EXHIBIT 1
NIPSCO CAPITAL MARKETS, INC.
$75,000,000
____% QUARTERLY DEBT CAPITAL SECURITIES
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(Junior Subordinated Deferrable Interest Debentures, Series A)
UNDERWRITING AGREEMENT
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January __, 1996
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
As Representatives of the several Underwriters
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs:
NIPSCO Capital Markets, Inc., an Indiana corporation (the "Company") and a
wholly-owned subsidiary of NIPSCO Industries, Inc., an Indiana corporation
("Industries"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters"), an aggregate of $75,000,000 principal amount of the _____%
Quarterly Debt Capital Securities of the Company (Junior Subordinated Deferrable
Interest Debentures, Series A) specified above (the "Securities") in the
respective principal amounts designated in Schedule I hereto.
1. The Company and Industries jointly and severally represent and warrant
to, and agree with, each of the several Underwriters that:
(a) A registration statement on Form S-3 in respect of the Securities has
been filed with the Securities and Exchange Commission (the "Commission");
such registration statement in the form heretofore delivered to you has
been declared effective by the Commission; no other document with respect
to such registration statement or document incorporated by reference
therein has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of such registration statement has been issued
and no proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), being hereinafter called a "Preliminary
Prospectus"; the various parts of such registration statement, including
all exhibits thereto but excluding Form T-1 and including (i) the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of
the registration statement at the time it was declared effective and (ii)
the documents incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration statement
became effective, each as amended at the time such part of the registration
statement became effective, being hereinafter called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to Rule
424(b) under the Act, being hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the time of filing of such Preliminary Prospectus or Prospectus, as
the case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of Industries filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to Industries or the Company by any
Underwriter through you expressly for use therein;
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(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus, or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to Industries or the
Company by any Underwriter through you expressly for use therein;
(d) Giving effect to the interpretations of the requirements of the Act
reflected in the Company's letter requesting "no-action" submitted to the
staff of the Commission (the "Staff"), dated April 27, 1992, as
supplemented by letters dated July 9, 1992 and September 21, 1992 (the "No-
Action Request") and the Staff's response thereto dated September 25, 1992
(the "Staff Response"), the Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects, to the
requirements of the Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to Industries or the Company by any
Underwriter through you expressly for use therein;
(e) Neither Industries nor any of its subsidiaries has sustained since the
date of the latest audited consolidated
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financial statements included or incorporated by reference in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any material change in the
consolidated share capital or long-term debt of Industries and its
subsidiaries or the consolidated share capital or long-term debt of either
the Company or Northern Indiana Public Service Company, a wholly-owned
subsidiary of Industries ("Northern Indiana"), or any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company, Northern
Indiana or Industries and its other subsidiaries, otherwise than as set
forth or contemplated in the Prospectus;
(f) Each of Industries, Northern Indiana and the Company has good and
marketable title in fee simple to such of its fixed assets as are real
property and good and marketable title to its other assets reflected in the
most recent consolidated balance sheet incorporated by reference in the
Prospectus, except properties and assets sold or otherwise disposed of in
the ordinary course of business after the date of said balance sheet,
subject to no mortgages, liens, charges or encumbrances of any kind
whatsoever other than liens of current mortgages and minor defects and
encumbrances customarily found in the case of properties of like size and
character which do not impair the use of such properties by Industries,
Northern Indiana or the Company, respectively;
(g) Each of Industries, Northern Indiana and the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Indiana, with respective power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction; and each other subsidiary of
Industries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation;
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(h) Each of Industries, Northern Indiana and the Company has an authorized
capitalization as set forth in the Prospectus; all of the issued capital
shares of Industries and each wholly-owned subsidiary of Industries have
been duly and validly authorized and issued and are fully paid and non-
assessable; and all of the issued common shares of Northern Indiana and all
the issued capital shares of the Company and each other subsidiary of
Industries (other than Northern Indiana, Elm Energy Recycling (UK) Ltd.
