Exhibit 10.3
[GRAPHIC OMITTED]
Scotia Capital (USA) Inc.
One Liberty Plaza, 165 Broadway, 26th Floor, New York, New York 10006
November 9, 1999
NiSource Inc.
5265 Hohman Avenue
Hammond, Indiana 46320-1775
Attention: Mr. Stephen P. Adik
Senior Executive Vice-President
Chief Financial Officer & Treasurer
Dear Sirs:
Re: Equity Forward Purchase Transaction
The purpose of this facsimile is to set forth the amended and restated
terms and conditions of the Transaction entered into between Scotia Capital
(USA) Inc. (formerly Scotia Capital Markets (USA) Inc.) ("Party A") and NiSource
Inc. ("Party B") on the Trade Date specified below (the "Transaction"). This
facsimile constitutes a "Confirmation" as referred to in the ISDA Master
Agreement specified below and amends, restates and replaces the Confirmation,
dated May 21, 1999, entered into between Party A and Party B.
This Confirmation is subject to and incorporates the definitions
contained in the 1991 ISDA Definitions, as supplemented by the 1998 Supplement
(the "1991 ISDA Definitions"), and the 1996 ISDA Equity Derivatives Definitions
(the "Equity Definitions") (each as published by the International Swaps and
Derivatives Association, Inc. ("ISDA")) (collectively, the "ISDA Definitions").
In the event of any inconsistency between the ISDA Definitions and this
Confirmation, this Confirmation will govern. This Confirmation supplements,
forms part of, and is subject to, the ISDA Master Agreement, dated May May 21,
1999, as amended and supplemented from time to time (the "ISDA Agreement"),
between Party A and Party B. All provisions contained in the ISDA Agreement
govern this Confirmation except as expressly modified below.
1. The terms of the particular Transaction to which this Confirmation relates
are as follows:
I. General Terms:
Trade Date: May 21, 1999
Effective Date: May 21, 1999
Termination Date: May 20, 2003, subject to postponement pursuant to the
Optional Extension provision set out below.
Extension Date: The earlier of November 21, 2003 and the date on which the
restriction cited by Party B in its extension notice, given pursuant to the
Optional Extension provision set out below, ceases to apply to Party B
Extension Term: The period commencing on but excluding the Termination Date
to but including the Extension Date
Optional Termination Date: Any Floating Rate
Reset Date selected by Party B in
accordance with the Notice provision
of the Settlement Terms set out
below.
Forward Purchase Seller: Party A
Forward Purchase Buyer: Party B
Exchange: New York Stock Exchange
Shares: NiSource Inc. common shares (Exchange designation "NI"), CUSIP No.
65473P105, quoted in USD on the Exchange.
Accumulation Period: The period commencing on and including the Effective
Date to and including the date by which Party A, or any U.S. subsidiary of The
Bank of Nova Scotia acquiring Shares in respect of this Transaction (the "Hedge
Subsidiary"), has, by means of one or more purchase transactions effected on the
Exchange through such period, accumulated such quantity of Shares as shall have
an Aggregate Notional approximately equal to USD 150,000,000, (the date on which
such accumulation is achieved being the "Accumulation Period End Date"). For
purposes hereof, "Aggregate Notional" means the product of the Initial Price and
the Number of Shares, as these terms are defined below.
Party A shall provide to Party B, on
or before the second Local Business
Day following the Accumulation
Period End Date, written notice
setting out the purchase
transactions effected by Party A or
the Hedge Subsidiary and Party A's
calculation of the Initial Price.
Initial Price: The price, in USD, per Share calculated as a weighted
average of the respective purchase prices per Share, including commissions which
shall not exceed USD 0.04 per Share, each in USD, of all Share purchase
transactions effected by Party A or the Hedge Subsidiary on the Exchange during
the Accumulation Period, which weighted average shall be determined by
multiplying each purchase price by the number of Shares to which such purchase
price is applicable, aggregating the products thereof and dividing such sum by
the total number of purchased Shares. The quotient thereof shall be the Initial
Price (per Share).
Disposition Period: In the context of Net Share
Settlement of this Transaction, the
period commencing on and including
the Optional Termination Date, the
Commencement Date or the Termination
Date (as applicable) to and
including the Final Settlement Date.
For purposes hereof, "Final
Settlement Date" means the earlier
of (1) the settlement date of the
last trade by which Party A, or the
Hedge Subsidiary, has effected, on
the Exchange, the sale of the
Relevant Share Number, (2) 90th
calendar day following the
commencement date of the Disposition
Period, or (3) the date on which the
Daily Settlement Amount (as defined
in the Net Share Settlement
provision) is an amount less than or
equal to zero and, if less than
zero, the absolute value thereof is
less than the closing price of the
Shares as reported by the Exchange
in respect of such Final Trading
Date (a "Zero Settlement Amount").
