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EXHIBIT 1
_________ Preferred Securities
CONSUMERS ENERGY COMPANY FINANCING II
(a Delaware trust)
____% Trust Originated Preferred Securities(SM) ("TOPrS(SM)")
(Liquidation Amount of $25 Per Preferred Security)
UNDERWRITING AGREEMENT
_______ __, 1997
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
as Representative of the several Underwriters
Xxxxxxx Xxxxx World Headquarters
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Consumers Energy Company Financing II (the "Trust"), a statutory business
trust organized under the Business Trust Act (the "Delaware Act") of the State
of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Sections
3801 et seq.), and Consumers Energy Company, a Michigan corporation (the
"Company" and, together with the Trust, the "Offerors") confirm their agreement
(the "Agreement") with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated ("Xxxxxxx Xxxxx") and each of the other Underwriters named
in Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Xxxxxxx Xxxxx is acting as representative (in such capacity,
Xxxxxxx Xxxxx shall
____________________
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Xxxxxxx Xxxxx & Co., Inc.
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hereinafter be referred to as the "Representative"), with respect to the sale
by the Trust and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of ____% Trust Originated Preferred
Securities (liquidation amount of $25 per preferred security) of the Trust
("Preferred Securities") set forth in said Schedule A except as may otherwise
be provided in the Pricing Agreement, as hereinafter defined. The Preferred
Securities will be guaranteed by the Company with respect to distributions and
payments upon liquidation, redemption and otherwise (the "Preferred Securities
Guarantee") pursuant to the Preferred Securities Guarantee Agreement (the
"Preferred Securities Guarantee Agreement"), dated as of _______ __, 1997,
between the Company and The Bank of New York, as trustee (the "Guarantee
Trustee"), and in certain circumstances described in the Prospectus, the Trust
will distribute Subordinated Debt Securities (as defined herein) to holders of
Preferred Securities. The Preferred Securities, the related Preferred
Securities Guarantee and the Subordinated Debt Securities are referred to
herein as the "Securities".
Prior to the purchase and public offering of the Preferred Securities by the
several Underwriters, the Offerors and the Representative, acting on behalf of
the several Underwriters, shall enter into an agreement substantially in the
form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Offerors and the Representative and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Preferred
Securities will be governed by this Agreement, as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Nos. 333-_____ and
333-_____) and a related preliminary prospectus for the registration under the
Securities Act of 1933, as amended (the "1933 Act") of up to a combination of
$120,000,000 of (i) Preferred Securities, (ii) guarantees of the Preferred
Securities, and (iii) the Subordinated Debt Securities, have filed such
amendments thereto, if any, and such amended preliminary prospectuses as may
have been required to the date hereof, and will file such additional amendments
thereto and such amended prospectuses as may hereafter be required. Such
registration statement at the time it initially became effective and the
prospectus constituting a part thereof (including, in each case, all documents
incorporated or deemed to be incorporated by reference therein pursuant to Item
12 of Form S-3 under the 1933 Act and the information, if any, deemed to be
part thereof pursuant to Rule 430A(b) of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations")), are hereinafter
referred to as the "Registration Statement" and the "Prospectus", respectively,
except that, if any revised prospectus (including a prospectus revised by
filing any
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documents pursuant to Section 13, 14 or 15 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution and delivery of this
Agreement) shall be provided to the Underwriters by the Offerors for use in
connection with the offering of the Preferred Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, the term "Prospectus" shall refer to such revised prospectus
so provided to the Underwriters for such use. All references in this Agreement
to financial statements and schedules and other information that is
"contained," "included" or "stated" in the Registration Statement or the
Prospectus (and all other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
that are or are deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the 1934 Act that is or is deemed to be, after the execution and delivery of
this Agreement, incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
the Pricing Agreement has been executed and delivered, and the Declaration (as
defined herein), the Indenture (as defined herein), and the Preferred
Securities Guarantee Agreement have been qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act"). The entire proceeds from the sale of
the Preferred Securities will be combined with the entire proceeds from the
sale by the Trust to the Company of its common securities (the "Common
Securities," and together with the Preferred Securities, the "Trust
Securities"), as guaranteed by the Company, to the extent set forth in the
Prospectus, with respect to distributions and payments upon liquidation and
redemption (the "Common Securities Guarantee" and together with the Preferred
Securities Guarantee, the "Guarantees") pursuant to the Common Securities
Guarantee Agreement (the "Common Securities Guarantee Agreement" and, together
with the Preferred Securities Guarantee Agreement, the "Guarantee Agreements"),
dated as of _______ __, 1997, between the Company and Guarantee Trustee, as
Trustee, and will be used by the Trust to purchase $___________ of ____%
subordinated deferrable interest debt securities (the "Subordinated Debt
Securities") issued by the Company. The Preferred Securities and the Common
Securities will be issued pursuant to the amended and restated declaration of
trust of the Trust, dated as of _______ __, 1997 (the "Declaration"), among the
Company, as Sponsor, [Xxxx X. Xxxxxx, Xxxxxx X. XxXxxx and Xxxxx X. Xxxxxx]
(the "Regular Trustees"), The Bank of New York, as property trustee (the
"Property Trustee"), and The Bank of New York (Delaware) (the "Delaware
Trustee," and, together with the Property Trustee and the Regular Trustees, the
"Trustees"), and the holders from time to time of undivided beneficial
interests in the assets of the
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Trust. The Subordinated Debt Securities will be issued pursuant to an
indenture, dated as of January 1, 1996 (the "Base Indenture"), between the
Company and The Bank of New York as trustee (the "Debt Trustee"), as amended
and supplemented, and the Second Supplemental Indenture to the Base Indenture,
dated as of _______ __, 1997 (the "Supplemental Indenture," and together with
the Base Indenture and any other amendments or supplements thereto, the
"Indenture"), between the Company and the Debt Trustee.
Section 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to
each Underwriter as of the date hereof and as of the date of the Pricing
Agreement (such latter date being hereinafter referred to as the
"Representation Date") as follows:
(i) At the time the Registration Statement becomes
effective and at the Representation Date, the Registration Statement will
comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the 1939 Act and the rules and regulations of
the Commission under the 1939 Act (the "1939 Act Regulations"), 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. The Prospectus, at each Representation
Date and at the Closing Time referred to in Section 2 hereof, will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Offerors in writing by any Underwriter through Xxxxxxx
Xxxxx expressly for use in the Registration Statement or Prospectus or to
that part of the Registration Statement which consists of the statements of
eligibility of trustees on Form T-1 under the 1939 Act.
