1
EXHIBIT 1.1
THE DETROIT EDISON COMPANY
DEBT SECURITIES
UNDERWRITING AGREEMENT
[ ]
To the Representatives of the
several Underwriters named in the
respective Pricing Agreements
hereinafter described.
Ladies and Gentlemen:
From time to time The Detroit Edison Company, a Michigan corporation
(the "Company"), proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of its debt securities (the "Securities"), which may
consist of (i) General and Refunding Mortgage Bonds (the "Mortgage Bonds"), (ii)
debt securities secured by Mortgage Bonds ("Secured Securities") and/or (iii)
unsecured debt securities, in each case as specified in Schedule II to such
Pricing Agreement (with respect to such Pricing Agreement, the "Designated
Securities"). Mortgage Bonds will be issued under the Mortgage and Deed of
Trust, dated as of October 1, 1924, between the Company and First Chicago Trust
Company of New York, as trustee (the "Mortgage Trustee"), as amended and
supplemented by various supplemental indentures including the supplemental
indenture (a "Supplemental Indenture") creating the Designated Securities (the
"Mortgage"). Any other Securities will be issued under the Indenture, dated as
of June 30, 1993, between the Company and Bank One Trust Company, National
Association, as trustee (the "Indenture Trustee" and each of the Indenture
Trustee and the Mortgage Trustee, a "Trustee"), as amended and supplemented by
various supplemental indentures including the supplemental indenture (a
"Supplemental Indenture") creating the Designated Securities (the "Indenture").
If specified in Schedule II to the applicable Pricing Agreement,
payment of the principal of, premium, if any, and interest on each series of
Secured Securities will be secured by the pledge by the Company to the Indenture
Trustee of a Mortgage Bond (each, a "Pledged Bond") to be issued under the
Mortgage.
2
The terms and rights of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the Mortgage or the Indenture, as the case may be, and the
Supplemental Indenture thereto identified in such Pricing Agreement.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representative. This underwriting agreement
(the "Agreement") shall not be construed as an obligation of the Company to sell
any of the Securities or as an obligation of any of the Underwriters to purchase
the Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Mortgage or, as
the case may be, the Indenture, and the Registration Statement (as defined
below) and prospectus with respect thereto) the terms of such Designated
Securities. A Pricing Agreement shall be in the form of an executed writing
(which may be in counterparts), and may be evidenced by an exchange of
telegraphic communications, facsimile or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (No. 333-[ ]) in respect
of the Securities has been filed with the Securities and Exchange Commission
(the "Commission"); such registration statement and any post-effective amendment
thereto, each in the form heretofore delivered or to be delivered to the
Representatives and, excluding exhibits to such registration statement, but
including all documents incorporated by reference in the prospectus contained
therein, to the Representatives for each of the other Underwriters have been
declared effective by the Commission in such form; no other document with
respect to such registration statement or any post-effective amendment thereto
or document incorporated by reference therein (other than prospectuses relating
to the offering of securities other than the Designated Securities) has
heretofore been filed or transmitted for filing with the Commission; and no stop
order suspending the effectiveness of such registration statement or any
post-effective amendment thereto 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 any post-effective
amendment thereto or filed with the Commission pursuant to Rule 424(a) of the
rules
2
3
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 or any post-effective amendment thereto,
including all exhibits thereto and the documents incorporated by reference in
the prospectus contained in the registration statement at the time such part of
the registration statement became effective, excluding the Statements of
Eligibility and Qualification on Form T-1 of the Mortgage Trustee and Indenture
Trustee (the "Forms T-1"), each as amended at the time such part of the
registration statement became effective, being hereinafter called the
"Registration Statement"; the prospectus relating to the Securities, in the form
in which it has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, 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 the applicable form 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 date 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; any reference to any amendment to the Registration Statement shall
be deemed to refer to and include any annual report of the Company filed
pursuant to Sections 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; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the applicable Designated Securities in the form in
which it is filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof, including any documents incorporated by
reference therein as of the date of such filing);
(b) 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;
(c) The Registration Statement and the Prospectus conform, 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 of 1939, as amended (the "Trust Indenture Act"), and
the respective 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
3
4
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 the Company by an Underwriter of
Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to the Designated Securities;