"Final Trading Date" means the day
on which any Share sale transaction
effected on the Exchange pursuant to
the Net Share Settlement provision
would settle on the Final Settlement
Date. "Relevant Share Number" means
the Number of Shares or, in the
context of any partial settlement to
be effected on any Optional
Termination Date, the number of
Shares specified or deemed specified
by Party B in its termination notice
given pursuant to the Notice
provision set out below.
Number of Shares: The aggregate number of
Shares yielded pursuant to Party A's
or the Hedge Subsidiary's purchase
program as referenced in
"Accumulation Period" above, less
the aggregate number of Shares
previously delivered by Party A or
the Hedge Subsidiary to Party B
pursuant to all partial settlements
(as contemplated by the Settlement
Terms) effected prior to the
relevant date of determination.
Business Days: London and New York
II. Floating Amounts payable by Party B
Floating Amount Payer: Party B
Notional Amount: same as Aggregate Notional
Payment Dates: The first Business Day
immediately following the
Accumulation Period End Date and,
thereafter, the first day of each of
the months of May, August, November
and February during the Term hereof
and, if applicable, during the
Extension Term, the Optional
Termination Date, the Termination
Date and, if applicable, the
Extension Date, subject to
adjustment in accordance with the
Modified Following Business Day
Convention.
Floating Rate Option: For all Calculation Periods following the
Accumulation Period, USD-LIBOR-BBA
Designated Maturity: 3-months
Reset Dates: In respect of each
Calculation Period following the
Accumulation Period, the first day
of each Calculation Period subject
to adjustment in accordance with the
Modified Following Business Day
Convention.
Spread: Plus 53.5 basis points (0.535%).
Day Count Fraction: Actual/360
Floating Rate for first Calculation Period following the Accumulation
Period (the "Initial Period"): USD-LIBOR-BBA quoted as of 11:00 a.m., London
time (the "Determination Time") on the day which is two London Banking Days
prior to the first day of the Initial Period (the "Determination Date") but for
a Designated Maturity equal to the actual number of days in such Initial Period
plus Spread. If there is no rate quoted on the Determination Date in respect of
such Designated Maturity and the Accumulation Period is greater than 30 days,
the Floating Rate for the Initial Period shall be the rate determined by linear
interpolation of USD-LIBOR-BBA quoted as of the Determination Time on such date
for a Designated Maturity of one-month and of USD-LIBOR-BBA quoted on such date
for a Designated Maturity of three-months, plus Spread. If there is no rate
quoted as of the Determination Time on the Determination Date in respect of a
Designated Maturity equal to the number of days in the Initial Period and the
Accumulation Period is less than 30 days, the Floating Rate for the Initial
Period shall be the rate determined by linear interpolation of the Overnight
Rate and of USD-LIBOR-BBA quoted as of the Determination Time on the
Determination Date for a Designated Maturity of three-months, plus Spread. For
purposes hereof, "Overnight Rate" means the average rate at which overnight
deposits in United States Dollars are offered by four major banks in the London
interbank market, as selected by Party A, as of the Determination Time on the
Determination Date.
Floating Amount in respect of Accumulation Period: Notwithstanding the
foregoing, the Floating Amount payable by Party B in respect of the Accumulation
Period shall be determined as follows:
For each day of the Accumulation
Period, the Calculation Agent shall
determine an amount (the
"Calculation Amount") in accordance
with the following formula:
[Calculation Amounti!1 + (Number of
Purchased Sharesi x WAPi)] x (1 +
Accumulation Period Floating Ratei /
360)
where, "Calculation Amounti!1" means
the Calculation Amount determined in
respect of the day preceding the
relevant day of determination,
"Number of Purchased Sharesi" means
the number of Shares purchased by
Party A or the Hedge Subsidiary on
the relevant date of determination;
"WAPi" means the weighted average of
the respective purchase prices per
Share, including commissions which
shall not exceed USD 0.04 per Share,
each in USD, of all Share purchase
transactions effected by Party A or
the Hedge Subsidiary on the relevant
date of determination, which
weighted average shall be determined
by multiplying each purchase price
by the number of Shares to which
such purchase price is applicable,
aggregating the products thereof and
dividing such sum by the total
number of purchased Shares; and
"Accumulation Period Floating Ratei"
means the Overnight Rate (as defined
above) in effect on the relevant
date of determination, as if such
date were a Reset Date, plus Spread.
