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EXHIBIT 5.3
MICHIGAN CONSOLIDATED GAS COMPANY
(A MICHIGAN CORPORATION)
FIRST MORTGAGE BONDS
UNDERWRITING AGREEMENT
May 15, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First Chicago Capital Markets, Inc.
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Michigan Consolidated Gas Company, a Michigan corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule II hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch and First Chicago Capital Markets, Inc. are
acting as representatives (in such capacity, the "Representatives"), with
respect to the issue and sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of $40,000,000 aggregate
principal amount of its First Mortgage Bonds designated as 7.06% Secured
Medium-Term Notes, Series B, due May 1, 2012 (the "Bonds"). The Bonds will be
issued by the Company under its Indenture of Mortgage and Deed of Trust (the
"Original Indenture") dated as of March 1, 1944, under which Citibank, N.A. and
Robert T. Kirchner are now the trustees (the "Trustees"), as heretofore amended
and supplemented by thirty-four supplemental indentures, including the
Twenty-ninth Supplemental Indenture dated as of July 15, 1989 providing for the
modification and restatement of the Original Indenture which became effective on
April 1, 1994 and the Thirty-third Supplemental Indenture creating the series in
which the Bonds are to be issued. The term "Indenture", as hereinafter used,
means such Original Indenture, as so amended and supplemented. The Company
proposes to sell to the Underwriters Bonds in the aggregate principal amount and
with the terms specified in Schedule I hereto (the "Offered Bonds").
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The Company understands that the Underwriters propose to make a public
offering of the Offered Bonds as soon as the Representatives deem advisable
after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333- 16285) covering the
registration of the Bonds under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses, and
the offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and the Company has filed such post-effective amendments thereto
as may be required prior to the execution of this Agreement. Such registration
statement, as so amended, has been declared effective by the Commission. Such
registration statement, as so amended, including the exhibits and schedules
thereto, if any, and the information, if any, deemed to be a part thereof
pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus and the prospectus supplement relating to the offering of the
Offered Bonds, in the form first furnished to the Underwriters by the Company
for use in connection with the offering of the Offered Bonds, are collectively
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall be deemed to include
all documents incorporated therein by reference pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of
this Agreement; provided, further, that if the Company files a registration
statement with the Commission pursuant to Section 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then after such filing,
all references to "Registration Statement" shall be deemed to include the Rule
462(b) Registration Statement; and provided, further, that if the Company elects
to rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall be deemed to include the final or preliminary prospectus and
the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as the
case may be, in the form first furnished to the Underwriters by the Company in
reliance upon Rule 434 of the 1933 Act Regulations, and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
A "preliminary prospectus" shall be deemed to refer to any prospectus used
before the registration statement became effective and any prospectus that
omitted, as applicable, the Rule 430A Information, the Rule 434 Information or
other information to be included upon pricing in a form of prospectus filed with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement. For purposes of this Agreement, all references to the
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Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the electronically transmitted copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter that:
(i) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been initiated
or, to the knowledge of the Company, threatened by the Commission.
(ii) The Company meets the requirements for the use of Form S-3 under
the 1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act. At the
respective times the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto (including the filing of the
Company's most recent Annual Report on Form 10-K with the Commission) became
effective and at the Closing Date, the Registration Statement, any Rule 462
Registration Statement and any amendments or supplements thereto complied and
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 did not 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. Neither the Prospectus nor any amendments and supplements
thereto, at the time the Prospectus or any amendment or supplement was issued
and at the Closing Date (as defined below), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
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fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the Company elects
to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with
the requirements of Rule 434. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or the Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or the Prospectus.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied as so filed in all
material respects with the 1933 Act Regulations and, if applicable, each
preliminary prospectus and the Prospectus delivered to the Underwriters for use
in connection with the offering of the Offered Bonds will, at the time of such
delivery, be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement or the Prospectus, at the time they were
or hereafter are filed or last amended, as the case may be, with the Commission,
complied and will comply in all material respects with the requirements of the
1934 Act, and the rules and regulations of Commission thereunder (the "1934 Act
Regulations"), and at the time of filing or as of the time of any subsequent
amendment, did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were or
are made, not misleading; and any additional documents deemed to be incorporated
by reference in the Registration Statement or the Prospectus will, if and when
such documents are filed with the Commission, or when amended, as appropriate,
comply in all material respects to the requirements of the 1934 Act and the 1934
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; 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 any Underwriter through Merrill Lynch expressly for use in the
Registration Statement or the Prospectus.