(d) Neither the Company nor any of its Significant Subsidiaries (as
defined below) has sustained since the date of the latest audited 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 capital stock or long-term debt of the
Company or any of its Significant Subsidiaries or any material adverse change,
or any development involving a prospective material adverse change (in either
case not in the ordinary course of business), in or affecting the general
affairs, management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, otherwise than
as set forth or contemplated in the Prospectus; "Significant Subsidiary" shall
mean each subsidiary listed on Schedule III to the Pricing Agreement; the only
subsidiaries of the Company are (i) those subsidiaries listed on Schedule III
and (ii) certain other subsidiaries which, considered in the aggregate as a
single subsidiary, do not constitute a "significant subsidiary" as defined in
Rule 1-02 of Regulation S-X of the rules and regulations under the Act;
(e) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; and, except as described in the
Registration Statement and the Prospectus, the Company holds all material
licenses, certificates and permits (or has applications pending) from
governmental authorities necessary for the conduct of its business;
(f) Each Significant Subsidiary, if any, of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the power and authority
(corporate and other) to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
and, except as described in the Registration Statement and the Prospectus, each
Significant Subsidiary of the Company holds all material licenses, certificates
and permits (or has applications pending) from governmental authorities
necessary for the conduct of its business;
4
5
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable;
(h) This Agreement and the Pricing Agreement with respect to the
Designated Securities have been duly authorized, executed and delivered by the
Company;
(i) The Company has good and marketable title to all properties
standing of record in its name (which includes, without limitation, all of those
properties, except pollution control facilities standing in the names of certain
municipalities which are being purchased by the Company pursuant to installment
sales contracts and the undivided ownership interest of Michigan Public Power
Agency in a portion of the Belle River Power Plant, in each case as described in
the Prospectus, which constitute or on which there are erected its principal
plants, generating stations and substations and on which its general office and
service buildings are constructed and all other important parcels of real
estate) and improvements thereon, subject to the lien of the Mortgage and to
minor exceptions and minor defects, irregularities and deficiencies which in the
opinion of the Company, do not materially impair the use of such property for
the purpose for which it is held by the Company, and the Company has adequate
rights to maintain and operate such of its distribution facilities as are
located on public or other property not owned by the Company;
(j) If the Designated Securities consist of Mortgage Bonds or Secured
Securities, the Mortgage is a first lien (subject to no prior liens, charges,
encumbrances or security interests, except current taxes and assessments not yet
due and minor encumbrances which do not materially impair the use of such
property for the purpose for which it is held by the Company) duly filed and
recorded, on substantially all of the Company's tangible properties and
franchises (other than items purchased for resale in the ordinary course of
business) and (subject to the necessity for particular filings and recordings in
the case of certain personal property such as railroad rolling stock) will
constitute a like lien on any such properties hereafter acquired by the Company
except that any such after-acquired property will be subject to prior liens and
encumbrances, if any, existing when acquired by the Company, except that the
Mortgage will not become a lien upon after-acquired real property in a new
county until it has been duly filed and recorded and except that the Mortgage
may not be effective as to property acquired subsequent to the filing of a case
with respect to the Company under the Bankruptcy Code (defined as Xxxxx 00,
Xxxxxx Xxxxxx Code, Sections 1 et seq., as amended);
(k) The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Securities, such Designated Securities
will have been duly executed, authenticated, issued and delivered, will be
entitled to the benefits of the Mortgage, in the case of Mortgage Bonds, or the
Indenture, in the case of other Securities, and will constitute valid and
legally binding obligations of the Company enforceable in accordance with their
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability; the
Mortgage, in the case of Mortgage Bonds, including Pledged Bonds, and/or the
Indenture, in the case of Securities other than Mortgage Bonds, has been duly
authorized and duly qualified
5
6
under the Trust Indenture Act and, at the Time of Delivery for such Designated
Securities (as defined in Section 4 hereof), the Mortgage, in the case of
Mortgage Bonds, including Pledged Bonds, and/or the Indenture, in the case of
Securities other than Mortgage Bonds, will constitute 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 Mortgage, in the case of Mortgage Bonds, including Pledged
Bonds, and/or the Indenture, in the case of other Securities, conforms, and the
Designated Securities will conform, to the descriptions thereof contained in the
Prospectus as amended or supplemented with respect to such Designated
Securities;
(l) If the Designated Securities consist of Secured Securities, the