("Elm Energy"), Triumph Natural Gas, Inc. ("Triumph"), NESI Energy
Marketing, L.L.C. ("NESI Energy") and Analytic Systems Laboratories, Inc.
("Analytic Systems")) are owned directly or indirectly by Industries, free
and clear of all liens, encumbrances, equities or claims; and all capital
shares of Elm Energy Triumph, NESI Energy and Analytic Systems owned
directly or indirectly by Industries, which constitute a majority of each
such corporation's outstanding capital shares, are owned free and clear of
all liens, encumbrances, equities or claims;
(i) The Securities have been duly authorized and, when issued and delivered
pursuant to this Agreement, will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally binding
obligations of the Company entitled to the benefits provided by (i) the
Support Agreement, dated April 4, 1989, as amended as of May 15, 1989,
December 10, 1990 and February 14, 1991, between Industries and the Company
(the "Support Agreement"), which will be substantially in the form filed as
an exhibit to the Registration Statement and (ii) the Indenture to be dated
as of January __, 1996 (the "Indenture") among the Company, Industries and
Chemical Bank, as Trustee (the "Trustee"), under which the Securities are
to be issued, which will be substantially in the form filed as an exhibit
to the Registration Statement; the Indenture has been duly authorized and
duly qualified under the Trust Indenture Act and, when executed and
delivered by the Company, Industries and the Trustee, the Indenture will
constitute, and the Support Agreement has been duly authorized, executed
and delivered by each of Industries and the Company and constitutes, a
valid and legally binding instrument, enforceable against Industries and
the Company, as the case may be, in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities, the Support Agreement and
the Indenture will conform to the descriptions thereof in the Prospectus;
(j) Industries' obligations under the Support Agreement will rank prior to
the equity securities of Industries and equal with all other unsecured and
unsubordinated
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indebtedness of Industries, whether now or hereafter outstanding;
(k) This Agreement has been duly authorized, executed and delivered by each
of Industries and the Company and constitutes a valid and legally binding
obligation, enforceable against Industries and the Company in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(l) None of Industries, Northern Indiana or the Company is in violation of
its Articles of Incorporation or By-Laws or in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any material contract, indenture, mortgage, loan agreement,
note, lease, or any other instrument to which it is a party or by which it
may be bound. The issue and sale of the Securities, the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Support Agreement and this Agreement, the compliance by Industries with all
of the provisions of the Securities, the Indenture, the Support Agreement
and this Agreement, and the consummation of the transactions herein and
therein contemplated, will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Industries or any of its subsidiaries is a
party or by which Industries or any of its subsidiaries is bound or to
which any of the property or assets of Industries or any of its
subsidiaries is subject, nor will any such action result in any violation
of the provisions of the Articles of Incorporation or By-laws of Industries
or any of its subsidiaries, or any statute, rule or regulation, or any
order of any court or governmental agency or body having jurisdiction over
Industries or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by Industries and the
Company of the transactions contemplated by this Agreement, the Support
Agreement or the Indenture, except the registration under the Act of the
Securities, such as have been obtained under the Trust Indenture Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Securities by the several
Underwriters;
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(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which Industries or any of its
subsidiaries is a party or to which any property of Industries or any of
its subsidiaries is subject which, if determined adversely to Industries or
any of its subsidiaries, would individually or in the aggregate have a
material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of Industries and its
subsidiaries; and, to the best of each of Industries' and the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(n) The accountants who have certified certain financial statements of
Industries and its subsidiaries included or incorporated by reference in
the Registration Statement and Prospectus are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(o) Except for Industries, as and to the extent described in the
Prospectus, no person or corporation which is a "holding company" or a