(iv) The accountants who certified the financial statements and
supporting schedules included or incorporated by reference in the Registration
Statement and the Prospectus are
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independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(v) The financial statements of the Company 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 as at the dates indicated and the
results of their operations for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The ratio
of earnings to fixed charges included in the Prospectus has been calculated in
compliance with Item 503(d) of Regulation S-K of the Commission. The selected
financial information and the summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus.
(vi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as otherwise stated
therein, (A) there has been no material adverse change and no development which
could reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise (a "Material Adverse Effect"), whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those arising in the ordinary
course of business, which are material with respect to the Company and its
subsidiaries, considered as one enterprise, (C) except for regular dividends on
the Company's common stock in amounts per share that are consistent with past
practice or the applicable charter document or supplement thereto, respectively,
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(vii) 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 presently conducted and as described in the Prospectus
and to enter into and perform its obligations under, or as contemplated under,
this Agreement. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required,
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whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good standing would
not have a Material Adverse Effect.
(viii) Each subsidiary of 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, has the corporate power and authority to own,
lease and operate its properties and to conduct its business as presently
conducted and as described in the Prospectus, and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing would not have a Material Adverse Effect. Except
as otherwise stated in the Registration Statement and the Prospectus, all of the
issued and outstanding shares of capital stock of each subsidiary of the Company
have been duly authorized and validly issued, is fully paid and non-assessable
and all such shares are owned by the Company, directly or through its
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital stock
of the subsidiaries was issued in violation of preemptive or other similar
rights arising by operation of law, under the charter or by-laws of any
subsidiary or under any agreement to which the Company or any subsidiary is a
party, or otherwise.
(ix) The Company has an authorized capitalization as set forth in the
Prospectus; since the date indicated in the Prospectus there has been no change
in the consolidated capitalization of the Company and its subsidiaries; and all
of the issued and outstanding capital stock of the Company has been duly
authorized and validly issued, is fully paid and non-assessable. None of such
shares of capital stock were issued in violation of preemptive or other similar
rights arising by operation of law, under the charter or by-laws of the Company
or under any agreement to which the Company or any of its subsidiaries is a
party, or otherwise.
(x) The Company has good and marketable title to the properties
specifically described in and conveyed by the Indenture (except such property as
may have been disposed of or released from the lien thereof in accordance with
the terms thereof) subject only to the lien of the Indenture, to permitted
liens, as defined in the Indenture, as to property acquired by the Company
subsequent to the execution of the Original Indenture, to any liens existing
thereon or purchase money liens placed thereon at the time of such acquisition
as permitted by the Indenture, and to certain other reservations, rights of
grantors under revocable permits, easements, licenses, zoning
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laws and ordinances and restrictions and minor defects or irregularities of
title which do not materially impair the use of the property affected thereby
in the operation of the business of the Company; the Company and its
subsidiaries have good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects except
the liens of the Indenture and such liens, encumbrances and defects as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries; the pipeline, distribution main
and underground gas storage easements enjoyed by the Company and its
subsidiaries are valid, subsisting and enforceable easements with such
exceptions as are not material and do not interfere with the conduct of the
business of the Company and its subsidiaries.
(xi) The Offered Bonds have been duly authorized by the Company for
issuance and sale pursuant to this Agreement and, at the Closing Date, will have
been duly executed by the Company and, when authenticated in the manner provided
for in the Indenture and delivered against payment of the consideration therefor
specified in this Agreement, will constitute legal, 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
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or 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"). The Offered Bonds 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 contained in the
Prospectus.
(xii) The Indenture has been duly authorized, executed and delivered
by the Company and qualified under the 1939 Act and constitutes a legal, 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.
(xiii) The Indenture constitutes a legally valid and direct
enforceable first mortgage lien, except as the same may be limited by the laws
of the State of Michigan (where all of the property covered thereby is located)
affecting the remedies for the enforcement of the security provided for therein,
which laws
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do not make inadequate the remedies necessary for the realization of the
benefits of such security, or as the same may be limited by the Bankruptcy
Exceptions, upon substantially all of the Company's properties and franchises,
now owned or hereafter acquired, free from all prior liens, charges or
encumbrances, except as hereinbefore set forth in subparagraph (x) above, and,
in the case of property hereafter acquired, any thereof existing at the time of
acquisition.
(xiv) Neither the Company nor any of its subsidiaries is in violation
of its charter or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, note, lease, loan or credit agreement or any
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them may be bound, or to which any of the property or
assets of the Company or any of its subsidiaries is subject, or in violation of
any applicable law, rule or regulation or any judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets, which violation or default would, singly or in
the aggregate, have a Material Adverse Effect.