Pledged Bond has been duly authorized and established in conformity with the
provisions of the Mortgage and, when the Pledged Bond has been executed and
authenticated in accordance with the provisions of the Mortgage and pledged to
the Indenture Trustee as contemplated by the Indenture, the Pledged Bond will be
entitled to the benefits of the Mortgage and will be a valid and binding
obligation of the Company, enforceable in accordance with its terms except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability; the payments of the principal of,
premium, if any, and interest on the Secured Securities to which a Pricing
Agreement relates are secured by the related Pledged Bond; assuming that the
Indenture Trustee holds the Pledged Bond as provided in the Indenture, the
Indenture creates a valid and perfected first priority security interest in the
Pledged Bond; and the Mortgage conforms, and the Pledged Bond will conform, to
the descriptions thereof contained in the Prospectus as amended or supplemented;
(m) The issue and sale of the Designated Securities and the compliance
by the Company with all of the provisions of the Designated Securities, the
Mortgage, in the case of Mortgage Bonds or a Pledged Bond, the Indenture in the
case of other Securities, this Agreement and any Pricing 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 the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company is subject, nor will such action result in any violation of the
provisions of the Restated Articles of Incorporation, as amended, or By-laws of
the Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
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 Designated Securities or the consummation
by the Company of the transactions contemplated by this Agreement or any Pricing
Agreement or the Mortgage, in the case of Mortgage Bonds or a Pledged Bond, or
the Indenture, in the case of other Securities, except such as have been, or
will have been prior to the Time of Delivery, 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 Designated Securities by
the Underwriters;
6
7
(n) The statements set forth in the Prospectus as supplemented with
respect to the Designated Securities under the caption "Description of Debt
Securities" (or similar captions), insofar as it purports to constitute a
summary of the terms of the Designated Securities and, if applicable, under the
caption "Taxation" (or similar caption), and under the captions "Plan of
Distribution" and "Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair;
(o) Neither the Company nor any of its Significant Subsidiaries is in
violation of its Restated Articles of Incorporation, or, as the case may be,
articles of incorporation or other equivalent document, or By-laws or in default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;
(p) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial position, shareholders'
equity or results of operations of the Company and its subsidiaries; and, other
than as set forth in the Prospectus, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(q) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(r) Deloitte & Touche LLP, who certified the financial statements and
supporting schedules of the Company and its consolidated subsidiaries included
or incorporated by reference in the Registration Statement and the Prospectus,
are independent public accountants with respect to the Company and its
consolidated subsidiaries as required by the Act and the rules and regulations
thereunder;
(s) The financial statements of the Company and its consolidated
subsidiaries included or incorporated by reference in the Registration Statement
and the Prospectus, together with the related schedules and notes, present
fairly the financial position of the Company and its consolidated subsidiaries
at the dates indicated and the statement of operations, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The Company has no material contingent
obligation which is not disclosed in the Registration Statement and the
Prospectus. The supporting schedules, if any, included in the Registration
Statement and the Prospectus present fairly in accordance with GAAP the
information required to be stated therein. If applicable, the pro forma
financial statements of the Company and its consolidated subsidiaries and the
related notes thereto included in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and
7
8
have been properly compiled on the bases described therein, and the assumptions
used in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances referred to
therein;
(t) Other than as set forth in the Prospectus, the Company and its
Significant Subsidiaries are (i) in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
have received (or have pending) all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole; and
(u) The Company is not a "holding company" but is an "affiliate" of a
"holding company" (within the meaning of the Public Utility Holding Company Act
of 1935, as amended (the "1935 Act")), which holding company is exempt from the
provisions of the 1935 Act, other than Section 9(a)(2) thereof, pursuant to
Section 3(a)(1) thereof.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated Securities, the several Underwriters propose to offer such
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in the form specified in the Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor in the manner
specified in the Pricing Agreement relating thereto, payable to the order of the
Company, all at the place and time and date specified in such Pricing Agreement
or at such other place and time and date as the Representatives and the Company
may agree upon in writing, such time and date being herein called the "Time of
Delivery" for such Securities.