"subsidiary of a holding company" within the meaning of such terms as
defined in the Public Utility Holding Company Act of 1935, as amended (the
"1935 Act") directly or indirectly owns, controls or holds with power to
vote 10% or more of the outstanding voting securities of Northern Indiana;
Industries is exempt from all provisions of the 1935 Act except Section
9(a)(2); and neither Northern Indiana nor the Company is a "holding
company" as so defined;
(p) The Company will apply the proceeds of the sale of the Securities in
the manner described in the Prospectus and in accordance with the
provisions of Rule 3a-5 under the Investment Company Act of 1940, as
amended (the "1940 Act");
(q) The Commission has issued an order (the "Order") exempting the Company
from all of the provisions of the 1940 Act; the Order is in full force and
effect; and the Company will continue to comply with the terms and
conditions of the Order, or otherwise remain exempt from all of the
provisions of the 1940 Act, so long as any Securities are outstanding;
(r) The Prospectus accurately describes the most restrictive of the
existing limitations on the payment of dividends by Northern Indiana on its
common shares held by Industries;
(s) Each of Industries, Northern Indiana and the Company has statutory
authority, franchises and consents free from
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burdensome restrictions and adequate for the conduct of the business in
which it is engaged;
(t) Industries, the Company and each other subsidiary of Industries is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-
198, An Act Relating to Disclosure of Doing Business with Cuba, and if
Industries, the Company or any other subsidiary of Industries commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba after the date the Registration Statement becomes
or has become effective with the Commission or with the Florida Department
of Banking and Finance (the "Department"), whichever date is later, or if
the information reported in the Prospectus, if any, concerning business
conducted with Cuba or with any person or affiliate located in Cuba by
Industries, the Company or any other subsidiary of Industries changes in
any material way, Industries or the Company will provide the Department
notice of such business or change, as appropriate, in a form acceptable to
the Department;
(u) None of Industries, Northern Indiana or the Company has any material
contingent liability which is not disclosed in the Prospectus; and
(v) The financial statements included or incorporated by reference in the
Prospectus present fairly the financial position of Industries and its
subsidiaries as at the dates indicated and the results of their operations
for the periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis and, with respect to financial statements included in
periodic reports filed by Industries pursuant to Sections 13 or 15(d) of
the Exchange Act with the Commission on and after September 25, 1992,
contain the information requested by the Staff in the Staff Response to be
so included; and the supporting schedules included or incorporated by
reference in the Prospectus present fairly the information required to be
stated therein.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to the several Underwriters, and the Underwriters
agree, severally and not jointly or jointly and severally, to purchase from the
Company, at a purchase price of _____% of the principal amount thereof, plus
accrued interest, if any, from January __, 1996 to the Time of Delivery
hereunder, the Securities.
3. Upon the authorization by you of the release of the Securities, the
Underwriters propose to offer their respective
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portions of the Securities for sale upon the terms and conditions set forth in
the Prospectus.
4. Securities to be purchased by the several Underwriters hereunder, in
definitive form, and in such authorized denominations and registered in such
names as each Underwriter may request through you upon at least forty-eight
hours' prior notice to the Company, shall be delivered by or on behalf of the
Company to you for the respective accounts of the several Underwriters, against
payment by the several Underwriters or on their behalf of the purchase price
therefor by certified or official bank check or checks, payable to the order of
the Company in New York Clearing House funds, all at the office of Morgan
Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036, at 10:00
A.M., New York City time, on January __, 1996 or at such other time and date as
you and the Company may agree upon in writing, such time and date being herein
called the "Time of Delivery." Such certificates will be made available for
checking and packaging at least twenty-four hours prior to the Time of Delivery
at the office of the Trustee located at 450 W. 33rd St., New York, New York
10001.