The amount payable by Party B to
Party A in respect of the
Accumulation Period shall be the
Calculation Amount determined in
respect of the Accumulation Period
End Date minus an amount equal to
the product of the Initial Price
multiplied by the Number of Shares.
Such amount shall be paid by Party B
to Party A on the second Business
Day following the Accumulation
Period End Date.
III. Settlement Terms
Settlement: This Transaction may be settled, in whole or in part, on any
Optional Termination Date, and, in the event of a partial settlement, the
unsettled portion shall remain, during the Term hereof, a Transaction for
purposes of the ISDA Agreement Otherwise, this Transaction shall terminate, and
each party's obligations in respect thereof shall be settled, on the Termination
Date. Settlement shall be effected in accordance with the settlement mechanism
selected by Party B in its settlement notice given in accordance with the Notice
provision set out below. All partial settlements shall, however, be effected
only in integral multiples of 500,000 Shares.
Physical Settlement: Where Physical Settlement is applicable, on the
Optional Termination Date or Termination Date Party A shall deliver to Party B
Shares equal in number to the Number of Shares or, in the context of any partial
settlement to be effected on any Optional Termination Date, the number of Shares
specified or deemed specified by Party B in its settlement notice given pursuant
to the Notice provision set out below (such number being, in either case, the
"Relevant Share Number") and Party B shall pay to Party A an amount, in USD,
equal to the product of the Initial Price multiplied by the Relevant Share
Number (the "Settlement Price"). Any delivery made pursuant to this provision
shall be on a delivery versus payment basis and the due date of such delivery
shall be subject to adjustment in accordance with Section 6.2 of the Equity
Definitions in the event of the occurrence of a Settlement Disruption Event.
Net Share Settlement: Where Net Share
Settlement is elected or otherwise
applies, on the Optional Termination
Date, the Commencement Date or
Termination Date (as applicable),
Party A shall commence selling
Shares on the Exchange and shall,
for each day in the Disposition
Period, determine an amount in USD
(the "Daily Settlement Amount") in
accordance with the following
formulae:
SA0 = Initial Price x Relevant Share Number
SAi = SAi!1 x (1 + ONi!1 / 360) ! Number of Settled Sharesi x VWAPi
where "Number of Settled Sharesi"
means the number of Shares held by
Party A or the Hedge Subsidiary as a
hedge of this Transaction the sale
of which is settled by Party A or
the Hedge Subsidiary on the relevant
day of determination, "VWAPi" means
the modified volume-weighted average
per-Share price as determined by
means of the Bloomberg service on
the relevant day for trades in
Shares effected on the third
Exchange Business Day prior to such
day and adjusted by Party A to (i)
include commissions which shall not
exceed USD 0.04 per Share; (ii)
exclude the first trade in the
Shares effected on the Exchange on
the relevant day; and (iii) exclude
all trades in the Shares effected on
the Exchange within 60 minutes of
the close of trading on the Exchange
on such day, "SA0" means the Daily
Settlement Amount determined in
respect of the first day of the
relevant Disposition Period, "SAi"
means the Daily Settlement Amount
determined in respect of the
relevant day, "SAi!1" means the
Daily Settlement Amount determined
in respect of the immediately
preceding day, and "ONi!1" means the
Overnight Rate in effect as of the
day immediately preceding the
relevant day.
The Daily Settlement Amount
determined in respect of the Final
Settlement Date shall be the Final
Settlement Amount. For purposes of
giving effect to the foregoing,
"Number of Settled Sharesi" and
"VWAPi" shall be deemed to be zero
on any day in the Disposition Period
which is not an Exchange Business
Day.