5. The Company agrees with each of the Underwriters of any Designated
Securities:
(a) To prepare the Prospectus as amended or supplemented in relation to
the applicable Designated Securities in a form approved by the Representatives
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 the Pricing Agreement relating to the applicable
Designated Securities or, if applicable, such earlier time as may be required by
Rule 424(b); to make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date of the Pricing
Agreement relating to such Securities and prior to the Time of Delivery for such
Securities which shall be disapproved by
8
9
the Representatives for such Securities promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment or
supplement after such Time of Delivery and furnish the Representatives with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as
the delivery of a prospectus is required in connection with the offering or sale
of such Securities, and during such same period to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed with the Commission, of
the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of such Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any such stop order or of any such order
preventing or suspending the use of any prospectus relating to the Securities or
suspending any such qualification, to promptly use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for offering
and sale under the securities laws of such jurisdictions as the Representatives
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 such Securities, provided that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented in such quantities as the Representatives may reasonably
request, and, if the delivery of a prospectus is required at any time 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
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus or to file under
the Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Act, the Exchange Act or the Trust Indenture Act, to
notify the Representatives and upon their request to file such document and to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives 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;
(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), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11 (a) of the Act and the rules and
9
10
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158); and
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing to and including the later of (i)
the termination of trading restrictions for such Designated Securities, as
notified to the Company by the Representatives and (ii) the Time of Delivery for
such Designated Securities, not to offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company which mature more than one year
after such Time of Delivery and which are substantially similar to such
Designated Securities, without the prior written consent of the Representatives.
(f) If the Designated Securities are Secured Securities, at the Time of
Delivery the Company will issue and deliver the related Pledged Bond to the
Indenture Trustee as security for the Designated Securities.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the reasonable fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
reasonable 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 Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Pricing Agreement, the
Mortgage, any Indenture, any Blue Sky and legal investment memoranda, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all reasonable 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 reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and legal investment surveys; (iv) any fees charged by
securities rating services for rating the Securities; (v) the cost of preparing
the Securities; (vi) the reasonable fees and expenses of any Trustee and any
agent of any Trustee and the reasonable fees and disbursements of counsel for
any Trustee in connection with the Mortgage, the Indenture and the Securities;
(vii) any filing fees incident to, and the reasonable fees and disbursements of
counsel for the Underwriters in connection with, any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Securities and (viii) all other reasonable costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section; it being acknowledged and agreed that the
Underwriters shall have no responsibility for payment of any of the foregoing
costs, fees, disbursements and expenses, whether reasonable or not. It is
understood, however, that, except as provided in this Section, and Sections 8
and 11 hereof, the 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 them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of
10
11
the Company in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company shall
have performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities 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
requests for additional information on the part of the Commission shall have
been complied with to the Representatives' reasonable satisfaction;
(b) Counsel for the Underwriters shall have furnished to the
Representatives such opinion or opinions, dated the Time of Delivery for such
Designated Securities, with respect to this Agreement, the validity of the
Mortgage or, as the case may be, the Indenture, the Designated Securities, the
Registration Statement, the Prospectus as amended or supplemented and other
related matters as the Representatives 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) Xxxxxx X. Xxxxxx, Esq., Vice President and General Counsel to the
Company, shall have furnished to the Representatives his written opinion, dated
the Time of Delivery for such Designated Securities, in form and substance
satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus as amended or supplemented and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
and, except as described in the Registration Statement and the
Prospectus, the Company holds all material licenses, certificates and
permits (or has applications pending) from governmental authorities
necessary for the conduct of its business;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iii) Each Significant Subsidiary, if any, of the Company has
been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the power and authority (corporate and other) to own
11
12
its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would
not have a material adverse effect on the Company and its subsidiaries,
