulations of the Commission thereunder. 3. Purchase of the PIES by the Underwriters. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the PIES Issuers agree to sell 6,000,000 Firm PIES to the several Underwriters and each of the Underwriters, severally and not jointly, agrees to purchase the number of the Firm PIES set forth opposite such Underwriter's name in Schedule 1 hereto. In addition, the PIES Issuers grant to the Underwriters an option to purchase up to 900,000 Option PIES. Such option is granted solely for the purpose of covering over-allotments in the sale of the Firm PIES and is exercisable as provided in Section 5 hereof. Option PIES shall be purchased severally for the account of the Underwriters in proportion to the number of Firm PIES set forth opposite the name of such Underwriter in Schedule 1 hereto. The respective obligations of each Underwriter with respect to the Option PIES shall be adjusted by Lehman Brothers Inc. so that no Underwriter should be obligated to purchase Option PIES other than in 100 unit amounts. The price of both the Firm PIES and any Option PIES shall be $50 per PIES. The Issuers shall not be obligated to deliver any of the PIES to be delivered on the First Delivery Date (as hereinafter defined) or the Second Delivery Date (as hereinafter defined), as the case may be, except upon payment for all the PIES to be purchased on such Delivery Date as provided herein. 13 As compensation to the Underwriters for arranging the purchase of the Debentures with the proceeds from the sale of the PIES, Capital Markets will, on the applicable Delivery Date (as such term is defined in Section 5), pay to Lehman Brothers Inc., for the accounts of the several Underwriters, an amount equal to $1.50 per PIES to be delivered hereunder on such Delivery Date. 4. Offering of PIES by the Underwriters. Upon authorization by Lehman Brothers Inc. of the release of the Firm PIES, the several Underwriters propose to offer the Firm PIES for sale upon the terms and conditions set forth in the Final Prospectus. 5. Delivery of and Payment for the PIES. Delivery of and payment for the PIES shall be made at the office of Schiff Hardin & Waite, 6600 Sears Tower, Chicago, Illinois 60606, at 8:30 A.M., Chicago time, on the fourth full business day following the date of this Agreement or at such other date or place as shall be determined by agreement between the Underwriters and the Company. This date and time are sometimes referred to as the "First Delivery Date." On the First Delivery Date, the Company, through the facilities of The Depository Trust Company ("DTC"), shall deliver or cause to be delivered a securities entitlement with respect to the Firm PIES to the Lehman Brothers Inc. for the account of each Underwriter against payment to or upon the order of the Trust of the purchase price by wire transfer of same-day funds to a bank account designated by the Company. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. Upon delivery, the Firm PIES shall be registered in the name of Cede & Co., as nominee for DTC. At any time on or before the thirtieth day after the date of this Agreement the option granted in Section 3 may be exercised by written notice being given to the Company by the Underwriters. Such notice shall set forth the aggregate number of Option PIES as to which the option is being exercised, the names in which the Option PIES are to be registered, the denominations in which the Option PIES are to be issued and the date and time, as determined by the Underwriters, when the Option PIES are to be delivered; provided, however, that this date and time shall not be earlier than the First Delivery Date nor earlier than the second business day after the date on which the option shall have been exercised nor later than the fifth business day after the date on which the option shall have been exercised. The date and time the Option PIES are delivered are sometimes referred to as the "Second Delivery Date" and the First Delivery Date and the Second Delivery Date are sometimes each referred to as a "Delivery Date". Delivery of and payment for the Option PIES shall be made at the place specified in the first sentence of the first paragraph of this Section 5 (or at such other place as shall be determined by agreement between the Underwriters and the Company) at 8:30 A.M., Chicago time, on the Second Delivery Date. On the Second Delivery Date, the Company, through the facilities of DTC, shall deliver or cause to be delivered a securities entitlement with respect to the Option PIES to Lehman Brothers Inc. for the account of each Underwriter against payment to or upon the order of the Trust of the purchase price by wire transfer of same-day funds to a bank account designated by the Company. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. Upon delivery, the Option PIES shall be registered in the name of Cede & Co., as nominee of DTC. 14 The Trust Preferred Securities underlying the PIES will be pledged with the Collateral Agent to secure the holders' obligations to purchase Common Stock under the Purchase Contracts. Such pledge shall be effected by the transfer to the Securities Intermediary of the Trust Preferred Securities to be pledged to the Collateral Agent in accordance with the Pledge Agreement. 6. Further Agreements of the Issuers. The Issuers agree: (a) To prepare the Final Prospectus in a form approved by the Underwriters and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than 10:00 A.M., New York City time, on the second business day following the execution and delivery of this Agreement; to make no further amendment or any supplement to the Registration Statement, the Final Prospectus or any Interim Prospectus except as permitted herein; to advise the Underwriters, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Final Prospectus or any amended Final Prospectus has been filed and to furnish the Underwriters with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Issuers with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Final Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the PIES; to advise the Underwriters, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of the Final Prospectus or any Interim Prospectus, of the suspension of the qualification of the PIES for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Final Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of the Final Prospectus or suspending any such qualification, to use promptly their best efforts to obtain its withdrawal. (b) To furnish promptly to the Underwriters and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith. (c) To deliver promptly to the Underwriters in New York City such number of the following documents as the Underwriters shall request: (i) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits other than this Agreement, the Indenture, the Amended Declaration, the Guarantee Agreement, the Purchase Contract Agreement, the Pledge Agreement, the Support Agreement and the Remarketing Agreement) and, (ii) the Final Prospectus (not later than 10:00 A.M., New York City time, of the day following the execution and delivery of this 15 Agreement) and any amended or supplemented Final Prospectus (not later than 10:00 A.M., New York City time, on the day following the date of such amendment or supplement) and (iii) any document incorporated by reference in any Interim Prospectus or Final Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time after the date hereof in connection with the offering or sale of the PIES (or any other securities relating thereto) and if at such time any event shall have occurred as a result of which the Final Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when the Final Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Final Prospectus or to file under the Exchange Act any document incorporated by reference in the Final Prospectus in order to comply with the Securities Act, the Exchange Act or the Trust Indenture Act, to notify the Underwriters and to prepare and to file such amendment, supplement or document, to cause any amendment of the Registration Statement containing an amended Final Prospectus to be made effective as soon as possible and to prepare and, at any time prior to the expiration of nine months after the date hereof, furnish, without charge (and at any time thereafter furnish at the expense of the Underwriters), to each Underwriter and to any dealer in securities as many copies as the Underwriters may from time to time request of an amended or supplemented Final Prospectus which will correct such statement or omission or effect such compliance. (d) To file promptly with the Commission any amendment to the Registration Statement or the Final Prospectus or any supplement to the Final Prospectus that may, in the judgment of the Company or the Underwriters, be required by the Securities Act or requested by the Commission. (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Final Prospectus or any document incorporated by reference in the Final Prospectus, to furnish a copy thereof to the Underwriters and counsel for the Underwriters; and not to file any such amendment or supplement which shall be disapproved by the Underwriters promptly after reasonable notice. (f) As soon as practicable to make generally available