(xv) The issuance and sale of the Offered Bonds, the compliance by
the Company with all of the provisions of the Offered Bonds, the execution,
delivery and performance by the Company of this Agreement, the Indenture and the
Offered Bonds and any other agreement or instrument entered into or issued or to
be entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Prospectus, and the consummation of the
transactions contemplated herein and therein and compliance by the Company with
its obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under or
require the consent of any party under, or result in the creation or imposition
of any lien on the properties or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, deed of trust,
note, lease, agreement or other instrument to which the Company or any of its
subsidiaries is a party or by which any of them may be bound, nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company and its subsidiaries or any applicable law, rule or regulation or
any judgment, order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets.
(xvi) This Agreement has been duly authorized, executed and delivered
by the Company.
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(xvii) There is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body, domestic or
foreign, now pending or to the knowledge of the Company threatened against or
affecting the Company or any of its subsidiaries which is required to be
disclosed in the Registration Statement and the Prospectus (other than as stated
therein), or which might reasonably be expected to result in a Material Adverse
Effect, or which might be reasonably expected to materially and adversely affect
the properties, assets or operations thereof or the consummation of this
Agreement, the Indenture or the transactions contemplated herein or therein.
The aggregate of all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
respective properties, assets or operations is the subject which are not
described in the Registration Statement and the Prospectus, including ordinary
routine litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xviii) No labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's principal suppliers, manufacturers,
customers or contractors which may be expected to result in a Material Adverse
Effect.
(xix) There are no contracts or documents which are required to be
described in the Registration Statement, the Prospectus or the documents
incorporated by reference therein, or to be filed as exhibits thereto which have
not been so described and/or filed as required.
(xx) No filing with, or authorization, approval, consent, license,
order, registration or qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Company
of its obligations hereunder, in connection with the offering, issuance or sale
of the Offered Bonds or the consummation of the transactions contemplated by
this Agreement or the Indenture, except such as have been already obtained or as
may be required under state or foreign securities or blue sky laws.
(xxi) The Company and its subsidiaries possess all licenses,
franchises, permits, certificates, authorizations, approvals, consents, orders
and other operating rights from the Federal Energy Regulatory Commission, the
State of Michigan and all governmental authorities or agencies necessary for the
ownership or lease of the material properties owned or leased by each of them
and for the operation of the business carried on by each of them, except where
the failure to so comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all such licenses, franchises, permits, certificates,
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authorizations, approvals, consents and orders are in full force and effect and
contain no unduly burdensome provisions that would interfere with the conduct of
the business of the Company and its subsidiaries, considered as one enterprise
and, except as otherwise set forth in the Registration Statement and the
Prospectus, there are no legal or governmental proceedings pending or threatened
that would result in a material modification, suspension or revocation thereof.
(xxii) The Company is a "subsidiary company" of a "holding company"
as such terms are defined in the Public Utility Holding Company Act of 1935 (the
"1935 Act"), and such "holding company" and the Company are presently exempt
from the provisions of the 1935 Act (except Section 9 thereof).
(xxiii) None of Company or any of its subsidiaries is an "investment
company" or under the "control" of an "investment company" as such terms are
defined under the Investment Company Act of 1940, as amended (the "1940 Act").
(xxiv) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act") or is exempt therefrom.
(xxv) Immediately after the sale of the Offered Bonds by the Company
hereunder, the aggregate amount of the Offered Bonds which shall have been
issued and sold by the Company hereunder and of any debt securities of the
Company (other than the Offered Bonds) that shall have been issued and sold
pursuant to the Registration Statement will not exceed the amount of debt
securities registered under the Registration Statement.
(xxvi) None of the Company, its subsidiaries or any of their
respective directors, officers or controlling persons, has taken, directly or
indirectly, any action resulting in a violation of Regulation M under the 1934
Act, or designed to cause or result in, or that has constituted or that
reasonably might be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Offered Bonds.
(xxvii) No "forward looking statement" (as defined in Rule 175 under
the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any officer of the Company and delivered to
the Representatives or to counsel for the Underwriters in connection with the
offering of the Offered Bonds
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shall be deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
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 Company agrees to
sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at the purchase price set forth in Schedule
I hereto, the respective principal amounts of the Offered Bonds set forth
opposite the name of such Underwriter in Schedule II hereto, plus any additional
principal amount of Offered Bonds which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) Payment of the purchase price for, and delivery of certificates for,
the Offered Bonds shall be made at the office at the location specified in
Schedule I, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M., Eastern time, on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called the "Closing Date").