taken as a whole; and, except as described in the Registration
Statement and the Prospectus, each Significant Subsidiary of the
Company holds all material licenses, certificates and permits (or has
applications pending) from governmental authorities necessary for the
conduct of its business;
(iv) To the best of such counsel's knowledge after due inquiry
and other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to
the Company 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 the Company
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;
(v) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Company;
(vi) The Company has good and marketable title to all
properties standing of record in its name (which includes, without
limitation, all of those properties, except pollution control
facilities standing in the names of certain municipalities which are
being purchased by the Company pursuant to installment sales contracts
and the undivided ownership interest of Michigan Public Power Agency in
a portion of the Belle River Power Plant, in each case as described in
the Prospectus, which constitute or on which there are erected its
principal plants, generating stations and substations and on which its
general office and service buildings are constructed and all other
important parcels of real estate) and improvements thereon, subject to
the lien of the Mortgage and to minor exceptions and minor defects,
irregularities and deficiencies which, in the opinion of the Company,
do not materially impair the use of such property for the purpose for
which it is held by the Company, and the Company has adequate rights to
maintain and operate such of its distribution facilities as are located
on public or other property owned by the Company;
(vii) The Designated Securities have been duly authorized and
established in conformity with the provisions of the Mortgage, in the
case of the Mortgage Bonds, or the Indenture, in the case of other
Securities, and, when such Designated Securities are executed by the
Company and authenticated by the applicable Trustee in accordance with
the provisions of the Mortgage, in the case of the Mortgage Bonds, or
the Indenture, in the case of other Securities, such Designated
Securities will be secured by the lien of and entitled to the benefits
of Mortgage, in the case of the Mortgage Bonds, or entitled to the
benefits of the Indenture, in the case of other Securities, and will be
valid and legally binding obligations of the Company, enforceable in
accordance with their terms except as
12
13
(i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability; and the Designated Securities and the Mortgage, in the
case of the Mortgage Bonds, or the Indenture, in the case of other
Securities, conform in all material respects to the descriptions
thereof in the Prospectus as amended or supplemented with respect to
such Designated Securities;
(viii) The Mortgage, in the case of the Mortgage Bonds,
including Pledged Bonds, and/or the Indenture, in the case of
Securities other than Mortgage Bonds, has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
fraudulent conveyance and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; and
the Mortgage, in the case of the Mortgage Bonds, including Pledged
Bonds, and the Indenture, in the case of Securities other than Mortgage
Bonds, has been duly qualified under the Trust Indenture Act;
(ix) If the Designated Securities consist of Mortgage Bonds or
Secured Securities, the Mortgage is a first lien (subject to no prior
liens, charges, encumbrances or security interests, except current
taxes and assessments not yet due and minor encumbrances which, in such
counsel's opinion, do not materially impair the use of such property
for the purpose for which it is held by the Company), duly filed and
recorded, on substantially all of the Company's tangible properties and
franchises (other than items purchased for resale in the ordinary
course of business) and (subject to the necessity for particular
filings and recordings in the case of certain personal property such as
railroad rolling stock) will constitute a like lien on any such
properties hereafter acquired by the Company except that any such
after-acquired property will be subject to prior liens and
encumbrances, if any, existing when acquired by the Company, except
that the Mortgage will not become a lien upon after-acquired real
property in a new county until it has been duly filed and recorded and
except that the Mortgage may not be effective as to property acquired
subsequent to the filing of a case with respect to the Company under
the Bankruptcy Code;
(x) If the Designated Securities consist of Secured
Securities, the Pledged Bond has been duly authorized and established
in conformity with the provisions of the Mortgage and, when the Pledged
Bond has been executed and authenticated in accordance with the
provisions of the Mortgage and pledged to the Indenture Trustee as
contemplated by the Indenture, the Pledged Bond will be entitled to the
benefits of the Mortgage and will be a valid and binding obligation of
the Company, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited
by equitable principles of general applicability; the payments of the
principal of, premium, if any, and interest on the Secured Securities
to which a Pricing Agreement relates are secured by the related Pledged
Bond; assuming that the Indenture Trustee holds the Pledged Bond as
provided in the Indenture, the Indenture creates a valid and perfected
first priority
13
14
security interest in the Pledged Bond; and the Mortgage conforms, and
the Pledged Bond will conform, to the descriptions thereof contained in
the Prospectus as amended or supplemented;
(xi) The issue and sale of the Designated Securities and the
compliance by the Company with all of the provisions of the Designated
Securities, the Mortgage, in the case of Mortgage Bonds or a Pledged
Bond, the Indenture, in the case of other Securities, this Agreement
and the Pricing Agreement with respect to the Designated Securities 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 known to such counsel, after due inquiry, to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, nor will such actions
result in any violation of the provisions of the Restated Articles of
Incorporation, as amended, or By-laws of the Company or any statute or
any order, rule or regulation known to such counsel of any court or
governmental agency, including, without limitation, the Michigan Public