If the Final Settlement Amount is a
Zero Settlement Amount, Party A or
the Hedge Subsidiary shall deliver
to Party B (1) the portion of the
Relevant Share Number remaining
after the Zero Settlement Amount is
reached (the "Unsold Shares"), and
(2) the absolute value of the Final
Settlement Amount, in USD, on or
before the Net Share Settlement
Date. If the Final Settlement Amount
is positive, Party A shall determine
a number of Shares in accordance
with the following formula:
Final Settlement Amount / Closing Price
where "Closing Price" is the closing
price of the Shares as reported by
the Exchange on the Final Settlement
Date. Party B shall deliver to Party
A Shares equal in number to the
number of Shares yielded by the
foregoing formula on or before the
Net Share Settlement Date. If within
ten Business Days after the Final
Settlement Date, Party A sells all
or a portion of the Shares (if any)
delivered to Party A by Party B
pursuant to this Net Share
Settlement provision (such Shares
being the "Settlement Shares") and
the net proceeds received by Party A
upon the sale of such Settlement
Shares is less than the Final
Settlement Amount (or if less than
all of such Settlement Shares are
resold, the applicable pro rata
portion of such Settlement Amount),
shall pay in USD or additional
Shares such difference (the
"Make-whole Amount") to Party A
within one Business Day following
the date on which Party A's notice
to Party B of the Make-whole Amount
becomes effective in accordance with
Section 12 of the ISDA Agreement. In
the event Party B elects to pay the
Make-whole Amount in additional
Shares, Party B shall deliver to
Party A the number of whole Shares
(the "Make-whole Shares") equal to
(i) the Make-whole Amount divided by
(ii) the closing price of the Shares
as reported by the Exchange on the
Exchange Business Day immediately
prior to delivery of such Shares. If
within ten Business Days after the
delivery of Make-whole Shares to
Party A, Party A sells all or any
portion of such Shares and the net
proceeds received by Party A are
less than the Make-whole Amount (or
if less than all the Make-whole
Shares are resold, the applicable
pro rata portion of the Make-whole
Amount), the provisions set forth
above with respect to payment in USD
or Shares based on the Settlement
Amount, including the make-whole
requirements, shall apply.
Net Share
Settlement Date: The second Clearance System
Business Day following the Final
Settlement Date, subject to
adjustment in accordance with
Section 6.2 of the Equity
Definitions in the event of the
occurrence of a Settlement
Disruption Event.
Notice: In the event Party B intends to effect a settlement in respect of
any Optional Termination Date, Party B shall provide Party A with prior written
notice of its intention to exercise its rights to so settle this Transaction and
such notice must become effective in accordance with Section 12 of the ISDA
Agreement on or before the 3rd day preceding the Optional Termination Date in
respect of which Party B intends to effect settlement. If Party B's notice
becomes effective after such 3rd day, Party B shall be deemed to have elected to
effect a settlement in respect of the next following Optional Termination Date;
provided, however, that no such notice may be given (i) on any day during the
Accumulation Period; or (ii) following the occurrence of an Event of Default,
Potential Event of Default or Termination Event (as such terms are defined in
the ISDA Agreement) or following the designation of an Early Termination Date in
respect of this Transaction in accordance with Section 6 of the ISDA Agreement.
Party B shall indicate in such notice whether settlement will be effected by way
of Physical Settlement or Net Share Settlement. In the context of any partial
settlement, Party B shall specify the number of Shares in respect of which
settlement will be effected. If such notice does not specify the manner of
settlement, Physical Settlement shall apply and, if such notice does not specify
the number of Shares in respect of which settlement will be effected, Party B
shall be deemed to have elected to effect settlement in respect of the full
Number of Shares then in effect. In the context of the Termination Date, if
Party B wishes to effect settlement by way of Net Share Settlement, Party B
shall so notify Party A and such notice must become effective in accordance with
Section 12 of the ISDA Agreement on or before the 3rd day prior to the
Termination Date, failing which Party B - shall be deemed to have elected to
utilize Physical Settlement.
Inability to Sell/Purchase Shares: If, in the context of Net Share
Settlement, any cash settlement election, or any other provision hereof which,
in order to give effect thereto, requires Party A to sell Shares (other than to
Party B), Party A is unable to effect a sale by any reasonably economic, viable
or practicable means, including a private transaction, of the requisite number
of Shares on or before the Final Trading Date for purposes of determining the
Final Settlement Amount for any reason including, without limitation, because
such Shares have a prospectus delivery requirement and Party B is unable to
provide Party A with a current prospectus, then, Party B shall be deemed to have
elected Physical Settlement with respect to the unsold portion of such requisite
number of Shares, and Party B shall, within one Business Day of the date it is
advised by Party A that a sale of all such Shares was not effected, repurchase
the unsold Shares for USD in an amount per Share that, when combined with all
amounts received by Party A for all effected sales of Shares, results in Party A
receiving an amount equal to the amount Party would have received had Physical
Settlement been elected. If, in the context of Physical Settlement or the
application of the Registration of Shares provision or any other provision of
this Confirmation which, in order to give effect thereto, requires delivery of
Shares to Party B by Party A, Party B is unable, due to the application of
applicable law, at the relevant time to take delivery of such Shares, a
Termination Event shall be deemed to have occurred for purposes of the ISDA
Agreement and in respect of which (i) Party B shall be the Affected Party, (ii)
this Transaction shall be the only Affected Transaction, (iii) and the payment
measure shall be Loss (as such terms are defined in the ISDA Agreement).