(ii) The documents incorporated by reference in the
Registration Statement or Prospectus, at the time they were filed with the
Commission (or, if an amendment with respect to any such document was
filed, at the time such amendment was filed), complied and will comply in
all material respects with the requirements of the 1934 Act and the rules
and regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), as applicable, any further documents so filed and
incorporated by reference will, when they are filed with the Commission,
comply in all
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material respects to the requirements of the 1934 Act and the 1934 Act
Regulations, and none of such documents when filed (or if any amendment
with respect any such document was filed, at the time such amendment was
filed) 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, in the light of the circumstances under which they were
made, not misleading.
(iii) Each of the Offerors meets, and at the respective times
of commencement and consummation of the offering of the Securities will
meet, the registrant requirements for use of Form S-3 under the 1933 Act
and the 1933 Act Regulations.
(iv) There has been no material adverse change in the
business, properties or financial condition of the Company or the Trust
from that set forth in the Registration Statement (other than changes
referred to in or contemplated by the Registration Statement or the
Prospectus).
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus, to enter into and perform its obligations under
this Agreement, the Pricing Agreement, the Declaration, the Indenture and
each of the Guarantees and to purchase, own, and hold the Common Securities
issued by the Trust.
(vi) The capital stock of the Company conforms in all
material respects to the description thereof in the Prospectus.
(vii) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act with the power
and authority to own property and to conduct its business as described in
the Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Pricing Agreement, the Preferred
Securities, the Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign company and is in good standing
in any other jurisdiction in which such qualification is necessary, except
to the extent that the failure to so qualify or be in good standing would
not have a material adverse effect on the Trust; the Trust is not a party
to or otherwise bound by any agreement other than those described in the
Prospectus; the Trust is and will, under current law, be classified for
United States federal
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income tax purposes as a grantor trust and not as an association taxable as
a corporation.
(viii) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Registration Statement and
Prospectus, will be validly issued and will represent undivided beneficial
interests in the assets of the Trust and will conform in all material
respects to the description thereof contained in the Prospectus; the
issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Closing Time all of the issued and outstanding
Common Securities of the Trust will be directly owned by the Company free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equitable right.
(ix) This Agreement and the Pricing Agreement have been duly
authorized, executed and delivered by each of the Offerors.
(x) The Declaration has been duly authorized by the Company
and, at the Closing Time, will have been duly executed and delivered by the
Company and the Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Property Trustee and the Delaware
Trustee, the Declaration will, at the Closing Time, be a valid and binding
obligation of the Company and the Regular Trustees, enforceable against the
Company and the Regular Trustees in accordance with its terms, except to
the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or by general principles of equity (regardless
of whether enforcement is considered in a proceeding at law or in equity)
(the "Bankruptcy Exceptions") and will conform in all material respects to
the description thereof contained in the Prospectus.
(xi) Each of the Guarantee Agreements has been duly
authorized by the Company and, when validly executed and delivered by the
Company, and, in the case of the Preferred Securities Guarantee Agreement,
assuming due authorization, execution and delivery of the Preferred
Securities Guarantee by the Guarantee Trustee, will constitute a valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms except to the extent that enforcement thereof may
be limited by the Bankruptcy Exceptions, and each of the Guarantees and the
Guarantee Agreements will conform in all material respects to the
description thereof contained in the Prospectus.
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(xii) The Preferred Securities have been duly authorized and,
when issued and delivered against payment therefor as provided herein, will
be validly issued and fully paid and non-assessable undivided beneficial
interests in the assets of the Trust and will conform in all material
respects to the description thereof contained in the Prospectus; the
issuance of the Preferred Securities is not subject to preemptive or other
similar rights.
(xiii) The Indenture has been duly authorized by the Company
and, when validly executed and delivered by the Company, will constitute a
valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms except to the extent that enforcement thereof
may be limited by the Bankruptcy Exceptions; the Indenture will conform in
all material respects to the description thereof contained in the
Prospectus.
(xiv) The Subordinated Debt Securities have been duly
authorized by the Company and, at the Closing Time, will have been duly
executed by the Company and, when authenticated in the manner provided for
in the Indenture and delivered against payment therefor as described in the
Prospectus, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to
the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions, and will be in the form contemplated by, and entitled to the
benefits of, the Indenture and will conform in all material respects to the
description thereof in the Prospectus.
(xv) Each of the Regular Trustees of the Trust is an
employee of the Company and has been duly authorized by the Company to
execute and deliver the Declaration.
(xvi) None of the Offerors is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(xvii) The Trust is not in violation of the Declaration or its
certificate of trust filed with the State of Delaware on _______ __, 1997
(the "Certificate of Trust"); none of the execution, delivery and
performance of this Agreement, the Pricing Agreement, the Declaration, the
Preferred Securities, the Common Securities, the Indenture, the
Subordinated Debt Securities, the Guarantee Agreements and the Guarantees
and the consummation of the transactions contemplated herein and therein
and compliance by the Offerors with their respective obligations hereunder
and
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thereunder did or will result in a breach of any of the terms or provisions
of, or constitute a default or require the consent of any party under the
Certificate of Trust or the Company's Articles of Incorporation or by-laws,
any material agreement or instrument to which either Offeror is a party,
any existing applicable law, rule or regulation or any judgment, order or
decree of any government, governmental instrumentality or court, domestic
or foreign, having jurisdiction over either Offeror or any of its
properties or assets, or did or will result in the creation or imposition
of any lien on the properties or assets of either Offeror.
(xviii) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, and no filing, recording,
publication or registration in any public office or any other place, was or
is now required in connection with the issuance and sale of the Common
Securities or the offering of the Preferred Securities, the Subordinated
Debt Securities or the Guarantees hereunder, except for the order of the
Federal Energy Regulatory Commission, which has already been obtained, and
such as may be required under the 1933 Act or state securities laws and the
qualification of the Declaration, the Preferred Securities Guarantee
Agreement and the Indenture under the 1939 Act.
(xix) The Company has outstanding unsecured non-convertible
preferred securities rated by a nationally recognized statistical rating
organization in one of its four (4) highest generic rating categories.