Service Commission, or any body having jurisdiction over the Company or
any of its properties, except that such counsel need express no opinion
as to rights to indemnity which may be limited by applicable law;
(xii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency,
including, without limitation, the Michigan Public Service Commission,
or any other body is required for the issue and sale of the Designated
Securities or the consummation by the Company of the transactions
contemplated by this Agreement or such Pricing Agreement or the
Mortgage, in the case of the Mortgage Bonds or a Pledged Bond, or the
Indenture, in the case of other Securities, except such as have been
obtained under the Act, the Trust Indenture Act and from the Michigan
Public Service Commission 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 Designated Securities by the Underwriters;
(xiii) The statements set forth in the Prospectus as
supplemented with respect to the Designated Securities under the
caption "Description of Debt Securities" (or similar captions), insofar
as it purports to constitute a summary of the terms of the Designated
Securities and, if applicable, under the caption "Taxation" (or similar
caption), and under the captions "Plan of Distribution" and
"Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and
fair;
(xiv) Neither the Company nor any of its Significant
Subsidiaries is in violation of its Restated Articles of Incorporation,
or, as the case may be, articles of incorporation or other equivalent
document, or By-laws or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound;
14
15
(xv) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company", as such term is defined in the Investment Company Act;
(xvi) The Company is not a "holding company" but is an
"affiliate" of a "holding company" (within the meaning of the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act")),
which holding company is exempt from the provisions of the 1935 Act,
other than Section 9(a)(2) thereof, pursuant to Section 3(a)(1)
thereof;
(xvii) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the financial
statements and related schedules and financial data therein and except
for those parts of the Registration Statement which constitute the
Forms T-1, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and such counsel has no
reason to believe that any of such documents, when they 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 the light of the
circumstances under which they were made when such documents were so
filed, not misleading; and
(xviii) The Registration Statement and the Prospectus as
amended or supplemented and any further amendments and supplements
thereto made by the Company prior to the Time of Delivery for the
Designated Securities (other than the financial statements and related
schedules and other financial data therein and except for those parts
of the Registration Statement which constitute the Forms T-1, 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 of the Commission
thereunder; although such counsel does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus, except for those
referred to in the opinion in subsection (xiii) of this Section 7(c);
such counsel has no reason to believe that, as of its effective date,
the Registration Statement or any further amendment thereto (including
the filing of the Company's most recent Annual Report on Form 10-K with
the Commission) made by the Company prior to the Time of Delivery
(other than the financial statements and related schedules and other
financial data therein and except for those parts of the Registration
Statement which constitute the Forms T-1, 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 as amended or supplemented or any further
amendment or supplement thereto made by the Company prior to the Time
of
15
16
Delivery (other than the financial statements and related schedules and
other financial data therein and except for those parts of the
Registration Statement which constitute the Forms T-1, 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 in which they were
made, not misleading or that, as of the Time of Delivery, either the
Registration Statement or the Prospectus as amended or supplemented or
any further amendment or supplement thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
related schedules and other financial data therein and except for those
parts of the Registration Statement which constitute the Forms T-1, 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
in which they were made, not misleading; and such counsel does not know
of any amendment to the Registration Statement required to be filed or
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 as amended or supplemented or required
to be described in the Registration Statement or the Prospectus as
amended or supplemented which are not filed or incorporated by
reference or described as required;
(d) Except as otherwise agreed, on the date of the Pricing Agreement
relating to the Designated Securities, the independent accountants of the
Company who have certified the financial statements of the Company and its
subsidiaries included or incorporated by reference in the Registration Statement
shall have furnished to the Representatives a letter or letters dated the date
of the Pricing Agreement, each in a form satisfactory to you;
(e) At the Time of Delivery for such Designated Securities, the
independent accountants of the Company who have certified the financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement shall have furnished to the
Representatives a "bring down" letter or letters dated at the Time of Delivery,
each in a form satisfactory to you or, if no letter has been previously
delivered pursuant to paragraph (d) above, a letter to the effect specified
pursuant to such paragraph (d), but dated at the Time of Delivery;
(f) (i) Neither the Company nor any of its Significant Subsidiaries
shall have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended or
supplemented prior to the date of the Pricing Agreement relating to the
Designated Securities 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 as amended or
supplemented prior to the date of the Pricing Agreement relating to the
Designated Securities, and (ii) since the respective dates as of which
information is given in the Prospectus as amended or supplemented prior to the
date of the Pricing Agreement relating to the Designated Securities there shall