Good Delivery: Any party required to deliver Shares hereunder shall
transfer good title to such Shares, and such Shares shall be freely transferable
(together with any prospectus required by applicable law) and free and clear of
any liens, charges, claims and encumbrances. Delivery shall be effected by
book-entry transfer of the Shares to an account with The Depository Trust
Company (the "Clearance System") in the name of the recipient as is designated
by the recipient.
Dividends: An amount equal to each cash
dividend the record date of which
precedes the Termination Date, or,
if applicable, the Extension Date or
any further deferral thereof and
which is received by Party A or the
Hedge Subsidiary in respect of
Shares held by Party A or the Hedge
Subsidiary to hedge this Transaction
shall be paid to Party B on or
before the second Business Day
immediately following the date of
receipt of such cash dividend by
Party A or the Hedge Subsidiary.
IV Optional Extension
In the event that, due to operation of any state or federal securities
law then in effect in the United States of America and which is
applicable to Party B, as of the Termination Date, Party B believes, in
good faith and in reliance upon a written, reasoned legal opinion of
its external legal counsel, that it is restricted from purchasing
Shares from Party A in an amount equal to the Number of Shares, Party B
shall so notify Party A on or before 1:00 p.m. (New York time) on the
Termination Date and shall specify the basis of the prohibition. If
requested by Party A, Party B shall also provide to Party A a copy of
the legal opinion upon which Party B is relying within three Business
Days of the date on which Party A's request becomes effective in
accordance with Section 12 of the ISDA Agreement. In such event, the
Termination Date of this Transaction shall be the Extension Date and
settlement of each party's respective obligations (as provided for
herein) shall be deferred to such date.
In the event that as of the Extension Date, Party B believes, in good
faith and in reliance upon a written, reasoned legal opinion of its
external counsel (a copy of which shall be provided to Party A upon
Party A's request) that it remains restricted from purchasing the
requisite number of Shares it shall so notify Party A and Party A may,
at its option, grant a further postponement of the Termination Date to
a mutually agreed upon settlement date or elect to terminate this
Transaction. If Party A elects to terminate this Transaction, Party A
shall so notify Party B and Party B shall, on or before the first
Business Day following the date on which Party A's termination notice
becomes effective (the "Termination Election Date"), elect to effect
settlement either by way of cash settlement or Net Share Settlement
(failing which Party B shall be deemed to have elected cash
settlement).
Where Party A elects to terminate this Transaction and Party B has
elected cash settlement, on the first Exchange Business Day following
the Termination Election Date (the "Commencement Date"), Party A or the
Hedge Subsidiary shall commence selling the Shares comprising its, or
the Hedge Subsidiary's, hedge of this Transaction and shall determine
the Final Settlement Amount as defined in the Net Share Settlement
provision above except that the Final Trading Date shall be the earlier
of (1) the date on which Party A, or the Hedge Subsidiary, has effected
transactions on the Exchange by which it has completed the sale of the
Relevant Share Number, or (2) the 90th calendar day following the
Commencement Date. If the Final Settlement Amount determined in respect
of the Final Settlement Date is negative, Party A shall pay to Party B
the absolute value of such amount on the Final Settlement Date. If such
amount is positive, Party B shall pay to Party A such amount on the
first Business Day following the date on which Party A's notice to
Party B that such Final Settlement Amount is owing by Party B becomes
effective in accordance with Section 12 of the ISDA Agreement.
Where Party A elects to terminate and Party B has elected Net Share
Settlement, the terms of the Net Share Settlement provision set out
above shall apply; provided, however, that if (i) the Final Settlement
Amount is a Zero Settlement Amount, (ii) there remains Unsold Shares,
and (iii) Party B remains at such time, subject to the purchase
restrictions contemplated above, Party B shall be deemed to have
elected cash settlement in which case Party A shall continue selling
the Unsold Shares (if any) and the preceding paragraph of this Section
shall apply.