Section 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Trust, at
the price per security set forth in the Pricing Agreement, the number of
Preferred Securities set forth in Schedule A opposite the name of such
Underwriter (except as otherwise provided in the Pricing Agreement), plus any
additional number of Preferred Securities that such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
The purchase price per security to be paid by the several Underwriters for
the Preferred Securities shall be an amount equal to the initial public
offering price. The initial public offering price per Preferred Security shall
be a fixed price to be determined by agreement between the Representative and
the Offerors. The
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initial public offering price and the purchase price, when so determined, shall
be set forth in the Pricing Agreement. In the event that such prices have not
been agreed upon and the Pricing Agreement has not been executed and delivered
by all parties thereto by the close of business on the fourth business day
following the date of this Agreement, this Agreement shall terminate forthwith,
without liability of any party to any other party, unless otherwise agreed to
by the Offerors and the Representative. As compensation to the Underwriters
for their commitments hereunder and in view of the fact that the proceeds of
the sale of the Preferred Securities will be used to purchase the Subordinated
Debt Securities of the Company, the Company hereby agrees to pay at Closing
Time (as defined below) to the Representative, for the accounts of the several
Underwriters, a commission per Preferred Security determined by agreement
between the Representative and the Company for the Preferred Securities to be
delivered by the Trust hereunder at Closing Time. The commission, when so
determined, shall be set forth in the Pricing Agreement.
(b) Payment of the purchase price for, and delivery of
certificates for, the Preferred Securities shall be made at the office of Xxxx
& Priest LLP, or at such other place as shall be agreed upon by the
Representative and the Trust, at 10:00 A.M. New York time on the third business
day (unless postponed in accordance with the provisions of Section 10) after
execution of the Pricing Agreement, or such other time not later than ten
business days after such date as shall be agreed upon by the Representative,
the Trust and the Company (such time and date of payment and delivery being
herein called "Closing Time"). Payment shall be made to the Trust in Federal or
other immediately available funds payable to an account designated by the
Trust, against delivery to the Representative for the respective accounts of
the Underwriters of certificates for the Preferred Securities to be purchased
by them. Certificates for the Preferred Securities shall be in such
denominations and registered in such names as the Representative may request in
writing at least two business days before the Closing Time. It is understood
that each Underwriter has authorized the Representative, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for,
the Preferred Securities which it has agreed to purchase. Xxxxxxx Xxxxx,
individually and not as Representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Preferred
Securities to be purchased by any Underwriter whose payment has not been
received by the Closing Time, but such payment by Xxxxxxx Xxxxx shall not
relieve such Underwriter from its obligations hereunder.
The certificate(s) for the Preferred Securities will be made available for
examination and packaging by the Representative not later than 10:00 A.M. on
the last business day prior to the Closing Time.
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At the Closing Time, the Company will pay, or cause to be paid, the
commission payable at such time to the Underwriters under this Section 2 to
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated in Federal or other
immediately available funds.
Section 3. Covenants of the Offerors. Each of the Offerors jointly
and severally covenant with each Underwriter as follows:
(a) The Offerors will promptly notify the Representative or
its counsel (i) of the effectiveness of the Registration Statement and any
amendment thereto (including any post-effective amendment), (ii) of the receipt
of any comments from the Commission or of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information, (iii) of any suspension of
qualification of the Preferred Securities for sale under Blue Sky or state
securities laws, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose. The Offerors will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Prior to the termination of the offering of the Preferred
Securities, the Offerors will not file any amendment to the Registration
Statement or amendment or supplement to the Prospectus unless the
Representative and counsel to the Underwriters have been furnished with a copy
of such amendment or supplement for their review and comment a reasonable time
prior to such proposed filing and will not file any such amendment or
supplement to which counsel for the Underwriters shall reasonably object on
legal grounds in writing after consultation with the Representative. Subject
to the foregoing, the Offerors will promptly prepare a supplement to the
Prospectus to reflect the terms of the Preferred Securities and the terms of
the offering contemplated by this Agreement. The Offerors will file such
Prospectus as so supplemented pursuant to Rule 424(b) under the Act within the
time periods provided by such Rule and Rule 430A(a)(3) under the Act.
(c) The Offerors will deliver to the Representative one signed
and as many conformed copies of the Registration Statement, in each case as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) as the Representative may
reasonably request and will also deliver to the Representative a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters.
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(d) The Offerors will furnish to each Underwriter, without charge,
from time to time during the period of time (not exceeding nine months) after
the date of the Prospectus when a Prospectus is required to be delivered under
the 1933 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act or the respective applicable rules and regulations
of the Commission thereunder; and in case any Underwriter is required to
deliver a prospectus after the expiration of nine months after the date of the
Prospectus, to furnish to the Representative, upon request, at the expense of
such Underwriter, a reasonable quantity of a supplemental prospectus or of
supplements to the Prospectus complying with Section 10(a)(3) of the 0000 Xxx.
(e) If at any time when the Prospectus is required by the 1933 Act
to be delivered in connection with sales of the Preferred Securities, any event
shall occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is to be delivered to a purchaser, or if
it shall be necessary at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Offerors will promptly prepare
and file with the Commission subject to paragraph (b) above such amendment or
supplement as may be necessary to correct such untrue statement or omission or
to make the Registration Statement or the Prospectus comply with such
requirements; and the Offerors will furnish to the Underwriters, without
charge, a reasonable number of copies of such amendment or supplement, except
that in case any Underwriter is required to deliver a prospectus in connection
with sales of the Preferred Securities after the expiration of nine months
after the date of the Prospectus the Offerors shall be required to furnish any
such amendments or supplements to such Underwriter only at the expense of such
Underwriter.
(f) The Offerors will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and the other jurisdictions of the
United States as the Representative may designate; provided, however, that none
of the Offerors shall be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to comply with any other
requirements deemed by the Company to be unduly burdensome.
(g) The Trust will make generally available to its security holders
as soon as practicable an earnings statement of the Company (which need not be
audited by independent public accountants) covering a twelve-month period
beginning after the "effective date" (as defined in Rule 158 of the 1933 Act
Regulations) of the Registration Statement and ending not later than 15 months
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thereafter, that shall satisfy the provisions of Section 11(a) of the 1933 Act
and said Rule 158.
(h) For a period of 18 months after the Closing Time, the Company
will furnish to you and, upon request, to each Underwriter, copies of all
annual reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as shall
be furnished by the Company to its stockholders or security holders generally.
(i) The Offerors will use best efforts to effect the listing of the
Preferred Securities (including the Preferred Securities Guarantee with respect
thereto) on the New York Stock Exchange; if the Preferred Securities are
exchanged for Subordinated Debt Securities, the Company will use its best
efforts to effect the listing of the Subordinated Debt Securities on the
exchange on which the Preferred Securities were then listed.