5. Industries and the Company jointly and severally agree with each of
the several Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus prior to the Time of Delivery which shall be disapproved by you
promptly after reasonable notice thereof; to advise you, promptly after it
receives notice thereof, of the time when the Registration Statement, or
any amendment thereto, has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish you with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by
Industries or the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities; to advise you,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any
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proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or Prospectus
or for additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such qualification,
to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Securities, provided that in connection therewith
neither Industries nor the Company shall be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction;
(c) To furnish you copies of the Prospectus in such quantities as you
may from time to time reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering
or sale of the Securities and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or the
Trust Indenture Act, to notify you and upon your request to file such
document and to prepare and furnish without charge to you and to any dealer
in securities as many copies as you may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which
will correct such statement or omission or effect such compliance; and in
case you are required to deliver a prospectus in connection with sales of
any of the Securities at any time nine months or more after the time of
issue of the Prospectus, upon your request but at your expense, to prepare
and deliver to each Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of the
Act;
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(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), earning statements of Industries and its subsidiaries and
of the Company (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including at the option of Industries Rule 158);
(e) During the period beginning from the date hereof and continuing to
and including the earlier of (i) the termination of trading restrictions on
the Securities, as notified to the Company by you, and (ii) the Time of
Delivery, not to offer, sell, contract to sell or otherwise dispose of any
debt securities of Industries or the Company which mature more than one
year after the Time of Delivery and which are substantially similar to the
Securities, without your prior written consent;
(f) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year Industries' annual report (including a
balance sheet and statements of income, shareholders' equity and cash flow
of Industries and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each of
the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of Industries and its
subsidiaries for such quarter in reasonable detail; and
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver
to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange on which the Securities or any class of
securities of Industries or the Company is listed; and (ii) such additional
information concerning the business and financial condition of Industries
or the Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of Industries and its subsidiaries are consolidated in reports
furnished to Industries' shareholders generally or to the Commission).
6. The Company and Industries jointly and severally covenant and agree
with each of the several Underwriters that the Company will pay or cause to be
paid the following: (i) the fees, disbursements and expenses of Industries' and
the Company's
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counsel and accountants in connection with the registration of the Securities
under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the several Underwriters and dealers; (ii) the
cost of printing or producing this Agreement, the Indenture, the Blue Sky
Memorandum and any other documents in connection with the offering, purchase,
sale and delivery of the Securities; (iii) all expenses in connection with the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the several Underwriters in connection with such qualification and
in connection with the Blue Sky Memorandum; (iv) any fees charged by securities
rating services for rating the Securities; (v) the filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (vi) the cost of preparing the Securities;
(vii) the fees and expenses of the Trustee and any agent of the Trustee and the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities; (viii) the fees, disbursements and expenses of
counsel in connection with preparing the Indenture; (ix) any transfer taxes
payable in connection with the sale of the Securities to the several
Underwriters; and (x) all other costs and expenses incident to the performance
of their respective obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, Section 8 and Section 10 hereof, the several
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by any of them,
and any advertising expenses connected with any offers any of them may make.
7. The several obligations of the Underwriters hereunder shall be
subject, in their discretion, to the condition that all representations and
warranties and other statements of Industries and the Company herein are, at and
as of the Time of Delivery, true and correct, the condition that Industries and
the Company shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission; and
all
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requests for additional information on the part of the Commission shall
have been complied with to your reasonable satisfaction;
(b) Sonnenschein Nath & Rosenthal, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated the Time of Delivery,
with respect to the incorporation of Industries and the Company, this
Agreement, the Support Agreement, the validity of the Indenture, the
Securities, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them
to pass upon such matters;
(c) (i) Schiff Hardin & Waite, counsel for Industries and the
Company, shall have furnished to you their written opinion, dated the Time
of Delivery, in form and substance satisfactory to you, to the effect that:
(1) Each of Industries, Northern Indiana and the Company has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Indiana, with respective
power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus;