V Decline in Share Price
In the event that on any Exchange Business Day during the Term of this
Transaction (other than the Accumulation Period) the closing price per
Share as quoted by the Exchange on such day is USD 12.00 or less, Party
A may upon notice to Party B, given in accordance with Section 12 of
the ISDA Agreement, and provided an Event of Default or Termination
Event has not occurred with respect to Party A or is then continuing
(and which, in the context of a Termination Event, renders this
Transaction an Affected Transaction) and provided an Early Termination
Date has not been designated in respect of this Transaction, elect to
terminate this Transaction in its entirety. Party B shall, on or before
the first Business Day following the date on which Party A's
termination notice becomes effective, notify Party A of the manner in
which this Transaction shall be settled which, for purposes hereof, may
include cash-settlement as provided for in the Optional Extension
provision set out above (and, failing such notification, Party B shall
be deemed to have elected cash settlement). If Party B elects cash
settlement as provided for in such Optional Extension provision or Net
Share Settlement, for purposes of giving effect to such provisions, the
commencement of the Disposition Period shall be the first Exchange
Business Day following the date on which Party B's election notice
became effective (the "Settlement Election Date"). If Party B elects
Physical Settlement, settlement shall be effected on the third Business
Day following the Settlement Election Date in accordance with, and
subject to, the Physical Settlement provision set out above.
If, in the context of (i) a cash-settlement election, the Final
Settlement Date (as provided for in the Optional Extension provision),
(ii) in the context of a Physical Settlement election, the Settlement
Election Date, or (iii) in the context of a Net Share Settlement
election, the Net Share Settlement Date (each such date being a
"Trigger Date"), is not an Optional Termination Date, then, in addition
to any other amount then payable by Party B, Party B shall also pay to
Party A, on such date, the Break Funding Amount. For purposes, hereof,
"Break Funding Amount" means an amount equal to the present value
(discounted at the Discount Rate defined below and determined by the
Calculation Agent in a commercially reasonable manner) of the product
of (1) the difference between the Floating Rate Option applicable to
the then current Calculation Period and the Discount Rate, (2) the
Number of Shares, (3) the Initial Price, and (4) a fraction the
numerator of which is the number of days in the period commencing on
and including the relevant Trigger Date, to but excluding the next
Optional Termination Date and the denominator of which is 360.
"Discount Rate" means the appropriate interpolated USD-LIBOR-BBA rate
determined by the Calculation Agent as of the Final Settlement Date.
VI Adjustments
For purposes of Article 9 of the Equity Definitions, any reference to the term
"Share Swap Transaction" shall be deemed to mean "Forward Purchase Transaction";
provided, however, that "Potential Adjustment Event" shall exclude the
declaration or payment of any cash dividends in respect of the Shares.
Method of Adjustment: Calculation Agent Adjustment
Calculation Agent: Party A
VII. Extraordinary Events
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Alternative Obligation
Nationalization: Cancellation and Payment
VIII. Regulatory Event
If during the Term of this Transaction, Party B effects any action, including
any action with respect to its capital structure, the result of which is that
Party A, or the Hedge Subsidiary, then owns more of any class of outstanding
voting shares of Party B than is permitted by the Bank Holding Company Act of
1956, as amended, or other federal legislation (the "Regulatory Limit"), then,
Party B shall be deemed to have elected to partially settle this Transaction and
the extent to which the Number of Shares exceeds the Regulatory Limit shall be
the Relevant Share Number for purposes of the Settlement Terms set out above.
For purposes of giving effect to the foregoing, the date on which such partial
settlement shall be effected shall be the first Business Day following the date
on which Party A's notice to Party B that Party A is then in breach of the
Regulatory Limit becomes effective in accordance with Section 12 of the ISDA
Agreement. If on such date Party B believes in good faith that it is restricted
from purchasing Shares from Party A or the Hedge Subsidiary, Party B shall so
notify Party A and, in such event, Party A shall be deemed to have elected to
effect such partial settlement by way of cash-settlement as provided for in the
Optional Extension provision set out above and, for purposes of giving effect
thereto, the reference therein to "Number of Shares" shall be deemed a reference
to Relevant Share Number and "Commencement Date" shall be deemed to the first
Exchange Business Day following the date on which Party A's notice to Party B of
Party A's breach of the Regulatory Limit becomes effective as aforesaid. If the
Final Settlement Date (as provided for in the Optional Extension provision) is
not an Optional Termination Date, then, in addition to any other amount then
payable by Party B, Party B shall also pay to Party A, on such date, the Break
Funding Amount. For purposes, hereof, "Break Funding Amount" means an amount
equal to the present value (discounted at the Discount Rate defined below and
determined by the Calculation Agent in a commercially reasonable manner) of the
product of (1) the difference between the Floating Rate Option applicable to the
then current Calculation Period and the Discount Rate, (2) the Relevant Share
Number, (3) the Initial Price, and (4) a fraction the numerator of which is the
number of days in the period commencing on and including the Final Settlement
Date to but excluding the next Optional Termination Date and the denominator of
which is 360. "Discount Rate" means the appropriate interpolated USD-LIBOR-BBA
rate determined by the Calculation Agent as of the Final Settlement Date.