(j) During a period of 60 days from the date of the Pricing
Agreement, neither the Trust nor the Company will, without the Representative's
prior written consent, directly or indirectly, sell, offer to sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, any Preferred
Securities, any security convertible into or exchangeable into or exercisable
for Preferred Securities or the Subordinated Debt Securities or any debt
securities substantially similar to the Subordinated Debt Securities or equity
securities substantially similar to the Preferred Securities (except for the
Subordinated Debt Securities and the Preferred Securities issued pursuant to
this Agreement).
Section 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of each Offeror's obligations under this Agreement,
including, but not limited to, (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii) the
preparation, issuance and delivery of the certificates for the Preferred
Securities to the Underwriters, (iii) the fees and disbursements of the
Company's and the Trust's counsel and accountants, (iv) the qualification of
the Securities in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of any Blue Sky survey up to an aggregate amount not to exceed $5,000.00, (v)
the printing and delivery to the Underwriters of copies of the Registration
Statement as originally filed and of each amendment thereto, of each
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (vi) the delivery to the Underwriters of copies of any Blue Sky
survey, (vii) the fee, if any, of the National Association of Securities
Dealers, Inc., (viii) the fees and expenses of the Debt Trustee, the Property
Trustee and the Guarantee Trustee,
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including the fees and disbursements of counsel for such trustees, in
connection with the Indenture and the Subordinated Debt Securities, the
Declaration, the Certificate of Trust and the Guarantee (it being understood
that as among the Offerors and such trustees, such fees and expenses shall not
exceed $5,000.00), (ix) any fees payable in connection with the rating of the
Preferred Securities and Subordinated Debt Securities, (x) the fees and
expenses incurred in connection with the listing of the Preferred Securities
(and the related Preferred Securities Guarantee) and, if applicable, the
Subordinated Debt Securities on the New York Stock Exchange, (xi) the cost and
charges of any transfer agent or registrar and (xii) the cost of qualifying the
Preferred Securities with The Depository Trust Company.
If the Underwriter shall not take up and pay for the Securities due to the
failure of the Offerors to comply with any of the conditions specified in
Section 5 hereof, or, if this Agreement shall be terminated in accordance with
the provisions of Section 9 hereof, the Company will pay the reasonable fees
and disbursements of counsel to the Underwriters, and, if the Underwriters
shall not take up and pay for the Securities due to failure of the Offerors to
comply with the conditions specified in Section 5 hereof, the Company will also
reimburse the Underwriters for their reasonable out-of-pocket expenses, in an
aggregate amount not exceeding a total of $3,000.00, incurred in connection
with the offering contemplated by this Agreement.
Section 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties of the Offerors herein contained, to the performance by the Offerors
of their obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date hereof, or with the consent of the Representative,
at a later time and date, not later, however, than 5:30 P.M. on the first
business day following the date hereof, or at such later time and date as may
be approved by the Representative; and at Closing Time no stop order suspending
the effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the Commission.
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 1933
Act Regulations.
(b) At Closing Time the Representative shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Xxxxxxx X. XxxXxxxxx, Esq., Assistant General Counsel of the Company and
counsel for the Offerors in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
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(i) The Company has been duly incorporated and is
validly existing in good standing under the laws of the State of Michigan
with corporate power and authority to carry on the public utility business
in which it is engaged and to own, lease and operate its properties and
conduct its business as described in the Prospectus.
(ii) The capital stock of the Company conforms in all
material respects to the description thereof in the Prospectus.
(iii) The Trust is not required to be qualified and in
good standing as a foreign company in Michigan, except to the extent that
the failure to so qualify or be in good standing would not have a material
adverse effect on the Trust; and the Trust is not a party to or otherwise
bound by any agreement other than those described in the Prospectus.
(iv) The Declaration has been duly authorized, executed
and delivered by the Company and the Trustees and is a valid and binding
obligation of the Company, enforceable against the Company and each of the
Regular Trustees in accordance with its terms, except as enforcement
thereof may be limited by the Bankruptcy Exceptions; and the Declaration
has been duly qualified under the 1939 Act.
(v) All legally required proceedings in connection with
the authorization, issuance and validity of the Securities and the sale of
the Securities in accordance with this Agreement (other than the filing of
post-issuance reports, the non-filing of which would not render the
Securities invalid) have been taken and all legally required orders,
consents or other authorizations or approvals of the Michigan Public
Service Commission and of any other public boards or bodies in connection
with the authorization, issuance and validity of the Securities and the
sale of the Securities in accordance with this Agreement (other than in
connection with or in compliance with the provisions of the securities or
Blue Sky laws of any jurisdictions, as to which no opinion need be
expressed) have been obtained and are in full force and effect.
(vi) The Registration Statement is effective under the
1933 Act and, to the best of his knowledge and information after due
inquiry, no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act, and no proceedings therefor
have been initiated or threatened by the Commission.
(vii) The Registration Statement as of its effective date
and the Prospectus and each amendment or supplement thereto as of its issue
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date (in each case, other than the operating statistics, the financial
statements and the notes thereto, the financial schedules, and any other
financial and statistical data included or incorporated by reference
therein, as to which such counsel need express no belief), complied as to
form in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations; and the Declaration, the Indenture, the Preferred
Securities Guarantee Agreement and the Statements of Eligibility on Forms
T-1 with respect to each of the Property Trustee, the Debt Trustee, and the
Guarantee Trustee filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(viii) Each of the documents incorporated by reference in
the Registration Statement or the Prospectus at the time they were filed or
last amended (other than the financial statements and the notes thereto,
the financial schedules, and any other financial or statistical data
included or incorporated by reference therein, as to which such counsel
need express no belief) complied as to form in all material respects with
the requirements of the 1934 Act, and the 1934 Act Regulations, as
applicable.
(ix) Each of the Offerors meets the registrant
requirements for use of Form S-3 under the 1933 Act Regulations.
(x) The Common Securities, the Preferred Securities,
the Subordinated Debt Securities, each of the Guarantees, the Declaration,
the Indenture and each of the Guarantee Agreements conform in all material
respects to the descriptions thereof contained in the Prospectus.