to the Company's security holders and to deliver to the Underwriters an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158). (g) During a period of five years following the effective date of the Registration Statement, to deliver to the Underwriters copies of all reports or other communications (financial or other) furnished to shareholders of the Company, and 16 deliver to the Underwriters (i) as soon as they are available, copies of any reports and financial statements furnished to or filed by the Company or Capital Markets with the Commission or any national securities exchange on which the PIES or any class of securities of the Company or Capital Markets is listed; and (ii) such additional information concerning the business and financial condition of the Company or Capital Markets as the Underwriters may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to the Company's shareholders generally or to the Commission). (h) Promptly from time to time to take such action as the Underwriters may reasonably request to qualify the Debentures, the Trust Preferred Securities, the Guarantees, the Purchase Contracts, the Common Stock, the Corporate PIES and the obligations of the Company pursuant to the Support Agreement for offering and sale under the securities laws of such jurisdictions as the Underwriters may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Debentures, the Trust Preferred Securities, the Guarantees, the Purchase Contracts, the Common Stock, the Corporate PIES and the obligations of the Company pursuant to the Support Agreement; provided that in connection therewith, neither the Company nor Capital Markets nor the Trust, shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. (i) The Company, Capital Markets and the Trust shall not (i) directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any PIES, Common Stock, Purchase Contracts, Trust Preferred Securities or Debentures, as the case may be, or any securities of the Company, Capital Markets or the Trust similar to the PIES, Common Stock, Purchase Contracts, Trust Preferred Securities or Debentures, or any security convertible into or exercisable or exchangeable for PIES, Common Stock, Purchase Contracts, Trust Preferred Securities or Debentures, or file any registration statement under the Securities Act with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the PIES, Common Stock, Purchase Contracts, Trust Preferred Securities or Debentures, or any securities convertible into or exercisable or exchangeable for PIES, Common Stock, Purchase Contracts, Trust Preferred Securities or Debentures, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of PIES, Common Stock, Purchase Contracts, Trust Preferred Securities, Debentures or such other securities, in cash or otherwise, for a period of 90 days from the date hereof without the prior written consent of Lehman Brothers Inc., other than (i) pursuant to this Agreement, (ii) Treasury PIES or Corporate PIES to be created or recreated upon 17 substitution of pledged securities or shares of Common Stock issuable upon early settlement of the Corporate PIES or Treasury PIES, (iii) any shares of Common Stock issued by the Company upon exercise of an option, warrant, or the conversion of a security described herein, (iv) any shares of Common Stock issued, or options to purchase such shares granted, pursuant to existing employee benefit plans described in the Final Prospectus, (v) any shares of Common Stock issued pursuant to any non-employee director stock plan or dividend reinvestment plan or (vi) any medium-term notes registered under the Registration Statement as of the date hereof.. (j) To use their best efforts to complete the listing of the Corporate PIES and the Common Stock to be issued and sold pursuant to the Purchase Contracts on the New York Stock Exchange, Inc., subject only to official notice of issuance and evidence of satisfactory distribution. (k) To use the net proceeds received by it from the sale of the PIES pursuant to this Agreement in the manner specified in the Final Prospectus under the caption "Use of Proceeds." 7. Expenses. The Company and Capital Markets, jointly and severally, agree to pay (a) the fees, disbursements and expenses of the Issuers' counsel and accountants in connection with the registration of the PIES under the Securities Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Interim Prospectus and the Final Prospectus and amendments and supplements thereto; (b) the costs incident to the authorization, issuance, sale and delivery of the Debentures, Trust Securities, Guarantees, Purchase Contracts, Common Stock to be issued and sold pursuant to the Purchase Contracts and PIES and any taxes payable in connection therewith; (c) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (d) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Interim Prospectus, the Final Prospectus and any amendment or supplement to any such prospectus or any document incorporated by reference therein, all as provided in this Agreement; (e) the costs of reproducing and distributing this Agreement; (f) the costs of distributing the terms of any agreement relating to the organization of the underwriting syndicate and selling group to the members thereof by mail, telex or other means of communication; (g) any applicable listing or other fees; (h) the fees and expenses of qualifying the Debentures, Trust Preferred Securities, Guarantees, Purchase Contracts, Common Stock, Corporate PIES and the obligations of the Company pursuant to the Support Agreement under the securities laws of the several jurisdictions as provided in Section 6(h) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters); (i) the filing fees and any expenses of legal counsel incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the PIES; (j) any fees charged by securities rating services for rating the PIES (or any related security); (k) the fees and expenses of the Purchase Contract Agent, the Collateral Agent, the Securities Intermediary, the Indenture Trustee, the Property Trustee, the Delaware Trustee and the Guarantee Trustee and their respective counsel; (l) any transfer taxes payable in connection with the sale of the PIES to the 18 Underwriters; and (m) all other costs and expenses incident to the performance of the obligations of the Issuers under this Agreement; provided that, except as provided in this Section 7 and in Section 12, the Underwriters shall pay their own costs and expenses, including the costs and expenses of their counsel, any transfer taxes on the PIES which they may sell and the expenses of advertising any offering of the PIES made by the Underwriters. 8. Conditions of Underwriters' Obligations. The respective obligations of the Underwriters hereunder are subject to the accuracy, when made and on each Delivery Date, of the representations and warranties of the Issuers contained herein, to the performance by the Issuers of their respective obligations hereunder, and to each of the following additional terms and conditions: (a) The Final Prospectus shall have been timely filed with the Commission in accordance with Section 6(a); no stop order suspending the effectiveness of the Registration Statement or any part thereof or suspending the qualification of the Indenture, the Guarantee Agreement or the Amended Declaration shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Final Prospectus or otherwise shall have been complied with. (b) No Underwriter shall have discovered and disclosed to the Company on or prior to such Delivery Date that the Registration Statement or the Final Prospectus or any amendment or supplement thereto contains any untrue statement of a fact which, in the opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, is material or omits to state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Indenture, the Amended Declaration, the Guarantee Agreement, the Purchase Contract Agreement, the Pledge Agreement, the Remarketing Agreement, the Debentures, the Trust Securities, the Guarantees, the Purchase Contracts, the Common Stock to be issued and sold pursuant to the Purchase Contracts, the Support Agreement, the Registration Statement, any Interim Prospectus and the Final Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Underwriters, and the Issuers shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Schiff Hardin & Waite shall have furnished to the Underwriters its written opinion, as counsel to the Company and Capital Markets, addressed to the Underwriters and dated such Delivery Date, in form and substance satisfactory to the Underwriters, to the effect that: (i) The Company and each Significant Subsidiary have been duly incorporated and are validly existing as corporations in good standing under 19 the laws of their respective jurisdictions of incorporation, with respective power and authority (corporate and other) to own their respective properties and conduct their businesses as described in the Final Prospectus. (ii) The Company has an authorized capitalization as set forth in the Final Prospectus, all of the issued capital shares of the Company and each Significant Subsidiary have been duly and validly authorized and issued and are fully paid and non-assessable; and all of the issued common shares of Northern Indiana and all