IX. Registration of Shares.
Notwithstanding any other provision hereof (including, without limitation, any
election of Net Share Settlement by Party B under "Notice" above, but excluding
any election by Party B of Net Share Settlement or cash settlement under
"Optional Extension" or "Decline in Share Price" above), Physical Settlement
shall apply unless the following conditions have been satisfied: (i) on the
Optional Termination Date or Termination Date, as the case may be, a
registration statement (a "Registration Statement") naming as selling
shareholders Party A and the Hedge Subsidiary and covering the public resale of
all Shares held by Party A or the Hedge Subsidiary to hedge this Transaction and
all Shares deliverable by Party B to Party A pursuant to the Net Share
Settlement provisions hereof (collectively, the "Registrable Shares") shall have
been filed with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933 (the "Securities Act"), and no stop
order shall be in effect with respect to such Registration Statement; (ii) a
printed prospectus relating to the Registrable Shares (including any prospectus
supplement thereto and amendments thereof, a "Prospectus") shall have been
delivered to Party A and the Hedge Subsidiary in such quantities as Party A
shall have requested no later than the Optional Termination Date or Termination
Date; (iii) the Registration Statement and the Prospectus shall be in form and
substance reasonably satisfactory to Party A; (iv) no later than the Exchange
Business Day before the Optional Termination Date or Termination Date, Party A
and Party B shall have entered into an agreement (a "Transfer Agreement") in
connection with the public resale of the Registrable Shares by Party A and the
Hedge Subsidiary substantially similar to underwriting agreements customary for
underwritten offerings of equity securities, in form and substance satisfactory
to Party A, providing for (without limitation): indemnification of, and
continuation in connection with the liability of, Party A and the Hedge
Subsidiary, the delivery of customary opinions of counsel and accountants
"comfort letters", the continuous effectiveness of the Registration Statement
until the fortieth day after the Optional Termination Date or Termination Date,
or if earlier, such time as all Registrable Shares have been resold pursuant
thereto and all expenses in connection with such resale, including all
registration costs and all fees and expenses of counsel for each of Party A and
Party B, have been paid by Party B; (v) Party A and the Hedge Subsidiary shall
have been afforded a reasonable opportunity to conduct a due diligence
investigation with respect to Party B customary in scope for underwritten
offerings of equity securities, and acceptance of the results of such
investigation by Party A and the Hedge Subsidiary cannot be unreasonably
withheld; (vi) all conditions to the obligations of each party under the
Transfer Agreement shall have been satisfied or waived no later than the
Optional Termination Date or Termination Date, and (vii) the representations and
warranties of Party B set forth herein and in the Transfer Agreement shall be
true and correct on the date of delivery of Registrable Shares to purchasers of
such Shares as though made at such time, and Party B shall have performed all
its obligations set forth herein and in such Transfer Agreement to be performed
by such time.
If, in the context of the Optional Extension provision or Decline in Share Price
provision, Party B has elected to cash-settle the Transaction or in the event
Party B has elected Net Share Settlement and Party B is required to deliver
Shares to Party A and any condition specified in items (i) - (vii) of the
previous paragraph shall not have been satisfied in the manner and at the times
specified therein, Party A may determine to (a) have some or all Registrable
Shares sold in one or more transactions exempt from the registration
requirements of the Securities Act, (b) extend this Transaction in order to give
Party B more time to satisfy such conditions, or (c) elect Physical Settlement.
If Party A chooses the action set forth in clause (a) above, Party B shall pay
all costs of such sales by Party A, including, without limitation, any
applicable sales or purchase taxes, transfer taxes and commissions. If Party A
chooses the action set forth in clause (b) above, the Calculation Agent will in
its reasonable discretion adjust the terms hereof to take into account any
additional costs to Party A and the Hedge Subsidiary of such extension. For the
purposes of this paragraph, references in items (i) - (vii) of the previous
paragraph to "the Optional Termination Date or Termination Date" shall be deemed
to be references to the Termination Election Date or the Settlement Election
Date, as the case may be.
2. Fee
Party B will, on or before November 12, 1999, pay to Party A a fee in the amount
of USD 175,000 and the payment thereof by Party B shall be a condition precedent
to Party A's obligations hereunder.