(xi) The descriptions in the Registration Statement and
the Prospectus and each amendment or supplement thereto of franchises,
regulations, statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the information required to
be shown and such counsel does not know of any legal or governmental
proceedings required to be described in the Registration Statement or the
Prospectus or any amendment or supplement thereto that are not so described
(or the descriptions of which are not incorporated by reference) or of any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or any amendment or supplement
thereto or to be filed as exhibits to the Registration Statement or any
amendment thereto that are not so described (or the descriptions of which
are not incorporated by reference) or so filed.
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(xii) All of the issued and outstanding Common Securities
of the Trust are directly owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equitable
right.
(xiii) This Agreement and the Pricing Agreement have been
duly authorized, executed and delivered by each of the Trust and the
Company.
(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred Securities
Guarantee Agreement, assuming it is duly authorized, executed, and
delivered by the Guarantee Trustee, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforcement thereof may be
limited by Bankruptcy Exceptions; and the Preferred Securities Guarantee
Agreement has been duly qualified under the 1939 Act.
(xv) The Indenture has been duly executed and delivered
by the Company and, assuming due authorization, execution, and delivery
thereof by the Debt Trustee, is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions; and the Indenture has been duly qualified under the
0000 Xxx.
(xvi) The Subordinated Debt Securities are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee in the
manner provided for in the Indenture and delivered against payment therefor
as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions.
(xvii) Neither the Company nor the Trust is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the 1940 Act.
(xviii) The execution, delivery and performance of this
Agreement, the Pricing Agreement, the Declaration, the Preferred
Securities, the Common Securities, the Indenture, the Subordinated Debt
Securities, the Guarantee Agreements, and the Guarantees; the consummation
of the
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transactions contemplated herein and therein; and the compliance by each of
the Offerors with their respective obligations hereunder and thereunder do
not and will not result in any violation of the charter or bylaws of the
Company or the Declaration or the Certificate of Trust, and do not and will
not result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Trust or the
Company under (A) any contract, indenture, mortgage, loan agreement, note,
lease or any other agreement or instrument known to such counsel to which
the Trust or the Company is a party or by which it may be bound or to which
any of its properties may be subject (except for such breaches or defaults
or liens, charges or encumbrances that would not have a material adverse
effect on the business, property or financial condition of the Trust or the
Company), (B) any existing applicable law, rule or regulation (other than
the securities or blue sky laws of the various states, as to which such
counsel need express no opinion) or (C) any judgment, order or decree of
any government, governmental instrumentality or court, domestic or foreign,
or any regulatory body or administrative agency or other governmental body
having jurisdiction over the Trust, the Company or any of their respective
properties.
(xix) Nothing has come to attention of such counsel which
would lead him to believe that the Registration Statement or any amendment
thereto (except for the operating statistics, financial statements and
other financial and statistical data included or incorporated by reference
therein, or the statements of eligibility under the 1939 Act of trustees as
to which no opinion is expressed), when it became effective, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as amended or supplemented or
modified by the filing of a document incorporated by reference therein
(except as aforesaid), on its issue date and on the date of such opinion
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
The foregoing opinions may be limited to the laws of Delaware,
Michigan and the federal law of the United States. In giving such opinion,
such counsel may rely, as to matters of Delaware Law, upon the opinion of
Xxxxxxxx, Xxxxxx & Finger, P.A., special Delaware counsel to the Company, in
which case the opinion shall state that such counsel believes that you and he
are entitled to so rely.
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(2) The favorable opinion, dated as of Closing Time,
of Xxxxxxxx, Xxxxxx & Finger, P.A., special Delaware counsel to the Offerors,
in form and substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act, and
all filings required under the laws of the State of Delaware with respect
to the creation and valid existence of the Trust as a business trust have
been made.
(ii) Under the Delaware Act and the Declaration, the
Trust has the power and authority to own property and conduct its business,
all as described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against the
Company and the Trustees in accordance with its terms, subject, as to
enforcement, to (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance and other similar laws
relating to or affecting the rights and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to fiduciary
duties (regardless of whether considered and applied in a proceeding in
equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification and contribution.
(iv) Under the Delaware Act and the Declaration, the
Trust has the power and authority to (i) execute and deliver, and to
perform its obligations under, this Agreement and the Pricing Agreement and
(ii) issue, and perform its obligations under, the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement and the Pricing
Agreement, and the performance by the Trust of its obligations hereunder
and under the Pricing Agreement, have been duly authorized by all necessary
action on the part of the Trust.
(vi) The Preferred Securities have been duly authorized
by the Declaration and are duly and validly issued and, subject to
qualifications hereinafter expressed in this paragraph (vi), fully paid and
nonassessable undivided beneficial interests in the assets of the Trust;
the holders of the Preferred Securities, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation
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Law of the State of Delaware; said counsel may note that the holders of the
Preferred Securities may be obligated to make payments as set forth in the
Declaration.
(vii) The Common Securities have been duly authorized by
the Declaration and are duly and validly issued and represent undivided
beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the Declaration, the
issuance of the Trust Securities is not subject to preemptive rights.
(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debt Securities,
the execution, delivery and performance by the Trust of this Agreement and
the Pricing Agreement, the consummation by the Trust of the transactions
contemplated hereby and by the Pricing Agreement and compliance by the
Trust with its obligations hereunder and thereunder will not violate (i)
any of the provisions of the Certificate of Trust or the Declaration or
(ii) any applicable Delaware law or administrative regulation.
(3) The opinion of Xxxx & Priest LLP, special tax
counsel to the Company and the Trust, generally to the effect that the
discussion set forth in the Prospectus under the heading "CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES" is a fair and accurate summary of the matters
addressed therein, based upon current law and the assumptions stated or
referred to therein. Such opinion may be conditioned on, among other things,
the initial and continuing accuracy of the facts, financial and other
information, covenants and representations set forth in certificates of
officers of the Company and the Trust and other documents deemed necessary for
such opinion.
(4) The favorable opinion, dated as of Closing Time,
of Xxxx & Priest LLP, counsel for the Underwriters, in form and substance
satisfactory to the Underwriters with respect to the incorporation and legal
existence of the Company, the Preferred Securities, the Indenture, the
Preferred Securities Guarantee Agreement, this Agreement, the Pricing
Agreement, the Registration Statement, the Prospectus and other related matters
as the Representative may require. In giving its opinion, Xxxx & Priest LLP
may rely as to certain matters of Michigan and Delaware law upon the opinions
of Xxxxxxx X. XxxXxxxxx, Esq. and Xxxxxxxx, Xxxxxx & Finger, P.A., counsel for
the Offerors, which shall be delivered in accordance with Section 5(b)(1) and
5(b)(2) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the business,
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properties or financial condition of the Company or the Trust, which in the
judgment of the Representative, after reasonable inquiries on the part of the
Representative, impairs the marketability of the Securities (other than changes
referred to in or contemplated by the Registration Statement or Prospectus).