(2) Each of Industries, Northern Indiana and the Company has an
authorized capitalization as set forth in the Prospectus; all of the
issued capital shares of Industries and each wholly-owned subsidiary
of Industries have been duly and validly authorized and issued and are
fully paid and non-assessable; and all of the issued common shares of
Northern Indiana and all the issued capital shares of the Company and
each other subsidiary of Industries (other than Northern Indiana,
Elm Energy, Triumph, NESI Energy and Analytic Systems) are owned
directly or indirectly by Industries, free and clear of all liens,
encumbrances, equities or claims; and all capital shares of Elm
Energy, Triumph, NESI Energy and Analytic Systems owned directly or
indirectly by Industries, which constitute a majority of each such
corporation's outstanding capital shares, are owned free and clear of
all liens, encumbrances, equities or claims;
(3) Each of Industries, Northern Indiana and the Company has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
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business, so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each other subsidiary of
Industries has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect
of matters of fact upon certificates of officers of Industries or its
subsidiaries, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates);
(4) To the best of such counsel's knowledge, other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which Industries or any of its subsidiaries is
a party or to which any property of Industries or any of its
subsidiaries is subject which, if determined adversely to Industries
or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of Industries and its
subsidiaries; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(5) Each of this Agreement and the Support Agreement has been
duly authorized, executed and delivered by each of Industries and the
Company and constitutes a valid and legally binding obligation,
enforceable against each in accordance with its terms, subject, as to
enforcement, (a) in the case of both this Agreement and the Support
Agreement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and
to general equity principles and (b) in the case of this Agreement, to
any limitations by reason of public policy considerations on the
enforcement under certain circumstances of the indemnity provisions
thereof;
(6) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company entitled to the benefits provided
by the Support Agreement and the Indenture; and the Securities, the
Support Agreement and the Indenture conform to the descriptions
thereof in the Prospectus;
-14-
(7) The Indenture has been duly authorized, executed and
delivered by the Company and Industries and constitutes a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture
has been duly qualified under the Trust Indenture Act;
(8) The issue and sale of the Securities, the compliance by each
of the Company and Industries with all of the provisions of the
Securities, the Indenture, the Support Agreement and this Agreement,
and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach or
violation of any the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which Industries or
any of its subsidiaries is a party or by which Industries or any of
its subsidiaries is bound or to which any of the property or assets
of Industries or any of its subsidiaries is subject, nor will such
actions result in any violation of the provisions of the Articles of
Incorporation or the By-Laws of Industries or any of its subsidiaries,
or any statute, rule or regulation, or any order known to such counsel
of any court or governmental agency or body having jurisdiction over
Industries or any of its subsidiaries or any of their properties;
(9) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the
consummation by Industries or the Company of the transactions
contemplated by this Agreement, the Support Agreement or the
Indenture, except such as have been obtained under the Act and the
Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the several Underwriters;
(10) The documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by Industries or
the Company prior to the Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion), when they became effective or
-15-
were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder; and they have no reason to believe that any of
such documents, when such documents became effective or were so filed,
as the case may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or, in the case of other documents which were filed under
the Act or the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made when such documents were so filed, not
misleading;
(11) Giving effect to the interpretations of the requirements of
the Act reflected in the No-Action Request and the Staff Response, the
Registration Statement and the Prospectus and any further amendments
and supplements thereto made by Industries or the Company prior to the
Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of
the Act and the Trust Indenture Act and the rules and regulations
thereunder; they have no reason to believe that, as of its effective
date, the Registration Statement or any further amendment thereto made
by Industries or the Company prior to the Time of Delivery (other than
the financial statements and related schedules therein, as to which
such counsel need express no opinion) contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by Industries or the Company
prior to the Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
or that, as of the Time of Delivery either the Registration Statement
or the Prospectus or any further amendment or supplement thereto made
by Industries or the Company prior to the
-16-
Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and they
do not know of any amendment to the Registration Statement required to
be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus or
required to be described in the Registration Statement or the
Prospectus which are not filed or incorporated by reference or
described as required; and
(12) The statements made in the Prospectus which are stated
therein to have been made on the basis of the opinion of such counsel
have been reviewed by such counsel and, as to matters of law and
legal conclusions, are correct;
(ii) Schiff Hardin & Waite shall also have furnished to you a letter,
in form and substance satisfactory to you, authorizing the several
Underwriters to rely on their opinion filed as Exhibit 8 to the
Registration Statement as if such opinion were addressed to the several