not have been any material change in the capital stock or long-term debt of the
Company or any of its Significant Subsidiaries or any material adverse change,
or any development involving a prospective material adverse change (other than
such as may have occurred in the ordinary course of business), in or affecting
the general affairs, management, financial position, shareholders' equity or
results of operations of the Company
16
17
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented, the effect of which,
in any such case described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Designated Securities on the terms and in the manner contemplated in the
Prospectus as amended or supplemented;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded 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 the Company's debt securities;
(h) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange; (ii) a suspension or material limitation in trading in the
Company's securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities declared by either Federal or New York State
authorities; or (iv) 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 (iv) in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Designated Securities on the
terms and in the manner contemplated in the Prospectus as first amended or
supplemented relating to the Designated Securities; and
(i) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Securities a
certificate or certificates of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations and warranties of the
Company herein at and as of such Time of Delivery, as to the performance by the
Company of all of its obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (a) and (f) of this
Section and as to such other matters as the Representatives may reasonably
request.
8.(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, 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, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, 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 reasonable 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 the
Company shall not 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
17
18
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Securities, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating to such
Securities.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which 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, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, 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, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does
18
19
not include a statement as to or an admission of fault, culpability or a failure
to act, by or on behalf of any indemnified party.
(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 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 the Company on the one hand and the Underwriters
of the Designated Securities on the other from the offering of the Designated
Securities to which such loss, claim, damage or liability (or action in respect
thereof) relates. 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 the Company on the one hand and
the Underwriters of the Designated Securities 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 the Company on the
one hand and such Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by such Underwriters. 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 the Company on the one hand
or such Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) 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 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 applicable Designated Securities
underwritten by it and distributed to the public 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 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. The
obligations of the Underwriters of Designated Securities in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to such Securities and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and
19
20
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 respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9.(a) If any Underwriter shall default in its obligation to purchase
the Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Designated Securities on such terms. In the event that, within the
respective prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Designated Securities, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Designated Securities, the Representatives or the Company shall have the right
to postpone the Time of Delivery for such Designated Securities for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to the Pricing Agreement with respect to such Designated
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of Designated
Securities which such Underwriter agreed to purchase under the Pricing Agreement
relating to such Designated Securities and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Designated Securities which such Underwriter agreed to
purchase under such Pricing Agreement) of the Designated Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing
20
21
Agreement relating to such Designated Securities shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company,
except for the expenses to be borne by the Company and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of 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 or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in Section 6 and Section 8 hereof; but, if for any other
reason Designated Securities are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Company shall then be under no
further liability to any Underwriter with respect to such Designated Securities
except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters
of Designated Securities shall act on behalf of each of such Underwriters, and
the parties hereto shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
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 the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Registration Statement: Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, the Company and, to the
extent provided in Section 8 and Section 10 hereof, the officers and directors
of the Company and each person who controls 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
21
22
this Agreement or any such Pricing Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement and each Pricing Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto 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.