of the issued capital shares of IWCR (except for directors' qualifying shares and as set forth or incorporated by reference in the Registration Statement) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. (iii) The Company and each Significant Subsidiary has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction. (iv) There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, (A) any shares of Common Stock issuable pursuant to the Purchase Contracts or (B) the Debentures pursuant to the Company's or Capital Markets' charter or by-laws or any agreement or other instrument known to such counsel. (v) To the best of such counsel's knowledge and other than as set forth in the Final Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or to which any property or asset of the Company or any of its subsidiaries is subject which could reasonably be expected individually or in the aggregate to have a material adverse effect on the consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge and other than as set forth in the Final Prospectus, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (vi) The Registration Statement was declared effective under the Securities Act, and the Indenture, the Amended Declaration and the Guarantee Agreement were qualified under the Trust Indenture Act, as of the date and time specified in such opinion, the Final Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and, to the knowledge of such counsel, no stop order suspending the effectiveness 20 of the Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission. (vii) Giving effect to the interpretations of the requirements of the Securities Act reflected in the No-Action Request and the Staff Response, the Registration Statement, as of its effective date, and the Final Prospectus, as of its date, and any further amendments or supplements thereto, as of their respective dates, made by the Issuers prior to such Delivery Date (other than the financial statements, related schedules and other financial data contained therein, as to which such counsel need express no opinion) complied as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations and the Trust Indenture Act; and the documents incorporated by reference in the Final Prospectus and any further amendment or supplement to any such incorporated document made by any of the Issuers prior to such Delivery Date (other than the financial statements, related schedules and other financial data contained therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and the Indenture, the Amended Declaration and the Guarantee Agreement conform in all material respects to the requirements of the Trust Indenture Act and the applicable rules and regulations thereunder. (viii) The statements contained in the Final Prospectus under the captions (A) "Description of the Debentures," "Description of the Preferred Securities," "Description of the Guarantee," "Relationship Among the Preferred Securities, the Debentures and the Guarantee," "Description of the Common Shares," "Description of the Stock Purchase Contracts and Stock Purchase Units" and "Description of the Support Agreement" in the Basic Prospectus and (B) "Prospectus Supplement SummaryyThe Offering," "Description of the PIES," "Description of the Purchase Contracts," "Certain Provisions of the Purchase Contracts, the Purchase Contract Agreement and the Pledge Agreement," "Description of the Preferred Securities," "Description of the Debentures" and "Description of the Guarantee" in the Prospectus Supplement insofar as they purport to constitute summaries of certain terms of documents referred to therein, constitute accurate summaries of the terms of such documents in all material respects. (ix) The unissued shares of Common Stock to be issued and sold by the Company pursuant to the Purchase Contracts have been duly and validly authorized and reserved for issuance and when issued and delivered in accordance with the provisions of the Purchase Contracts, will be duly and validly issued, fully paid and non-assessable. 21 (x) The Corporate PIES have been duly authorized, executed and delivered by the Company and (assuming due execution by the Purchase Contract Agent as attorney-in-fact of the holders thereof and due authentication by the Purchase Contract Agent) upon payment therefor as set forth herein, will be duly and validly issued and outstanding, and will constitute valid and binding obligations of the Company entitled to the benefits of the Purchase Contract Agreement and enforceable against the Company in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (xi) The Indenture has been duly authorized, executed and delivered by the Company and Capital Markets and (assuming due authentication, execution and delivery by the Indenture Trustee) constitutes a valid and binding agreement of each of the Company and Capital Markets enforceable against the Company and Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (xii) The Debentures have been duly authorized, executed and delivered by Capital Markets and (assuming due authentication by the Indenture Trustee) upon payment therefor as set forth herein, will constitute valid and binding obligations of Capital Markets entitled to the benefits of the Indenture and enforceable in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (xiii) The Amended Declaration has been duly authorized, executed and delivered by Capital Markets. (xiv) The Guarantee Agreement has been duly authorized, executed and delivered by Capital Markets and (assuming due execution and delivery by the Guarantee Trustee) constitutes a valid and binding agreement of Capital Markets enforceable against Capital Markets in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether 22 considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (xv) The Purchase Contract Agreement and the Pledge Agreement have been duly authorized, executed and delivered by the Company and (assuming due execution and delivery by the Purchase Contract Agent and, in the case of the Pledge Agreement, the Securities Intermediary and the Collateral Agent) constitute valid and binding agreements of the Company enforceable against the Company in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing provided, however, that based on a review of applicable case law, upon the occurrence of a Termination Event, Section 365(e)(1) of the Bankruptcy Code (11 U.S.C. ss.ss. 101-1330, as amended) should not substantively limit the provisions of Sections 3.15 and 5.8 of the Purchase Contract Agreement and Section 5.4 of the Pledge Agreement that require termination of the Purchase Contracts and release of the Collateral Agent's security interest in the Trust Preferred Securities, the Debentures, the Applicable Ownership Interest (as specified in clause (A) of the definition thereof in the Amended Declaration) of the Treasury Portfolio or the Treasury Securities. (xvi) This Agreement and the Remarketing Agreement have been duly authorized, executed and delivered by the Company and Capital Markets. (xvii) The Support Agreement has been duly authorized, executed and delivered by the Company and Capital Markets and constitutes a valid and binding agreement of the Company and Capital Markets enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing; the Debentures and the Guarantee will be entitled to the benefits of the Support Agreement, the obligations of Capital Markets under the Debentures and the Guarantees will be deemed to be "Debt" for purposes of the Support Agreement and the holders of the Debentures and the Guarantee will be entitled to the rights of "Lenders" under the Support Agreement. (xviii) The Transactions will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, 23 any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Trust, the Company or any of the Significant Subsidiaries is a party or by which the Trust, the Company or any of the Significant Subsidiaries is bound or to which any of the properties or assets of the Trust, the Company or any of the Significant Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of the Significant Subsidiaries or the Amended Declaration or Certificate of Trust of the Trust or any statute, rule or regulation or any order known to such counsel of any court or governmental agency or body having jurisdiction over the Trust, the Company or any of the Significant Subsidiaries or any of their properties or assets; and, except for the registration of the Debentures, the Trust Preferred Securities, the Guarantees, the Purchase Contracts, the Common Stock to be issued and sold pursuant to the Purchase Contracts, the Company's obligations under the Support Agreement and the PIES under the Securities Act, the qualification of the Indenture, the Amended Declaration and the Guarantee Agreement under the Trust Indenture Act, and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state securities laws in connection with the purchase of the PIES by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the Transactions. (xix) The provisions of the Pledge Agreement are effective to create, in favor of the Collateral Agent for the benefit of the Company, a valid and perfected security interest under the Uniform Commercial Code as in effect on the date of such opinion in the State of New York (the "New