Underwriters and dated the Time of Delivery;
(d) On the date of this Agreement and also at the Time of Delivery,
Arthur Andersen & Co. shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto;
(e) (i) Neither Industries nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been
any change in the consolidated share capital or long-term debt of
Industries or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of
operations of Industries and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus, the effect of which, in any such case
-17-
described in Clause (i) or (ii), is in your judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in the
manner contemplated in the Prospectus;
(f) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded any of Industries', Northern Indiana's or the
Company's debt securities by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of Industries', Northern Indiana's
or the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally or in trading in securities of Industries on the New
York Stock Exchange; (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities; or (iii) the outbreak or escalation of hostilities involving
the United States or the declaration by the United States of a national
emergency or war if the effect of any such event specified in this Clause
(iii) in your judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities on the terms and
in the manner contemplated in the Prospectus; and
(h) Each of Industries and the Company shall have furnished or caused
to be furnished to you at the Time of Delivery certificates of officers of
Industries and of the Company satisfactory to you as to the accuracy of the
representations and warranties of Industries and the Company herein at and
as of such Time of Delivery, as to the performance by Industries and the
Company of all of their respective obligations hereunder to be performed at
or prior to such Time of Delivery, as to the matters set forth in
subsections (a), (e) and (f) of this Section and as to such other matters
as you may reasonably request.
8. (a) Industries and the Company will jointly and severally indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration
-18-
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that neither the Company nor Industries shall be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information furnished to
Industries or the Company by any Underwriter through you expressly for use
therein.
(b) Each Underwriter, severally and not jointly or jointly and severally,
will indemnify and hold harmless Industries and the Company against any losses,
claims, damages or liabilities to which Industries or the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to Industries or the Company by such Underwriter through you expressly
for use therein; and will reimburse Industries or the Company, as the case may
be, for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to subsection (a) or (b) above, such person (the "indemnified party")
shall promptly notify the person or persons against whom such indemnity may be
sought (singly or collectively, as the case may be, the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may
-19-
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to subsection (a)
above and by Industries, in the case of parties indemnified pursuant to
subsection (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there shall be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this subsection (c), the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
-20-
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by Industries and the Company, on the one hand, and the Underwriters, on the
other, from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of Industries and the Company, on the one hand, and the Underwriters, on
the other, in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by Industries and the Company, on the one hand, and the Underwriters, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
Industries or the Company, on the one hand, or the Underwriters, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective principal amounts of Securities they have purchased
and not joint or joint and several. Industries and the Company, on the one
hand, and the Underwriters, on the other, agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or
-21-
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of Industries and the Company under this Section 8
shall be in addition to any liability which they may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of Industries and of the Company and to
each person, if any, who controls Industries or the Company within the meaning
of the Act.
9. The respective indemnities, agreements, representations, warranties
and other statements of Industries, the Company and the Underwriters, as set
forth in this Agreement or made by them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by any
Underwriter or any controlling person of such Underwriter, or Industries or the
Company, or any officer or director or controlling person of Industries or the
Company, and shall survive delivery of and payment for the Securities.
10. If for any reason the Securities are not delivered by or on behalf of
the Company as provided herein, Industries and the Company will reimburse the
Underwriters for all out-of-pocket expenses approved in writing by you,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Securities, but Industries and the Company shall then be under no further
liability to the Underwriters except as provided in Section 6 and Section 8
hereof.
11. All statements, requests, notices, and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to Morgan Stanley & Co. Incorporated at 1585 Broadway,
New York, New York 10036, Attention: Managing Director - Debt Syndicate
Department, facsimile no. (212) 761-0785; and if to Industries or the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of Industries or the Company set forth in the Registration Statement,
Attention: Treasurer, facsimile no. (219) 853-5352. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
-22-
12. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, Industries and the Company and, to the extent provided in
Section 8 and Section 9 hereof, the officers and directors of Industries and of
the Company and each person who controls Industries or the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from the
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
-23-
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Underwriter, on the one hand, and Industries and the Company, on the
other.