Very truly yours,
The Detroit Edison Company
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof:
[Underwriters]
By: [ ]
By:
-------------------------------
Name:
Title:
22
23
ANNEX I
PRICING AGREEMENT
[Underwriters]
[ ]
Dear Sirs:
The Detroit Edison Company, a Michigan corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated [ ] (the "Underwriting Agreement"), between the
Company on the one hand and [Underwriters] to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") the Securities specified in
Schedule II hereto (the "Designated Securities"). Each of the provisions of the
Underwriting Agreement is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented relating to the Designated
Securities which are the subject of this Pricing Agreement. Each reference to
the Representatives herein and in the provisions of the Underwriting Agreement
so incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein as
therein defined. The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Securities pursuant to Section 12 of the Underwriting Agreement and the address
of the Representatives referred to in such Section 12 are set forth at the end
of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the Prospectus,
as the case may be, relating to the Designated Securities, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the Underwriting
Agreement incorporated herein by reference, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at the time and place and at the
purchase price to the Underwriters set forth in Schedule II hereto, the
principal amount of Designated Securities set forth opposite the name of such
Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon acceptance hereof by you, on behalf
of each of the Underwriters, this letter and such acceptance hereof, including
the provisions of the Underwriting Agreement incorporated herein by reference,
shall constitute a binding agreement between each of the
1
24
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of which
shall be submitted to the Company for examination upon request, but without
warranty on the part of the Representatives as to the authority of the signers
thereof.
Very truly yours,
The Detroit Edison Company
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof:
[Underwriters]
By: [ ]
By:
-------------------------------
Name:
Title:
2
25
SCHEDULE I
Principal Amount
of Designated
Securities to be
Underwriter Purchased
----------- --------------------
$
Total $
=
Sch. I-1
26
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
AGGREGATE PRINCIPAL AMOUNT:
$[ ]
PRICE TO PUBLIC:
PURCHASE PRICE BY UNDERWRITERS:
FORM OF DESIGNATED SECURITIES:
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same day funds.
MORTGAGE AND DEED OF TRUST:
Mortgage and Deed of Trust dated as of October 1, 1924, as supplemented
by and through a Supplemental Indenture dated as of [ ] between
the Company and First Chicago Trust Company of New York, as Trustee.
INDENTURE:
Indenture dated as of June 30, 1993, as supplemented by and through a
Supplemental Indenture, dated as of [ ] between the Company and
Bank One Trust Company, National Association, as Trustee.
MATURITY:
INTEREST RATE:
DAY COUNT:
360-day year of twelve 30-day months
Sch. II-1
27
INTEREST PAYMENT DATES:
[ ] and [ ], of each year
REDEMPTION PROVISIONS:
As set forth in the Designated Securities
SINKING FUND PROVISIONS:
No sinking fund provisions.
OTHER PROVISIONS:
TIME OF DELIVERY:
CLOSING LOCATION FOR DELIVERY OF SECURITIES:
Sidley Xxxxxx Xxxxx & Xxxx LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
NAMES AND ADDRESSES OF REPRESENTATIVES:
Sch. II-2
28
SCHEDULE III
SIGNIFICANT SUBSIDIARIES
Sch. III-1