York UCC") in the Pledged Preferred Securities, Pledged Debentures, Applicable Ownership Interests (as specified in clause (A) of the definition thereof in the Amended Declaration) of the Treasury Portfolio and Pledged Treasury Securities from time to time credited to the Collateral Account in accordance with the Pledge Agreement. For purposes of such counsel's opinion, capitalized terms used in this clause (xix) shall have the meanings ascribed to such terms in the Pledge Agreement. (xx) The issuance and sale of the PIES do not contravene the Commodity Exchange Act or the regulations of the Commodity Futures Trading Commission. (xxi) None of the Trust nor the Company or any of its subsidiaries is, and upon the issuance and sale of the PIES as herein contemplated and the application of the net proceeds therefrom as described in the Final Prospectus will not be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the 1940 Act. 24 (xxii) Based upon current law and the assumptions stated or referred to therein: (i) the Trust will be classified as a grantor trust for United States federal income tax purposes and not as an association taxable as a corporation; (ii) the Debentures will be classified as indebtedness of Capital Markets and (iii) the statements set forth in the Final Prospectus under the caption "Certain United States Federal Income Tax Consequences" insofar as they purport to constitute summaries of matters of United States federal tax laws and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects. In rendering such opinion, such counsel may (i) state that its opinion is limited to matters governed by the Federal laws of the United States of America and the laws of the State of Indiana and New York (with respect to clause (xi)) and (ii) rely (to the extent such counsel deems proper and specifies in its opinion), as to matters involving the application of the laws of the State of Massachusetts upon the opinion of William D. MacGillivray, Esq. Such counsel shall also advise the Underwriters that although such counsel is not passing upon and assumes no responsibility or liability for the accuracy, completeness or fairness of the statements contained in the documents incorporated by reference in the Final Prospectus or any further amendment or supplement thereto made by the Company or Capital Markets prior to such Delivery Date, they have no reason to believe that any of such documents (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when such documents became effective or were filed with the Commission, as the case may be, contained, in the case of a registration statement which became effective under the Securities Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Securities Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made when such documents were so filed, not misleading. Such counsel shall also advise the Underwriters that although such counsel is not passing upon and, except as set forth in clauses (viii) and (xxii) above, assumes no responsibility or liability for the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Final Prospectus and any further amendments and supplements thereto made by the Company or Capital Markets prior to such Delivery Date, they have no reason to believe that, as of its effective date, the Registration Statement or any further amendment thereto made by the Company or Capital Markets prior to such Delivery Date (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of its date, the Final Prospectus or any further amendment or supplement thereto made by the Company or Capital Markets prior to such Delivery 25 Date (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or that, as of such Delivery Date, either the Registration Statement or the Final Prospectus or any further amendment or supplement thereto made by the Company or Capital Markets prior to such Delivery Date (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Final Prospectus or required to be described in the Registration Statement or the Final Prospectus which were not filed or incorporated by reference or described as required. (e) Richards, Layton & Finger, P.A. shall have furnished to the Underwriters its written opinion, as special Delaware counsel to the Issuers, addressed to the Underwriters and dated such Delivery Date, in form and substance satisfactory to the Underwriters, to the effect that: (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Trust Act. Under the Delaware Trust Act and the Amended Declaration, the Trust has the business trust power and authority to own property and to conduct its business as described in the Final Prospectus and to enter into and perform its obligations under this Agreement and the Trust Securities. (ii) The Common Securities have been duly authorized by the Amended Declaration and, when issued and delivered by the Trust to Capital Markets against payment therefor in accordance with the terms of the Amended Declaration and as described in the Final Prospectus, will be validly issued and (subject to the terms in this paragraph) fully paid undivided beneficial interests in the assets of the Trust (such counsel may note that the holders of Common Securities will be subject to the withholding provisions of Section 10.4 of the Amended Declaration, will be required to make payment or provide indemnity or security as set forth in the Amended Declaration and will be liable for the debts and obligations of the Trust to the extent provided in Section 9.1(b) of the Amended Declaration); under the Delaware Trust Act and the Amended Declaration, the issuance of the Common Securities is not subject to preemptive rights. 26 (iii) The Trust Preferred Securities have been duly authorized by the Amended Declaration and, when issued and delivered in accordance with the terms of the Amended Declaration against payment therefor as set forth herein, the Trust Preferred Securities will be validly issued and (subject to the terms in this paragraph) fully paid and non-assessable undivided beneficial interests in the assets of the Trust, the Holders of the Trust Preferred Securities will be entitled to the benefits of the Amended Declaration (subject to the limitations set forth in clause (v) below) and will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware (such counsel may note that the holders of Trust Preferred Securities will be subject to the withholding provisions of Section 10.4 of the Amended Declaration and will be required to make payment or provide indemnity or security as set forth in the Amended Declaration); under the Delaware Trust Act and the Amended Declaration, the issuance of the Trust Preferred Securities is not subject to preemptive rights. (iv) Under the Delaware Trust Act and the Amended Declaration, all necessary trust action has been taken to duly authorize the execution, delivery and performance by the Trust of the Underwriting Agreement and the Remarketing Agreement. (v) Assuming the Amended Declaration has been duly authorized by Capital Markets and has been duly executed and delivered by Capital Markets and the Regular Trustees, and assuming due authorization, execution and delivery of the Amended Declaration by the Property Trustee and the Delaware Trustee, the Amended Declaration constitutes a valid and binding obligation of Capital Markets and the Regular Trustees, enforceable against Capital Markets and the Regular Trustees in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws relating to or affecting the rights and remedies of creditors generally, (ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (vi) The issuance and sale by the Trust of the Trust Securities, the purchase by the Trust of the Debentures, the execution, delivery and performance by the Trust of the Underwriting Agreement, the consummation by the Trust of the transactions contemplated by the Underwriting Agreement and compliance by the Trust with its obligations thereunder do not violate 27 any of the provisions of the Certificate of Trust or the Amended Declaration or any applicable Delaware law or administrative regulation. (vii) Assuming that the Trust derives no income from or connected with sources within the State of Delaware and has no assets, activities (other than having a Delaware Trustee as required by the Delaware Trust Act and the filing of documents with the Secretary of State of Delaware) or employees in the State of Delaware, no filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware governmental authority or agency (other that as may be required under the securities or blue sky laws of the state of Delaware, as to which such counsel need express no opinion) is necessary or required to be obtained by the Trust solely in connection with the due authorization, execution and delivery by the Trust of the Underwriting Agreement or the offering, issuance, sale or delivery of the Trust Preferred Securities. (f) Kelley Drye & Warren LLP shall have furnished to the Underwriters its written opinion, as counsel to The Chase Manhattan Bank, as Property Trustee and Guarantee Trustee, addressed to the Underwriters and dated such Delivery Date, in form and substance satisfactory to the Underwriters, to the effect that: (i) Each of the Property Trustee and the Guarantee Trustee is duly incorporated as a New York banking corporation with all necessary power and authority to execute and deliver and perform their respective obligations under the terms of the Amended Declaration and the Guarantee Agreement. (ii) The execution, delivery and performance by the Property Trustee of the Amended Declaration and the execution, delivery and performance by the Guarantee Trustee of the Guarantee Agreement have been duly authorized by all necessary corporate action on the part of the Property Trustee and the Guarantee Trustee, respectively. The Amended Declaration has been duly executed and delivered by the Property Trustee and the Guarantee Agreement has been duly executed and delivered by the Guarantee Trustee and each constitutes the valid and binding agreement of the Property Trustee and the Guarantee Trustee, respectively, enforceable against the Property Trustee and the Guarantee Trustee, respectively, in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. 