Payment shall be made to the Company by certified or official bank
check or checks, or by wire transfer in the type of funds specified in Schedule
I, payable to the order of the Company, against delivery to the Representatives
for the respective accounts of the Underwriters of certificates for the Offered
Bonds to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Offered Bonds which it has
agreed to purchase. Merrill Lynch, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Offered Bonds to be purchased by any Underwriter whose
check has not been received by the Closing Date, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(c) Certificates for the Offered Bonds shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Date. The certificates for the Offered
Bonds will be made available to for examination and packaging by the
Representatives at the location specified in Schedule I hereto not later than
10:00 a.m., Eastern time, on the business day prior to the Closing Date.
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SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Promptly following the execution of this Agreement, the Company will
cause the Prospectus, including as a part thereof a prospectus supplement
relating to the Offered Bonds to be filed with the Commission pursuant to Rule
424 of the 1933 Act Regulations and the Company will promptly advise the
Representatives when such filing has been made. Prior to the filing, the
Company will cooperate with the Representatives in the preparation of such
prospectus supplement to assure that the Representatives have no reasonable
objection to the form or content thereof when filed or mailed.
(b) The Company, subject to Section 3(c), will comply with the
requirements of Rule 434 of the 1933 Act Regulations if and as applicable, and
will notify the Representatives immediately, and confirm the notice in writing,
(i) of the effectiveness of any post-effective amendment to the Registration
Statement or the filing of any supplement or amendment to the Prospectus, (ii)
the receipt of any comments from the Commission, (iii) 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, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or suspending the use of any preliminary prospectus, or
the initiation of any proceedings for that purpose and (v) of the issuance by
any state securities commission or other regulatory authority of any order
suspending the qualification or the exemption from qualification of the Offered
Bonds under state securities or Blue Sky laws or the initiation or threatening
of any proceeding for such purpose. The Company 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.
(c) The Company will give the Representatives notice of its intention to
file or prepare any amendment to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the Representatives with copies of any such Rule
462(b) Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as the case may
be; and will not file any such Rule 462(b) Registration Statement, Term Sheet,
amendment, supplement or revision to which the Representatives or counsel for
the Underwriters shall object.
(d) The Company will comply with the 1933 Act and the 1933 Act Regulations
and the 1934 Act and the 1934 Act Regulations so
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as to permit the completion of the distribution of the Offered Bonds as
contemplated in this Agreement and in the Registration Statement and the
Prospectus. If at any time when the Prospectus is required by the 1933 Act or
the 1934 Act to be delivered in connection with sales of the Offered Bonds, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement in order that the Registration Statement 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
or to amend or supplement the Prospectus in order that the Prospectus 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 not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, 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
Company will promptly prepare and file with the Commission, subject to Section
3(c), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters, without
charge, such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(e) The Company will make generally available to its security holders as
soon as practicable, but not later than 45 days (or 90 days, in the case of a
period that is also the Company's fiscal year) after the close of the period
covered thereby, an earnings statement of the Company and its subsidiaries (in
form complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the "effective date" (as defined in said
Rule 158) of the Registration Statement.
(f) The Company will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Registration Statement 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) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each of
the Underwriters. If applicable, the copies of the Registration Statement and
each amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted
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copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(g) The Company will deliver to each Underwriter, without charge, as many
copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter,
without charge, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. If applicable, the Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(h) The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Offered Bonds for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as Merrill Lynch may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Offered Bonds have been so qualified, the Company
will file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for so long as may be
required in connection with distribution of the Offered Bonds.
(i) The Company will use the net proceeds received by it from the sale of
the Offered Bonds in the manner specified in the Prospectus under "Use of
Proceeds".
(j) If, at the time that the Registration Statement became (or in the case
of a post-effective amendment becomes) effective, any information shall have
been omitted therefrom in reliance upon Rule 434 of the 1933 Act Regulations,
then immediately following the execution of this Agreement, the Company will
prepare, and file or transmit for filing with the Commission in accordance with
such Rule 434 and Rule 424(b) of the 1933 Act Regulations, copies of an amended
Prospectus, or Term Sheet, containing all information so omitted.
(k) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) and pay the applicable fees in accordance with Rule 111 of the 1933 Act
Regulations by the time confirmations are sent or given, as specified by Rule
462(b)(2).