(d) At Closing Time, the Representative shall have received a certificate
of an executive officer of the Company and a certificate of a Regular Trustee
of the Trust, and dated as of Closing Time, to the effect that to the best of
such person's knowledge, information and belief (i) there has been no material
adverse change in the business, properties or financial condition of the
Company or the Trust from that set forth in the Registration Statement or
Prospectus (other than changes referred to in or contemplated by the
Registration Statement or Prospectus), (ii) the representations and warranties
in Section 1 hereof are true and correct as though expressly made at and as of
Closing Time, (iii) the Trust and the Company have complied with all agreements
and satisfied all conditions on their part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been initiated or threatened by the Commission.
(e) At the Closing Time the Representative shall have received from
Xxxxxx Xxxxxxxx LLP a letter dated such date, in form and substance
satisfactory to the Representative, to the effect that: (i) they are
independent public accountants with respect to the Company and its consolidated
subsidiaries, within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) in their opinion, the financial statements examined 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 published rules and regulations of the Commission; and
(iii) covering, as of a date not more than five business days prior to the date
of such letter, such other matters as the Representative shall reasonably
request.
(f) Any additional documents or agreements reasonably requested by
counsel to the Underwriters to permit such counsel to deliver opinions
hereunder at Closing Time shall have been provided to them and all proceedings
taken by the Offerors in connection with the issuance and sale of the Preferred
Securities as herein contemplated shall be satisfactory in form and substance
to the Representative and Xxxx & Priest LLP, counsel for the Underwriters.
(g) (i) At Closing Time, the Preferred Securities shall be rated Ba1
Xxxxx'x Investors Service, Inc., BB+ by Standard & Poor's Rating Group, BBB- by
Duff & Xxxxxx Credit Rating Co. and BBB by Fitch Investors Service, Inc., and
(ii) between the date of this Agreement and the Closing Time, there shall not
have occurred a downgrading of the investment ratings of any of the Company's
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securities by Standard & Poor's Rating Group, Xxxxx'x Investors Service, Inc.,
Duff & Xxxxxx Credit Rating Co. or Fitch Investors Service, Inc., and the
Company shall not have been placed on "credit watch" or "credit review" with
negative implications by any of such nationally recognized statistical rating
organizations if, in the case of such placement on "credit watch" or "credit
review," such occurrence shall, in the reasonable judgment of the
Representative, after reasonable inquiries on the part of the Representative,
impair the marketability of the Securities.
(h) At the Closing Time, the Preferred Securities shall have been
approved for listing on the New York Stock Exchange upon notice of issuance.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Representative by notice to the Offerors at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof.
Section 6. Conditions of Offerors' Obligations. The obligations of the
Offerors hereunder are subject to the following conditions:
(a) The Registration Statement shall be effective under the 1933 Act and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(b) The order of the Federal Energy Regulatory Commission in connection
with the authorization, issuance and sale of the Securities shall be in full
force and effect.
Section 7. Indemnification.
(a) The Offerors agree to the extent permitted by law to jointly and
severally indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the 1933 Act or otherwise, and, subject to and in accordance with Section
7(d) hereof, to reimburse the Underwriters and such controlling person or
persons, if any, for any legal or other expenses incurred by them in connection
with defending any action, suit or proceeding (including governmental
investigations) insofar as such losses, claims, damages, liabilities or
actions, suits or proceedings (including governmental investigations) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement
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(or any amendment thereto), including the information deemed to be a part of
the Registration Statement pursuant to Rule 430A(b) of the 1933 Act
Regulations, if applicable, any preliminary prospectus as of its issue date,
the Prospectus, or, if the Prospectus shall be amended or supplemented, in the
Prospectus as so amended or supplemented (if such Prospectus or such Prospectus
as amended or supplemented is used after the period of time referred to in
Section 3(e) hereof, it shall contain or be used with such amendments or
supplements as the Company deems necessary to comply with Section 10(a) of the
1933 Act), or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
which was made in such preliminary prospectus, Registration Statement
(or amendment thereto) or Prospectus, or in the Prospectus as so amended or
supplemented, in reliance upon and in conformity with information furnished in
writing to the Company by, or through Xxxxxxx Xxxxx on behalf of, any
Underwriter expressly for use therein, and except that this indemnity is
subject to the condition that, insofar as it relates to any untrue statement or
omission, or any alleged untrue statement or omission, made in a preliminary
prospectus but eliminated or remedied in the Prospectus, it shall not inure to
the benefit of any Underwriter (or any person controlling such Underwriter)
from whom the person asserting the claim purchased the Securities (or to the
benefit of any person who controls such Underwriter) if the Offerors have
complied with their Prospectus delivery obligations pursuant to Section 3 of
this Agreement and a copy of the Prospectus, excluding documents incorporated
therein by reference, was not sent or given to such person at or prior to the
time required by the 1933 Act and the receipt thereof would have constituted
the sole defense to the claim asserted by such person.
The Offerors' indemnity agreement contained in this Section 7(a), and the
covenants, representations and warranties of the Offerors contained in this
Agreement, shall remain in full force and effect regardless of any
investigation made by or on behalf of any person, and shall survive the
delivery of and payment for the Preferred Securities hereunder, and the
indemnity agreement contained in this Section 7 shall survive any termination
of this Agreement. The liabilities of the Offerors in this Section 7(a) are in
addition to any other liabilities of the Offerors under this Agreement or
otherwise.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 7(a) hereunder.
(c) Each Underwriter agrees, severally and not jointly, to the
extent permitted by law, to indemnify, hold harmless and reimburse the Offerors,
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their directors and such of their officers or trustees, as the case may be, as
shall have signed the Registration Statement, and each person, if any, who
controls the Offerors or any such other Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, to the same extent
and upon the same terms as the indemnity agreement of the Offerors set forth in
Section 7(a) hereof, but only with respect to alleged untrue statements or
omissions made in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with information furnished in
writing to the Offerors by such Underwriter through Xxxxxxx Xxxxx expressly for
use therein.