Very truly yours,
NIPSCO CAPITAL MARKETS, INC.
By: _____________________________
Name:
Title:
NIPSCO INDUSTRIES, INC.
By: _____________________________
Name:
Title:
Accepted as of the date hereof:
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
Acting severally on behalf of
themselves and the several
Underwriters named herein.
By: MORGAN STANLEY & CO. INCORPORATED
By: ______________________________
-24-
ANNEX I
-------
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
Industries within the meaning of the Act and the applicable published rules and
regulations thereunder, and as such certified public accountants, audit the
books of Industries and its subsidiaries;
(ii) In their opinion, the financial statements and schedules audited by
them and included or incorporated by reference in the Registration Statement or
the Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as applicable, and the
related published rules and regulations thereunder;
(iii) In their opinion, any of the unaudited selected financial
information with respect to the consolidated results of operations and financial
position of Industries and its subsidiaries for the five most recent fiscal
years that is included in the Prospectus or included or incorporated by
reference in Item 6 of Industries' Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after restatement
where applicable) in the audited consolidated financial statements for such five
fiscal years which were included or incorporated by reference in Industries'
Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of procedures
specified by the American Institute of Certified Public Accountants for a review
of interim financial information as described in Statement of Auditing Standards
No. 71, "Interim Financial Information" of the unaudited financial statements
and a reading of other information referred to below, inspection of the minute
books of Industries and its subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus,
inquiries of officials of Industries and its subsidiaries responsible for
financial and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that caused them to
believe that:
I-1
(A) any unaudited income statement data and balance sheet items
included or incorporated by reference in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements from
which such data and items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial statements included
or incorporated by reference in Industries' Annual Report on Form 10-K for the
most recent fiscal year or Quarterly Report on 10-Q for the most recent quarter;
(B) any unaudited pro forma condensed financial statements included or
incorporated by reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Act and the
published rules and regulations thereunder;
(C) as of a specified date not more than five days prior to the date
of such letter, except as occasioned by the declaration of dividends, the
repurchase of common shares or the purchase of outstanding long-term debt for
sinking fund purposes, there have been any changes in the consolidated share
capital (other than issuances of capital shares upon exercise of options and
share appreciation rights, amortization of compensation cost for restricted
shares, charges in components of foreign currency translation and upon
conversions of convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by reference in
the Prospectus) or any increase in consolidated long-term debt of Industries and
its subsidiaries, or any decreases in consolidated net assets or other items
specified by the Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the Prospectus, except in each
case for changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(D) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified date
referred to in Clause (C) there were any decreases in consolidated operating
revenues or operating income or the total or per share amounts of consolidated
net income or other items specified by the Underwriters, or any increases in any
items specified by the
I-2
Underwriters, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length specified by
the Underwriters, except in each case for increases or decreases which the
Prospectus discloses have occurred or may occur or which are described in such
letter.
(v) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (iv) above,
they have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Underwriters
which are derived from the general accounting records of Industries and its
subsidiaries, which appear in the Prospectus (excluding documents incorporated
by reference), or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Underwriters or in documents
incorporated by reference in the Prospectus specified by the Underwriters, and
have compared certain of such amounts, percentages and financial information
with the accounting records of Industries and its subsidiaries or analyses
prepared by management of the Company and have found them to be in agreement.
All references in this Annex I or the Prospectus shall be deemed to refer
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) as of the date of the amendment, supplement
or incorporation.
I-3
SCHEDULE I
Principal Amount
of Securities to
Underwriter be Purchased
- ----------- ----------------
Morgan Stanley & Co. Incorporated $
Goldman, Sachs & Co.
-----------
Total........................ $75,000,000
===========