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(l) The Company, during the period when the Prospectus is required to be
delivered under the 1933 Act, will file all documents required to be filed with
the Commission pursuant to the 1934 Act within the time periods required by the
1934 Act and the 1934 Act Regulations.
(m) During a period of fifteen days from the date of the Prospectus, the
Company will not, without the prior written consent of Merrill Lynch, directly
or indirectly, issue, sell, contract to sell, grant any option for the sale of,
or otherwise transfer or dispose of any debt securities of the Company which
mature more than one year after the Closing Date and which are substantially
similar to the Offered Bonds, except for the offer by the Company of $15,000,000
aggregate principal amount of First Mortgage Bonds designated as Secured
Medium-Notes, Series C, due May 1, 2017 and $30,000,000 aggregate principal
amount of First Mortgage Bonds designated as Secured Medium-Term Notes, Series
C, due May 1, 2007.
(n) None of the Company, its subsidiaries or any of their respective
directors, officers or controlling persons, will take, directly or indirectly,
any action resulting in a violation of Regulation M under the 1934 Act, or
designed to cause or result in, or that reasonably might be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Offered Bonds.
SECTION 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including, without
limitation, expenses related to the following, if incurred: (i) the
preparation, delivery, printing and filing of the Registration Statement and
Prospectus as originally filed (including financial statements and exhibits)
and of each amendment thereto; (ii) the printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters, the Indenture
and such other documents as may be required in connection with the offering,
purchase, sale and delivery of the Offered Bonds; (iii) the preparation,
issuance and delivery of the certificates for the Offered Bonds to the
Underwriters; (iv) all costs, taxes and expenses incident to the issue and
delivery of the Offered Bonds to the Underwriters; (v) the fees, expenses and
disbursements of the Company's counsel, accountants and other advisors; (vi)
the qualification of the Offered Bonds under securities laws in accordance with
the provisions of Section 3(h), including filing fees and the fees, expenses
and disbursements of counsel for the Underwriters in connection therewith and
in connection with the preparation of the Blue Sky Survey, any supplement
thereto and any Legal Investment Survey; (vii) 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, any Term Sheet and of
the Prospectus and any amendments or supplements thereto; (viii) the printing
and
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delivery to the Underwriters of copies of the Blue Sky Survey, any supplement
thereto and any Legal Investment Survey; (ix) the fees and expenses of the
Trustees, including the fees, expenses and disbursements of counsel for the
Trustees in connection with the Indenture and the Offered Bonds; and (x) any
fees payable in connection with the rating of the Offered Bonds by nationally
recognized statistical rating organizations.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriters for all of its out-of-pocket expenses, including the
reasonable fees, expenses and disbursements of LeBoeuf, Lamb, Greene & MacRae,
L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligation. The obligations of the
several Underwriters to purchase and pay for the Offered Bonds pursuant to this
Agreement are subject to the accuracy of the representations and warranties of
the Company herein contained or in certificates of any officer of the Company or
any subsidiary delivered pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder, and to the following further
conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective under the 1933 Act not later than 5:30
p.m., New York City time, on the date hereof, and on the date hereof and at the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel to the Underwriters. A prospectus
containing information relating to the description of the Offered Bonds, the
specific method of distribution and similar matters shall have been filed with
the Commission in accordance with Rule 424(b)(1), (2), (3), (4) or (5), as
applicable, or, if the Company has elected to rely upon Rule 434 of the 1933 Act
Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) At the Closing Date, the Representatives shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Susan K.
McNish, Vice President, General Counsel and Secretary of the Company, in form
and substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under
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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 presently
conducted and as described in the Prospectus and to enter into and perform its
obligations under, or as contemplated under, this Agreement.
(ii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not have a Material Adverse Effect.
(iii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and is fully paid and
non-assessable. None of such shares of capital stock were issued in violation of
preemptive or other similar rights arising by operation of law, under the
charter or by-laws of the Company or under any agreement to which the Company or
any of its subsidiaries is a party, or otherwise.
(iv) Each subsidiary of 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, has the corporate power and authority to own,
lease and operate its properties and to conduct its business as presently
conducted and as described in the Prospectus, and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing would not have a Material Adverse Effect. Except
as otherwise stated in the Registration Statement and the Prospectus, all of the
issued and outstanding shares of capital stock of each such subsidiary of the
Company has been duly authorized and validly issued, is fully paid and
non-assessable and all such shares are owned by the Company, directly or through
its subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(v) to the best of such counsel's knowledge, neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws and no default
by the Company or any subsidiary exists in the due performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, note, lease, loan agreement or
other
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agreement or instrument to which the Company or any of its subsidiaries is a
party or by which any of them may be bound, or to which any of the properties or
assets of the Company or any of its subsidiaries is subject.