The indemnity agreement on the part of each Underwriter contained
in this Section 7(c) shall remain in full force and effect regardless of any
investigation made by or on behalf of the Offerors or any other person, and
shall survive the delivery of and payment for the Preferred Securities
hereunder, and the indemnity agreement contained in this Section 7(c) shall
survive any termination of this Agreement. The liabilities of each Underwriter
in this Section 7(c) are in addition to any other liabilities of such
Underwriter under this Agreement or otherwise.
(d) If a claim is made or an action, suit or proceeding (including
governmental investigation) is commenced or threatened against any person as to
which indemnity may be sought under Section 7(a) or 7(c), such person (the
"Indemnified Person") shall notify the person against whom such indemnity may
be sought (the "Indemnifying Person") promptly after any assertion of such
claim threatening to institute an action, suit or proceeding or if such an
action, suit or proceeding is commenced against such Indemnified Person,
promptly after such Indemnified Person shall have been served with a summons or
other first legal process, giving information as to the nature and basis of the
claim. Failure to so notify the Indemnifying Person shall not, however, relieve
the Indemnifying Person from any liability which it may have on account of the
indemnity under Section 7(a) or 7(c) if the Indemnifying Person has not been
prejudiced in any material respect by such failure. Subject to the immediately
succeeding sentence, the Indemnifying Person shall assume the defense of any
such litigation or proceeding, including the employment of counsel and the
payment of all expenses counsel, with such being designated, subject to the
immediately succeeding sentence, in writing by the Representative in the case
of parties indemnified pursuant to Section 7(c) and by the Company in the case
of parties indemnified pursuant to Section 7(a). Any Indemnified Person shall
have the right to participate in such litigation or proceeding and to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties)
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include (x) the Indemnifying Person and (y) the Indemnified Person and, in the
written opinion of counsel to such Indemnified Person, representation of both
parties by the same counsel would be inappropriate due to actual or likely
conflicts of interest between them, in either of which cases the reasonable
fees and expenses of counsel (including disbursements) for such Indemnified
Person shall be reimbursed by the Indemnifying Person to the Indemnified
Person. If there is a conflict as described in clause (ii) above, and the
Indemnified Persons have participated in the litigation or proceeding utilizing
separate counsel whose fees and expenses have been reimbursed by the
Indemnifying Person and the Indemnified Persons, or any of them, are found to
be solely liable, such Indemnified Persons shall repay to the Indemnifying
Person such fees and expenses of such separate counsel as the Indemnifying
Person shall have reimbursed. It is understood that the Indemnifying Person
shall not be liable under this Agreement for the reasonable fees and
out-of-pocket expenses of more than one separate firm (together with not more
than one appropriate local counsel) for all such Indemnified Persons in
connection with any one action or separate but similar related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
Subject to the next paragraph, all such fees and expenses shall be reimbursed
by payment to the Indemnified Persons of such reasonable fees and expenses of
counsel promptly after payment thereof by the Indemnified Persons.
In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the
Representative and the Offerors agree that the Indemnifying Person's
obligations to pay such fees and expenses shall be conditioned upon the
following:
(1) in case separate counsel is proposed to be retained by the
Indemnified Persons pursuant to clause (ii) of the preceding paragraph, the
Indemnified Persons shall in good faith fully consult with the Indemnifying
Person in advance as to the selection of such counsel; and
(2) reimbursable fees and expenses of such separate counsel shall be
detailed and supported in a manner reasonably acceptable to the
Indemnifying Person (but nothing herein shall be deemed to require the
furnishing to the Indemnifying Person of any information, including without
limitation, computer print-outs of lawyers' daily time entries, to the
extent that, in the judgment of such counsel, furnishing such information
might reasonably be expected to result in a waiver of any attorney-client
privilege); and
(3) the Company and the Representative shall cooperate in monitoring
and controlling the fees and expenses of separate counsel for Indemnified
Persons for which the Indemnifying Person is liable hereunder
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and the Indemnified Person shall use reasonable efforts to cause such
separate counsel to minimize duplication of activities between themselves
and counsel to the Indemnifying Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 7, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
Section 8. Contribution. If the indemnification provided for in Section 7
above is unavailable to or insufficient to hold harmless an Indemnified Person
under such Section in respect of any losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in
respect thereof) referred to therein, then each Indemnifying Person under
Section 7 shall contribute to the amount paid or payable by such Indemnified
Person 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 the Indemnifying Person on the one hand and the
Indemnified Person 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, then each Indemnifying Person shall contribute to
such amount paid or payable by such Indemnified Person in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of each Indemnifying Person, if any, on the one hand and the Indemnified
Person on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions, suits or
proceedings (including governmental investigations) in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Offerors 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 Offerors and 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, bear to the
aggregate public offering price of the Securities. 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
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by the Offerors 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 Offerors and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 8. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages or
liabilities (or actions, suits or proceedings (including governmental
proceedings) in respect thereof) referred to above in this Section 8 shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Person in connection with investigating or defending any such
actions, suits or proceedings (including governmental proceedings) or claims,
provided that the provisions of Section 7 have been complied with (in all
material respects) in respect of any separate counsel for such Indemnified
Person. Notwithstanding the provisions of this Section 8, no Underwriter shall
be required to contribute any amount in excess of the total price at which the
Securities underwritten by it and distributed to the public were offered to the
public. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 8 to contribute are several in
proportion to their respective underwriting obligations and not joint.
The agreement with respect to contribution contained in this Section 8 shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any Underwriter, and shall survive delivery of and
payment for the Preferred Securities hereunder and any termination of this
Agreement.
Section 9. Termination of Agreement.
(a) The Representative may terminate this Agreement, by notice to
the Offerors, at any time at or prior to Closing Time (i) if there has occurred
any material adverse disruption in the financial markets or any outbreak or
material escalation of hostilities or any other calamity or crisis the effect
of which is such as to impair, in the reasonable judgment of the Representative
after having made reasonable inquiry, the marketability of the Preferred
Securities, (ii) if trading in the Preferred Securities has been suspended by
the Commission, or if trading generally on the New York Stock Exchange has been
suspended, limited or restricted or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
said exchange or by order of the Commission or any other governmental
authority, (iii) if trading of any securities of the Company shall have been
suspended on any exchange or over-the-counter
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market, or (iv) if a general moratorium on commercial banking activities in New
York or Delaware has been declared by Federal, New York, or Delaware
authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
as provided in Section 4 hereof.