28 (iii) The execution, delivery and performance of the Amended Declaration and the Guarantee Agreement by the Property Trustee and the Guarantee Trustee, respectively, do not conflict with or constitute a breach of the charter or by-laws of the Property Trustee and the Guarantee Trustee, respectively. (iv) No consent, approval or authorization of, or registration with or notice to, any New York or federal banking authority is required for the execution, delivery or performance by the Property Trustee and the Guarantee Trustee of the Amended Declaration and the Guarantee Agreement, respectively. (g) Richards, Layton & Finger, P.A. shall have furnished to the Underwriters its written opinion, as counsel to Chase Manhattan Bank Delaware, as Delaware Trustee, addressed to the Underwriters and dated such Delivery Date, in form and substance satisfactory to the Underwriters, to the effect that: (i) The Delaware Trustee has been duly incorporated and is validly existing as a banking corporation in good standing under the laws of the State of Delaware with all necessary power and authority to execute and deliver, and to carry out and perform its obligations under the terms of the Amended Declaration. (ii) The execution, delivery and performance by the Delaware Trustee of the Amended Declaration has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. The Amended Declaration has been duly executed and delivered by the Delaware Trustee and constitutes the valid and binding agreement of the Delaware Trustee enforceable against the Delaware Trustee in accordance with its terms, subject to (i) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws relating to or affecting the rights and remedies of creditors generally, (ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (iii) The execution, delivery and performance of the Amended Declaration by the Delaware Trustee do not conflict with or constitute a breach of the charter or by-laws of the Delaware Trustee. (iv) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking authority is required for the 29 execution, delivery or performance by the Delaware Trustee of the Amended Declaration. (h) Kelley Drye & Warren LLP shall have furnished to the Underwriters its written opinion, as counsel to The Chase Manhattan Bank, as Purchase Contract Agent, addressed to the Underwriters and dated such Delivery Date, in form and substance satisfactory to the Underwriters, to the effect that: (i) The Purchase Contract Agent is duly incorporated as a New York banking corporation with all necessary power and authority to execute, deliver and perform its obligations under the Purchase Contract Agreement and the Pledge Agreement. (ii) The execution, delivery and performance by the Purchase Contract Agent of the Purchase Contract Agreement and the Pledge Agreement, and the authentication and delivery of the PIES have been duly authorized by all necessary corporate action on the part of the Purchase Contract Agent. The Purchase Contract Agreement and the Pledge Agreement have been duly executed and delivered by the Purchase Contract Agent, and constitute the valid and binding agreements of the Purchase Contract Agent, enforceable against the Purchase Contract Agent in accordance with their terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (iii) The execution, delivery and performance of the Purchase Contract Agreement and the Pledge Agreement by the Purchase Contract Agent does not conflict with or constitute a breach of the charter or by-laws of the Purchase Contract Agent. (iv) No consent, approval or authorization of, or registration with or notice to, any state or federal governmental authority or agency is required for the execution, delivery or performance by the Purchase Contract Agent of the Purchase Contract Agreement and the Pledge Agreement. (i) With respect to the letter of Arthur Andersen LLP delivered to the Underwriters concurrently with the execution of this Agreement (the "initial letter"), the Issuers shall have furnished to the Underwriters a letter (the "bring-down letter") of such accountants, addressed to the Underwriters and dated such Delivery Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, 30 (ii) stating, as of the date of the bring-down letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Final Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (j) With respect to the letter of KPMG Peat Marwick, LLP delivered to the Underwriters concurrently with the execution of this Agreement (the "initial KPMG letter"), the Issuers shall have furnished to the Underwriters a letter (the "bring-down letter") of such accountants, addressed to the Underwriters and dated such Delivery Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Final Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial KPMG letter. (k) Each of the Company and Capital Markets shall have furnished to the Underwriters a certificate, dated such Delivery Date, of, (i) with respect to the Company, (A) Gary L. Neale, its Chairman of the Board and President, or Patrick J. Mulchay, its Executive Vice President, and (B) Stephen P. Adik, its chief financial officer, and (ii) with respect to Capital Markets, Stephen P. Adik, its President, and Francis P. Girot, Jr., its chief financial officer, stating that: (i) The representations, warranties and agreements of the Company and Capital Markets in Sections 1 and 2 are true and correct as of such Delivery Date; the Company and Capital Markets have complied with all its agreements contained herein; and the conditions set forth in Section 8(a) have been fulfilled; (ii) (A) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Final Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, otherwise than as set forth or contemplated in the Final Prospectus and (B) since the respective 31 dates as of which information is given in the Final Prospectus, there has not been any material change in the consolidated share capital or long-term debt of the Company and its subsidiaries or the consolidated share capital or long-term debt of any Significant Subsidiary or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries (taken as a whole), otherwise than as set forth or contemplated in the Final Prospectus; and (iii) They have carefully examined the Registration Statement and the Final Prospectus and, in their opinion (A) the Registration Statement, as of its effective date, and the Final Prospectus, as of its date, did not include any untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since such dates, no event has occurred which should have been set forth in a supplement or amendment to either of the Registration Statement or the Final Prospectus. (l) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Final Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Final Prospectus or (ii) since such date there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Final Prospectus, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Underwriters, so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the PIES being delivered on such Delivery Date on the terms and in the manner contemplated in the Final Prospectus. (m) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company's or any Significant Subsidiary's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's or any Significant Subsidiary's debt securities. 32 (n) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of a majority in interest of the several Underwriters, impracticable or inadvisable to proceed with the public offering or delivery of the PIES being delivered on such Delivery Date on the terms and in the manner contemplated in the Final Prospectus. (o) The New York Stock Exchange, Inc. shall have approved the Corporate PIES for listing, subject only to official notice of issuance. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters. 9. Indemnification and Contribution. (a) The Issuers, jointly and severally, shall indemnify and hold harmless each Underwriter, its officers and employees and each person, if any, who controls any Underwriter within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of PIES), to which that Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in the Registration Statement, any Interim Prospectus or the Final Prospectus, or in any amendment or supplement thereto, or (B) in any blue sky application or other document prepared or executed by any Issuer (or based upon any written information furnished by the Issuers) specifically for the purpose of qualifying any or all of the Debentures, the Trust Preferred Securities, the Guarantees, the Purchase Contracts, the Common Stock or the Corporate PIES under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a "Blue Sky Application"), or (ii) the omission or alleged omission to state in the Registration Statement, any Interim Prospectus or the Final Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading 33 and shall reimburse each Underwriter and each such officer, employee and controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that none of the Issuers shall be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Interim Prospectus or the Final Prospectus, or in any such amendment or supplement, or in any Blue Sky Application in reliance upon and in conformity with the written information furnished to the Issuers by any Underwriter specifically for inclusion therein and described in Section 9(e); and provided further, that as to any Interim Prospectus this indemnity agreement shall not inure to the benefit of any Underwriter, its officers or employees or any person controlling that Underwriter on account of any loss, claim, damage, liability or action arising from the sale of PIES to any person by that Underwriter if that Underwriter failed to send or give a copy of the Final Prospectus, as the same may be amended or supplemented, to that person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact in such Interim Prospectus was corrected in the Final Prospectus, unless such failure resulted from non-compliance by the Company with Section 6(c). For purposes of the last proviso to the immediately preceding sentence, the term "Final Prospectus" shall not be deemed to include the documents incorporated therein by reference, and no Underwriter shall be obligated to send or give any supplement or amendment to any document incorporated by reference in any Interim Prospectus or the Final Prospectus to any person other than a person to whom such Underwriter had delivered such incorporated document or documents in response to a written request therefor. The foregoing indemnity agreement is in addition to any liability which the Issuers may otherwise have to any Underwriter or to any officer, employee or controlling person of that Underwriter. (b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the Company and Capital Markets, their officers and employees, each of their directors, the Trust and each Trustee and each person, if any, who controls any of the Issuers within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such director or officer, the Trust or any Trustee or such controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in the Registration Statement, any Interim Prospectus or the Final Prospectus, or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in the Registration Statement, any Interim Prospectus or the Final Prospectus, or in any amendment or supplement thereto, or in any Blue Sky Application any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with the written information furnished to the Issuers by that Underwriter specifically for inclusion therein and described in Section 9(e), and shall reimburse the Company and Capital Markets and any such director or officer, the Trust or any Trustee or any such controlling 34 person for any legal or other expenses reasonably incurred by the Company or Capital Markets or any such director or officer, the Trust or any Trustee or any such controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which any Underwriter may otherwise have to the Company or Capital Markets or any such director or officer, the Trust or any Trustee or any such controlling person. (c) Promptly after receipt by an indemnified party under this Section 9 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 9 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 9. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Underwriters shall have the right to employ counsel to represent jointly the Underwriters and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Underwriters against the Issuers under this Section 9 if, in the reasonable judgment of the Underwriters, it is advisable for the Underwriters and their respective officers, employees and controlling persons to be jointly represented by separate counsel, and in that event the fees and expenses of such separate counsel shall be paid by the Issuers. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss of liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 9 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 9(a) or 9(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, 35 then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Issuers on the one hand and the Underwriters on the other from the offering of the PIES or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuers on the one hand and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Issuers on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the PIES purchased under this Agreement (before deducting expenses) received by the Issuers, on the one hand, and the total compensation received by the Underwriters with respect to the PIES purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the PIES under this Agreement, in each case as set forth on the cover page of the Final Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuers or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuers and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 9(d) shall be deemed to include, for purposes of this Section 9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9(d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the PIES underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 9(d) are several in proportion to their respective underwriting obligations and not joint. (e) The Underwriters severally confirm that the statements with respect to the public offering of the PIES set forth on the cover page of, and under the caption "Underwriting" in, the Final Prospectus are correct and constitute the only information furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in the Registration Statement and the Final Prospectus. 10. Defaulting Underwriters. 36 If, on either Delivery Date, any Underwriter defaults in the performance of its obligations under this Agreement, the remaining non-defaulting Underwriters shall be obligated to purchase the PIES which the defaulting Underwriter agreed but failed to purchase on such Delivery Date in the respective proportions which the number of Firm PIES set forth opposite the name of each remaining non-defaulting Underwriter in Schedule 1 hereto bears to the total number of Firm PIES set forth opposite the names of all the remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the remaining non-defaulting Underwriters shall not be obligated to purchase any of the PIES on such Delivery Date if the total number of the PIES which the defaulting Underwriter or Underwriters agreed but failed to purchase on such date exceeds 9.09% of the total number of PIES to be purchased on such Delivery Date, and any remaining non-defaulting Underwriter shall not be obligated to purchase more than 110% of the number of PIES which it agreed to purchase on such Delivery Date pursuant to the terms of Section 5. If the foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or those other underwriters satisfactory to the Underwriters who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon among them, all the PIES to be purchased on such Delivery Date. If the remaining Underwriters or other underwriters satisfactory to the Underwriters do not elect to purchase the PIES which the defaulting Underwriter or Underwriters agreed but failed to purchase on such Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the obligation of the Underwriters to purchase, and of the Company to sell, the Option PIES) shall terminate without liability on the part of any non-defaulting Underwriter or the Issuers, except that the Company and Capital Markets will continue to be liable for the payment of expenses to the extent set forth in Section 7. As used in this Agreement, the term "Underwriter" includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule 1 hereto who, pursuant to this Section 10, purchases Firm PIES or Option PIES which a defaulting Underwriter agreed but failed to purchase. Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Issuers for damages caused by its default. If other underwriters are obligated or agree to purchase the PIES of a defaulting or withdrawing Underwriter, either the Underwriters or the Company may postpone the First Delivery Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement, the Final Prospectus or in any other document or arrangement. 11. Termination. The obligations of the Underwriters hereunder may be terminated by the Underwriters by notice given to and received by the Company prior to delivery of and payment for the Firm PIES if, prior to that time, any of the events described in Sections 8(l), 8(m) or 8(n) shall have occurred or if the Underwriters shall decline to purchase the PIES for any reason permitted under this Agreement. 