3. Additional Representations.
Each party will be deemed to represent to the other on the date of this
Confirmation that, with respect to this Transaction (1) It is entering into this
Transaction for its own account and not with a view to transfer, resale or
distribution, (2) it is an "accredited investor" within the meaning of Rule
501(a) of Regulation D under the Securities Act and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of this Transaction, and (3) it understands and
acknowledges that this Transaction may involve the purchase or sale of a
"security" as defined in the Securities Act and the securities laws of certain
states, and that any such security has not been registered under the Securities
Act or the securities laws of any state and, therefore, may not be sold,
pledged, hypothecated, transferred or otherwise disposed of unless such security
is registered under the Securities Act and any applicable state securities law,
or an exemption from registration is available.
4. Additional Party B Representation
Party B represents to Party A that it is entering into this Transaction
in connection with its Share repurchase program which has been approved by its
board of directors and publicly announced, solely for the purposes stated in
such board resolution and public disclosure.
5. Additional Agreement
Each party agrees that it will comply, in connection with this
Transaction and all related or contemporaneous sales and purchases of Shares,
with the applicable provisions of the Securities Act, the Securities Exchange
Act of 1934 (the "Exchange Act"), and the rules and regulations thereunder,
including, without limitation, Rules 10b-5 under the Exchange Act, provided that
each party shall be entitled to rely conclusively on any information
communicated by the other party concerning such other party's market activities.
Party A represents to Party B and agrees that, in effecting the purchase
transactions referred to opposite "Accumulation Period", above, Party A shall
make bids for and purchases of the Shares only in accordance with the price,
volume, timing, and method of bidding and purchasing constraints set forth in
Rule 10b-18 under the Exchange Act, as if Party A were the issuer of the Shares
and wished to avail itself of the protections afforded by that rule.
6. Miscellaneous
Transfer: Party A may without the consent of Party B assign and delegate
its rights and obligations hereunder, in whole or in part, to any U.S.
subsidiary of The Bank of Nova Scotia effective upon delivery to Party B of a
guarantee by The Bank of Nova Scotia; provided that, at the time of such
proposed assignment (i) no Termination Event, Event of Default or Potential
Event of Default as defined in this Agreement shall have occurred and be
continuing with respect to Party A, (ii) no Early Termination Date shall have
been designated or shall have occurred, (iii) Party B will not, as a result of
such transfer, be required to pay to the transferee on the next succeeding
Scheduled Payment Date (as defined in the ISDA Agreement) an amount in respect
of an Indemnifiable Tax under Section 2(d)(i)(4) of the ISDA Agreement (except
in respect of interest under Section 2(e)) greater than the amount in respect of
which Party B would have been required to pay to Party A in the absence of such
assignment, (iv) the assignee will not, as a result of such transfer, be
required to withhold or deduct on account of a Tax under Section 2(d)(i) of the
ISDA Agreement (except in respect of interest under 2(e)) on the next succeeding
Scheduled Payment Date an amount in excess of that which Party A would have been
required to so withhold or deduct on the next succeeding Payment Date in the
absence of such assignment unless the assignee would be required to make
additional payment pursuant to Section 2(d)(4) of the ISDA Agreement
corresponding to such excess, and (v) an Event of Default or Termination Event
will not occur as a result of such assignment. With respect to the results
described in Clauses (iii) and (iv) above, Party A will cause the assignee to
make, and Party B will make, such reasonable Payer Tax Representations and Payee
Tax Representations as may be reasonably requested by the other party in order
to permit such other party to determine that such result will not occur after
such transfer. Party A will cause any assignee to deliver opinions of counsel in
the form and substance reasonably satisfactory to Party B and to cause such
assignee to enter into any legally required assumption or other similar
agreement, in each case at the expense of Party A. Any assignment permitted by
the foregoing sentences will not constitute an event or condition described in
Sections 5(a)(viii) and 5(b)(iv) of the ISDA Agreement.
Wire Instructions: Party A: The Bank of Nova Scotia, New York Agency One
Liberty Plaza, 165 Broadway, 26th Floor New York, New York SWIFT Code: NOSCUS33
ABA# 0260-02532 Account No.: 6027-36 Attention: IBD Derivative Products
Party B:
(please provide)
7. Offices
(a) The Office of Party A for this Transaction is New York; and
(b) The Office of Party B for this Transaction is Hammond,
Indiana.
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us or by sending to us a letter or facsimile
substantially similar to this letter, which letter or facsimile sets forth the
material terms of the Transaction to which this Confirmation relates and
indicates agreement to those terms.
Yours truly,
SCOTIA CAPITAL (USA) INC.
By:____________________________
Name:
Title:
Confirmed as of the date first above written:
NiSOURCE INC.
By:__________________________________
Name: Stephen P. Adik
Title: Senior Executive Vice President,
Chief Financial Officer and
Treasurer