(vi) The Company meets the registrant requirements for use of
Form S-3 under the 1933 Act Regulations.
(vii) The issuance and sale of the Offered Bonds, the compliance by
the Company with all of the provisions of the Offered Bonds, the execution,
delivery and performance by the Company of this Agreement, the Indenture and the
Offered Bonds and any other agreement or instrument entered into or issued or to
be entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Prospectus, and the consummation of the
transactions contemplated herein and therein and compliance by the Company with
its obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under or
require the consent of any party under, or result in the creation or imposition
of any lien on the properties or assets of the Company or any of its
subsidiaries pursuant to, any contract, indenture, mortgage, deed of trust,
note, lease, agreement or other instrument to which the Company or any of its
subsidiaries is a party or by which any of them may be bound, nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company and its subsidiaries or any applicable law, rule or regulation or
any judgment, order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets.
(viii) No filing with, or authorization, approval, consent, license,
order, registration or qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Company
of its obligations hereunder, in connection with the offering, issuance or sale
of the Offered Bonds or the consummation of the transactions contemplated by
this Agreement or the Indenture, except such as have been already obtained or as
may be required under state or foreign securities or blue sky laws.
(ix) All descriptions in the Prospectus of contracts and other
documents to which the Company or its subsidiaries are a party are accurate in
all material respects; to the best of such counsel's knowledge and information,
there are no franchises, contracts, indentures,
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mortgages, agreements, notes, leases or other instruments required to be
described or referred to or incorporated by reference in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to or incorporated by reference therein or filed as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects; and no default exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, agreement, note, lease or other instrument so described,
referred to, filed or incorporated by reference.
(x) The Company and its subsidiaries possess all licenses,
franchises, permits, certificates, authorizations, approvals, consents, orders
and other operating rights from the Federal Energy Regulatory Commission, the
State of Michigan and all governmental authorities or agencies necessary for the
ownership or lease of the material properties owned or leased by each of them
and for the operation of the business carried on by each of them, except where
the failure to so comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all such licenses, franchises, permits, certificates,
authorizations, approvals, consents and orders are in full force and effect and
contain no unduly burdensome provisions that would interfere with the conduct of
the business of the Company and its subsidiaries, considered as one enterprise
and, except as otherwise set forth in the Registration Statement or the
Prospectus, there are no legal or governmental proceedings pending or threatened
that would result in a material modification, suspension or revocation thereof.
(xi) To the best of such counsel's knowledge, there is no action,
suit, proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, pending or threatened against
or affecting the Company or any of its subsidiaries which is required to be
disclosed in the Registration Statement and the Prospectus (other than as stated
therein), or which might reasonably be expected to result in a Material Adverse
Effect, or which might be reasonably expected to materially and adversely affect
the properties, assets or operations thereof or the consummation of this
Agreement, the Indenture or the transactions contemplated herein or therein.
The aggregate of all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
respective properties, assets or operations is the subject which are not
described in the Registration Statement and the Prospectus, including ordinary
routine litigation incidental
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to the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xii) The Company and its subsidiaries have good and marketable
title to all personal property owned by them, free and clear of all liens,
encumbrances and defects except the liens of the Indenture and such liens,
encumbrances and defects as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(xiii) The information in the Prospectus under the captions
"Summary," "The Company," "Capitalization at March 31, 1997," "Use of Proceeds,"
"Description of the Offered Bonds" and "Description of the New Bonds", to the
extent that they involve matters of law, summaries of legal matters, documents
or proceedings, or legal conclusions, has been reviewed by such counsel and is
correct in all material respects.
(xiv) The Offered Bonds and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus.
(xv) The Registration Statement, including any Rule 462(b)
Registration Statement, is effective under the 1933 Act; any required filing of
the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act
or proceedings therefor initiated, to the best of such counsel's knowledge, or
threatened by the Commission.
(xvi) The Registration Statement, including any Rule 462(b)
Registration Statement and the Prospectus, and each amendment or supplement
thereto (other than the financial statements and the notes thereto, the
financial schedules and any other financial data included or incorporated by
reference therein, or the exhibits to the Registration Statement, including any
Form T-1, as to which no opinion need be rendered), as of their respective
effective or issue dates, or when amended, as appropriate, complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
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