12. Reimbursement of Underwriters' Expenses. If (a) the Company shall fail to tender the PIES for delivery to the Underwriters for any reason permitted under this Agreement, or 37 (b) the Underwriters shall decline to purchase the PIES for any reason permitted under this Agreement (including the termination of this Agreement pursuant to Section 11 other than in accordance with Section 10 as a result of the default by any Underwriter), the Company shall reimburse the Underwriters for the fees and expenses of their counsel and for such other out-of-pocket expenses as shall have been incurred by them in connection with this Agreement and the proposed purchase of the PIES, and upon demand the Company shall pay the full amount thereof to the Underwriters. If this Agreement is terminated pursuant to Section 10 by reason of the default of one or more Underwriters, the Company shall not be obligated to reimburse any defaulting Underwriter on account of those expenses. 13. Notices, etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Lehman Brothers Inc., Three World Financial Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-528-8822); (b) if to the Company, Capital Markets or to the Trust, shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Treasurer (Fax: 219-853-5352); provided, however, that any notice to an Underwriter pursuant to Section 9(c) shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its acceptance telex to Lehman Brothers Inc., which address will be supplied to any other party hereto by Lehman Brothers Inc. upon request. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Issuers shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Underwriters by Lehman Brothers Inc. 14. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Issuers and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Issuers contained in this Agreement shall also be deemed to be for the benefit of the officers and employees of each Underwriter and the person or persons, if any, who control each Underwriter within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 9(b) of this Agreement shall be deemed to be for the benefit of directors, officers and employees of the Issuers and any person controlling the Issuers within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 14, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 15. Survival. The respective indemnities, representations, warranties and agreements of the Issuers and the Underwriters contained in this Agreement or made by or on behalf 38 of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the PIES and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them. 16. Definition of the Terms "Business Day" and "Subsidiary". For purposes of this Agreement, (a) "business day" means any day on which the New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules and Regulations. 17. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. 18. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. 19. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. 39 If the foregoing correctly sets forth the agreement among the Company, Capital Markets, the Trust, and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, NIPSCO INDUSTRIES, INC. By: ------------------------------- Title: NIPSCO CAPITAL MARKETS, INC. By: ------------------------------- Title: NIPSCO CAPITAL TRUST I By: NIPSCO Capital Markets, Inc., as Sponsor By: ------------------------------- Title: Accepted: LEHMAN BROTHERS INC. GOLDMAN, SACHS & CO. MORGAN STANLEY & CO. INCORPORATED By: LEHMAN BROTHERS INC. By: ------------------------- Authorized Representative SCHEDULE 1 Number of Firm Underwriters PIES ------------ --------- Lehman Brothers Inc. ....................................... 3,300,000 Goldman, Sachs & Co. ....................................... 1,350,000 Morgan Stanley & Co. Incorporated .......................... 1,350,000 --------- Total ................................................ 6,000,000 ========= EX-4.7 8 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 The Depository Trust Company, a New York corporation (the "Depositary"), or a nominee of the Depositary. This Debenture is exchangeable for Debentures registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and no transfer of this Debenture (other than a transfer of this Debenture as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Debenture is presented by an authorized representative of the Depositary to the issuer or its agent for registration of transfer, exchange or payment, and any Debenture issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of the Depositary, and any payment hereon is made to Cede & Co., or to such other entity as is requested by an authorized representative of the Depositary), and, except as otherwise provided in the Indenture, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] No._______________ $_________________ CUSIP No. 654638 AC9 5.90% SENIOR DEBENTURE DUE 2005 NIPSCO Capital Markets, Inc., an Indiana corporation ("Capital Markets", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to ______________________, or registered assigns, the principal sum of _______ Dollars on __________________, 2005, and to pay interest on said principal sum from February 16, 1999, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly in arrears on February 19, May 19, August 19 and November 19 of each year commencing May 19, 1999, at the rate of 5.90% per annum until February 19, 2003, and at the Reset Rate thereafter, until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum compounded quarterly. The amount of interest payable for any period will be computed (1) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable is not a Business Day, then payment of the interest payable on such date will be made on the next day that is a Business Day (and without any interest or other payment in respect of such delay), except that, if such Business Day is in the next calendar year, then such payment will be made on the preceding Business Day. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture referred to on the reverse side hereof, be paid to the person in whose name this Debenture (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment, which, if this Debenture is a Global Security, shall be the close of business on the Business Day preceding such Interest Payment Date or, if this Debenture is not a Global Security, shall be the close of business on the 15th Business Day preceding such Interest Payment Date; provided that interest paid at maturity shall be paid to the Person to whom principal is paid. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such Regular Record Date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee referred to on the reverse side hereof for the payment of such defaulted interest, notice whereof shall be given to the registered Holders of the Debentures not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of and interest on this Debenture shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of Capital Markets by check mailed to the registered Holder at such address as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Debenture is the Property Trustee, the payment of the principal of (and premium, if any) and interest on this Debenture will be made at such place and to such account as may be designated by the Property Trustee. This Debenture is, to the extent provided in the Indenture, senior and unsecured and will rank in right of payment on a parity with all other senior unsecured obligations of Capital Markets. Unless the Certificate of Authentication hereon has been executed by the Trustee, this Debenture shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. The provisions of this Debenture are continued on the reverse side hereof, and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, Capital Markets has caused this instrument to be executed. NIPSCO CAPITAL MARKETS, INC. By: ----------------------------------- Attest: By: ------------------------- Secretary (FORM OF CERTIFICATE OF AUTHENTICATION) CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series referred to in the within-mentioned Indenture. Dated: THE CHASE MANHATTAN BANK, as Trustee ---------------- By: --------------------------------- Authorized Officer (FORM OF REVERSE OF DEBENTURE) This Debenture is one of a duly authorized series of Securities of Capital Markets (herein sometimes referred to as the "Debentures"), all issued under and pursuant to an Indenture dated as of February 14, 1997, duly executed and delivered among NIPSCO Industries, Inc. ("Industries"), NIPSCO Capital Markets, Inc. ("Capital Markets") and The Chase Manhattan Bank, as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture thereto dated as of _________________________, 1999, among Industries, Capital Markets and the Trustee (such Indenture as so supplemented, the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, Capital Markets, Industries and the Holders of the Debentures. By the terms of the Indenture, the Securities are issuable in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. This series of Securities is limited in aggregate principal amount to $355,700,000. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. If a Tax Event occurs and is continuing, Capital Markets may, at its option and upon not less than 30 nor more than 60 days' notice to the Holders of the Debentures, redeem the Debentures in whole (but not in part) within 90 days following the occurrence of such Tax Event at the Redemption Price. The Redemption Price shall be paid prior to 12:00 noon, New York City time, on the Tax Event Redemption Date, by check or wire transfer in immediately available funds at such place and to such account as may be designated by each such Holder. The Debentures will not be subject to a sinking fund provision. In case an Event of Default shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting Capital Markets and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Debentures and all other series of Securities affected at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Debentures; provided, however, that no such supplemental indenture may, without the consent of the Holder of each outstanding Debenture, among other things, (i) change the stated maturity of the principal of, or any installment of interest on, any Debenture, (ii) reduce the principal amount of, or the rate of interest on or any premium payable upon the redemption of, the Debentures, (iii) impair the right to institute suit for the enforcement of any such payment on or after the stated maturity of or any redemption date for the Debentures or (iv) reduce the above-stated percentage of principal amount of Debentures, the Holders of which are required to modify or amend the Indenture, to consent to any waiver thereunder or to approve any supplemental indenture. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Debentures at the time outstanding affected thereby, on behalf of all of the Holders of the Debentures, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to the Debentures, and its consequences, except a default in the payment of the principal of or interest on any of the Debentures (unless cured as provided in the Indenture) or in respect of a covenant or provision that cannot be modified or amended without the consent of the Holders of each Debenture then outstanding. Any such consent or waiver by the registered Holder of this Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of Capital Markets, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered Holder hereof on the Security Register of Capital Markets, upon surrender of this Debenture for registration of transfer at the office or agency of Capital Markets in the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to Capital Markets or the Trustee duly executed by the registered Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but Capital Markets may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Debenture, Capital Markets, the Trustee, any paying agent and any Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither Capital Markets nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of Capital Markets or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Indenture imposes certain limitations on the ability of Capital Markets and Industries to, among other things, merge, consolidate or sell, assign, transfer or lease all or substantially all of its properties or assets. Such covenants and limitations are subject to a number of important qualifications and exceptions. Capital Markets and Industries must report periodically to the Trustee on compliance with the covenants in the Indenture. The Debentures of this series are issuable only in registered form without coupons in denominations of $50 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations herein and therein set forth, Debentures of this series so issued are exchangeable for a like aggregate principal amount of Debentures of this series of a different authorized denomination, as requested by the Holder surrendering the same. EX-8.1 9 TAX OPINION February 11, 1999 NIPSCO Industries, Inc. NIPSCO Capital Markets, Inc. NIPSCO Capital Trust I Re: NIPSCO Industries, Inc., NIPSCO Capital Markets, Inc. and NIPSCO Capital Trust Prospectus Supplement dated February 9, 1999 Gentlemen: As special tax counsel to NIPSCO Capital Trust I (the "Trust"), NIPSCO Industries, Inc. (the "Company") and NIPSCO Capital Markets, Inc. ("Capital Markets") in connection with the issuance of 6,000,000 Premium Income Equity Securities of the Company and Trust (the "PIES") and assuming the operative documents for the PIES described in the Prospectus Supplement dated February 9, 1999 of the Trust, Company and Capital Markets to which this opinion is filed as an exhibit (the "Prospectus Supplement") will be performed in accordance with the terms described therein, we are of the opinion that: 1. The Trust will be classified as a grantor trust for United States federal income tax purposes and not as an association subject to tax as a corporation; 2. The Debentures, as defined in the Prospectus Supplement, will be classified as indebtedness of Capital Markets for United States federal income tax purposes; and 3. The discussion in the Prospectus Supplement under the heading "Certain United States Federal Income Tax Consequences," to the extent such information constitutes matters of law, summaries of legal matters, or legal conclusions, fairly presents in all material respects the principal United States Federal income tax consequences of an investment in PIES. Our opinion is based on current provisions of the Internal Revenue Code of 1986, the Treasury Regulations promulgated thereunder, published pronouncements of the Internal Revenue Service and case law, any of which may be changed at any time with retroactive effect. Any change in applicable laws or facts and circumstances surrounding the offering of the PIES, or any inaccuracy in the statements, facts, assumptions and representations on which we have relied, may affect the NIPSCO Industries, Inc. NIPSCO Capital Markets, Inc. NIPSCO Capital Trust I February 11, 1999 Page 2 continuing validity of the opinions set forth herein. We assume no responsibility to inform you of any such change or inaccuracy that may occur or come to our attention. We hereby consent to the filing of this opinion as an exhibit to the Prospectus Supplement and the reference to us under the heading "Certain United States Federal Income Tax Consequences" Prospectus Supplement. Very truly yours, SCHIFF HARDIN & WAITE By: /s/ Lawrence H. Jacobson -------------------------------------- Lawrence H. Jacobson EX-12.1 10 STATEMENT RE COMPUTATION OF RATIO EARNING EXHIBIT 12 NIPSCO INDUSTRIES, INC. Ratio of Earnings to Fixed Charges
Year Ended December 31, ------------------------------------------------------------------------------- 1994 1995 1996 1997 1998 ------------ ------------ ------------ ------------ ------------ Earnings as defined in item 503(d) of Regulation S-K: Income before interest charges........................ $272,678,294 $284,665,276 $287,877,630 $319,514,639 $338,081,136 Adjustments- Federal income taxes........... 100,320,953 95,676,572 80,626,310 97,010,863 115,799,335 State income tax............... 15,398,420 15,214,803 12,781,207 16,856,952 16,785,056 Deferred investment tax credit, net................... (6,499,242) (7,515,362) (7,407,813) (7,375,636) (7,360,797) Deferred income taxes, net..... (11,488,355) (1,479,358) 21,125,012 (1,466,940) (22,460,744) Federal and state income taxes included in other income........................ (16,332,753) (2,698,478) (206,820) 987,240 (1,900,910) Amortization of capitalized interest.......... 103,130 247,516 247,512 0 0 ------------ ------------ ------------ ------------ ------------ $354,180,447 $384,110,969 $395,043,038 $425,527,118 $438,943,076 ============ ============ ============ ============ ============ Fixed charges as defined in item 503(d) of Regulation SK: Interest on long-term debt...... $ 78,292,155 $ 82,655,251 $ 84,254,716 $102,842,096 $111,419,929 Other interest.................. 11,650,228 13,561,297 17,759,136 13,453,006 16,536,021 Amortization of premium, reacquisition premium, discount and expense on debt, net............................ 3,897,151 4,401,658 4,605,471 4,718,120 4,589,696 Interest portion of rent expense........................ 2,220,575 2,415,111 2,656,116 2,939,650 7,899,302 Capitalized interest during period......................... 2,145,182 234,613 0 0 0 ------------ ------------ ------------ ------------ ------------ $ 98,205,291 $103,267,930 $109,275,439 $123,952,872 $140,444,948 ============ ============ ============ ============ ============ Plus preferred stock dividends: Preferred dividend requirements of subsidiary..... $ 9,912,759 $ 9,046,207 $ 8,711,985 $ 8,691,457 $ 8,538,180 Preferred dividend requirements factor......................... 1.47 1.54 1.59 1.54 1.49 ------------ ------------ ------------ ------------ ------------ Preferred dividend requirements of subsidiary.................. 14,571,756 13,931,159 13,852,056 13,384,844 12,721,888 Fixed charges................... 98,205,291 103,267,930 109,275,439 123,952,872 140,444,948 ------------ ------------ ------------ ------------ ------------ $112,777,047 $117,199,089 $123,127,495 $137,337,716 $153,166,836 ============ ============ ============ ============ ============ Ratio of earnings to fixed charges......................... 3.14 3.28 3.21 3.10 2.87
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