Section 10. Substitution of Underwriters. If any Underwriter shall fail or
refuse (otherwise than for some reason sufficient to justify in accordance with
the terms hereof, the termination of its obligations hereunder) to purchase the
Securities which it had agreed to purchase at the Closing Time, the
Representative shall immediately notify the Company and the Representative and
the other Underwriters may, within 36 hours of the giving of such notice,
determine to purchase, or to procure one or more other members of the National
Association of Securities Dealers, Inc. ("NASD") (or, if not members of the
NASD, who are foreign banks, dealers or institutions not registered under the
1934 Act and who agree in making sales to comply with the NASD's Rules of Fair
Practice), satisfactory to the Company, to purchase, upon the terms herein set
forth, the number of Securities which the defaulting Underwriter had agreed to
purchase. If any non-defaulting Underwriter or Underwriters shall determine to
exercise such right, the Representative shall give written notice to the
Company of such determination within 36 hours after the Company shall have
received notice of any such default, and thereupon the Closing Time shall be
postponed for such period, not exceeding three business days, as the Company
shall determine. If in the event of such a default, the Representative shall
fail to give such notice, or shall within such 36-hour period give written
notice to the Company that no other Underwriter or Underwriters, or others,
will exercise such right, then this Agreement may be terminated by the Company,
upon like notice given to the Representative within a further period of 36
hours. If in such case the Company shall not elect to terminate this
Agreement, it shall have the right, irrespective of such default:
(a) to require such non-defaulting Underwriters to purchase and
pay for the respective number of Securities which they had severally agreed
to purchase hereunder, as hereinabove provided, and, in addition, the
Securities which the defaulting Underwriter shall have so failed to
purchase up to a number of Securities equal to one-ninth (1/9) of the
respective number of Securities which such non-defaulting Underwriters have
otherwise agreed to purchase hereunder; and/or
(b) to procure one or more other members of the NASD (or, if not
members of the NASD, who are foreign banks, dealers or institutions not
registered under the 1934 Act and who agree in making sales to comply with
27
28
the NASD's Rules of Fair Practice), to purchase, upon the terms herein set
forth, the number of Securities which such defaulting Underwriter had
agreed to purchase, or that portion thereof which the remaining
Underwriters shall not be obligated to purchase pursuant to the foregoing
clause (a).
In the event the Company shall exercise its rights under clause (a) and/or
(b) above, the Company shall give written notice thereof to the Representative
within such further period of 36 hours, and thereupon the Closing Time shall be
postponed for such period, not exceeding five business days, as the Company
shall determine. In the event the Company shall be entitled to but shall not
elect to exercise its rights under clause (a) and/or (b), the Company shall be
deemed to have elected to terminate this Agreement.
Any action taken by the Company under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement. Termination by the Company under this
Section 10 shall be without any liability on the part of the Company or any
non-defaulting Underwriter.
In the computation of any period of 36 hours referred to in this Section 10,
there shall be excluded a period of 24 hours in respect of each Saturday,
Sunday or legal holiday which would otherwise be included in such period of
time.
Section 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at Xxxxxxx Xxxxx World
Headquarters, North Tower, World Financial Center, New York, New York
10281-1201, attention of Xxxxxxx X. Xxxxxx, Managing Director; notices to the
Trust and the Company shall be directed to them at 000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, attention of Xxxx X. Xxxxxx, Senior Vice President and
Chief Financial Officer.
Section 12. Parties. This Agreement and the Pricing Agreement shall each
inure to the benefit of and be binding upon the Underwriters and the Trust and
the Company and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the Trust
and the Company and their respective successors and the controlling persons and
officers, directors and trustees referred to in Sections 7 and 8 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or the Pricing Agreement or any provision
herein or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit
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29
of the Underwriters and the Trust and the Company and their respective
successors, and said controlling persons and officers, directors and trustees
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
Section 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Except as otherwise set forth herein, specified times of day refer to
New York City time.
Section 14. Counterparts. 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.
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30
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Trust a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Trust and the Company in accordance with its
terms.
Very truly yours,
CONSUMERS ENERGY COMPANY
By
-------------------------------
Senior Vice President and Chief
Financial Officer
CONSUMERS ENERGY COMPANY FINANCING II
By
-------------------------------
Title: Regular Trustee
By
--------------------------------
Title: Regular Trustee
By
--------------------------------
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By
-----------------------------
Authorized Signatory
For itself and as Representative of the other
Underwriters named in Schedule A hereto.
31
SCHEDULE A
Number
Name of Underwriter of Securities
------------------- -------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________
Xxxxxx Xxxxxxx & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________
Total
========
32
EXHIBIT A
_________ Preferred Securities
CONSUMERS ENERGY COMPANY FINANCING II
(a Delaware trust)
_____% Trust Originated Preferred SecuritiesSM ("TOPrSSM")
(Liquidation Amount of $25 Per Security)
PRICING AGREEMENT
XXXXXXX XXXXX & CO. ___________ __, 1997
Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated
as Representative of the several
Underwriters named in the within-
mentioned Underwriting Agreement
Xxxxxxx Xxxxx World Headquarters
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated ___ __,
1996 (the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated is acting as representative (the
"Representative"), of the above ___% Trust Originated Preferred Securities (the
"Preferred Securities"), of CONSUMERS ENERGY COMPANY FINANCING II, a Delaware
business trust (the "Trust").
Pursuant to Section 2 of the Underwriting Agreement, the Trust
and Consumers Energy Company (the "Company"), a Michigan corporation, agree
with each Underwriter as follows:
____________________
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Xxxxxxx Xxxxx & Co., Inc.
33
1. The initial public offering price per security
for the Preferred Securities, determined as provided in said Section 2,
shall be $_____.
2. The purchase price per security for the Preferred
Securities to be paid by the several Underwriters shall be $_____, being
an amount equal to the initial public offering price set forth above.
3. The compensation per Preferred Security to be
paid by the Company to the several Underwriters in respect of their
commitments hereunder shall be $__________; provided, however, that the
compensation per Preferred Security for sales of 10,000 or more
Preferred Securities to a single purchaser shall be $_________.
2
34
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Trust and the Company in accordance
with its terms.
Very truly yours,
CONSUMERS ENERGY COMPANY
By
--------------------------------
Title:
CONSUMERS ENERGY COMPANY FINANCING II
By
--------------------------------
Title: Regular Trustee
By
--------------------------------
Title: Regular Trustee
By
--------------------------------
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By
------------------------------
Authorized Signatory
For itself and as Representative of the other
Underwriters named in the Underwriting Agreement.
