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EXHIBIT 1.2
MICHIGAN CONSOLIDATED GAS COMPANY
(A MICHIGAN CORPORATION)
DEBT SECURITIES
PURCHASE AGREEMENT
JUNE 4, 1999
Merrill Lynch & Co.
Merrill Lynch Pierce, Fenner & Smith
Incorporated
A. G. Edwards & Sons, Inc.
c/o Merrill Lynch & Co.
World Financial Center - North Tower
New York, New York 10281-1327
Ladies and Gentlemen:
Michigan Consolidated Gas Company (the "COMPANY"), a Michigan
corporation, confirms its agreement (this "AGREEMENT") with Merrill Lynch & Co.,
Merrill Lynch Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH") and A. G.
Edwards & Sons, Inc. (collectively, the "UNDERWRITERS", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), with respect to the issue and sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the principal amount set
forth in Schedule II of $55,000,000 aggregate principal amount of the Company's
6.85% Senior Notes due 2039 (the "SECURITIES"). The Securities will be issued by
the Company under its Indenture, dated as of June 1, 1998, as supplemented by
the First Supplemental Indenture, dated as of June 18, 1998 (the "BASE
INDENTURE"), between the Company and Citibank, N.A., as trustee (the "TRUSTEE"),
and a second supplement to the Base Indenture (the "SECOND SUPPLEMENTAL
INDENTURE," and together with the Base Indenture and any amendments or
supplements thereto, the "INDENTURE") to be entered into between the Company and
the Trustee, which will be secured by the concurrent issuance and delivery to
the Trustee of the Company's First Mortgage Bonds, Collateral Series D (the
"COLLATERAL BONDS"), issued under and ratably secured by the Indenture of
Mortgage and Deed of Trust
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dated as of March 1, 1944 (the "ORIGINAL SECURED INDENTURE"), as supplemented
and amended by thirty-five indentures supplemental thereto, including
specifically the Twenty-ninth Supplemental Indenture, and the Thirty-fifth
Supplemental Indenture creating the series in which the Collateral Bonds are to
be issued (the "THIRTY-FIFTH SUPPLEMENTAL INDENTURE") (the Original Secured
Indenture and all supplemental indentures thereto being referred to collectively
herein as the "SECURED INDENTURE"), in a principal amount equal to that of and
having other terms that mirror those of the Securities. The Company proposes to
sell to the Underwriters Securities of the designation, with the terms and the
aggregate principal amount specified in Schedule I hereto.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (No. 333-56333) covering the
registration of debt securities of the Company, including the Securities, 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 Securities, are collectively referred to herein
as the "PROSPECTUS"; provided, however, that all references to the "Registration
Statement" 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,
the term "PROSPECTUS" shall refer to the final or preliminary prospectus and the
applicable term sheet (a "TERM SHEET") and all references in this Agreement to
the date of such Prospectus shall mean the date of the applicable 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 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
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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 or any Rule 464(b) Registration Statement has been issued
under the 1933 Act and no proceeding for that purpose has been instituted or are
pending or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information has
been complied with.
(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 as of the date hereof, 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 Trust Indenture Act of 1939, as amended (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 or supplements thereto, at the time
that the Prospectus or any such amendment or supplement was issued and at the
Closing Date, included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. 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
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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 when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with the
offering of the Securities 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 and the Prospectus, at the time they
were or hereafter are filed 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, when
read together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was issued
and on the Closing Date, 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, in the light of the circumstances
under which they were or are made, not misleading.
(iv) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus are 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 at the dates indicated
and the statements of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries 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.
(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
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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 quarterly 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, 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, singly or in the aggregate, 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, singly or in the
aggregate, 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, are 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 shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights arising by
operation of law, under the charter or by-laws of the
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Company, under any agreement to which the Company or any of its subsidiaries is
a party or otherwise.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) The Securities have been duly authorized 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 by the Company against payment of the purchase price
therefor, 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 Securities will be in the form contemplated by,
and entitled to the benefits of, the Indenture and conform in all material
respects to the description thereof contained in the Prospectus and will be in
substantially the form filed or incorporated by reference, as the case may be,
as an exhibit to the Registration Statement.
(xii) The Collateral Bonds have been duly authorized for
issuance and delivery to the Trustee, and at the Closing Date will have been
duly executed by the Company and, when authenticated in the manner provided for
in the Secured Indenture and delivered by the Company as security for the
Securities, 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 the Bankruptcy Exceptions. The
Collateral Bonds will be in the form contemplated by, and entitled to the
benefits of, the Secured Indenture and conform in all material respects to the
description thereof contained in the Prospectus and will be substantially in the
form filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement.
(xiii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and qualified under the 1939 Act and
constitutes a valid and legally binding instrument, enforceable against the
Company in accordance with its terms except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions; the Indenture conforms in
all material respects to the description thereof contained in the Prospectus and
will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xiv) The issuance and delivery by the Company of the
Collateral Bonds to the Trustee constitute a sale by the Company of the
Collateral Bonds to the Trustee as of the Closing Date, or, if not a sale, the
grant by the Company to the Trustee of a perfected security interest in the
Collateral Bonds for the benefit of the holders of the Securities.
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(xv) The Secured Indenture constitutes a legally valid and
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 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 set forth in subparagraph xxii below, and in the case of
property hereafter acquired, any thereof existing at the time of acquisition.
(xvi) None of the Company or 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, writ 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.
(xvii) The execution, delivery and performance by the Company
of this Agreement, the Indenture, the Securities, the Secured Indenture, the
Collateral 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; and the consummation of the transactions
contemplated herein and therein and in the Registration Statement and the
Prospectus (including the issuance and sale of the Securities and the issuance
and delivery of the Collateral Bonds, and the use of the proceeds from the sale
of the Securities as described in the Prospectus under the caption "Use of
Proceeds"); 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, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or 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 (other than the
lien of the Indenture), or to which any property or assets of the Company or any
subsidiary thereof is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not, singly or in the aggregate,
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter of by-laws of the Company or any of
its subsidiaries or any applicable law, statute, rule or regulation, judgment,
order, writ or decree of any government, governmental instrumentality or court,
domestic or
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foreign, having jurisdiction over the Company or any of its subsidiaries or any
of their respective property, assets or operations.
(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 of its subsidiary's principal suppliers,
manufacturers, customers or contractors which, in either case, may reasonably be
expected to result in a Material Adverse Effect.
(xix) There is no action, suit, proceeding, inquiry or
investigation before or 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
disclosed therein), or which might reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect, or which might be reasonably
expected to materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated by this Agreement,
or the performance by the Company of its obligations hereunder; and the
aggregate of all pending legal or governmental proceedings to which the Company
or any subsidiary thereof is a party or of which any of their respective
properties 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, singly or in
the aggregate, result in a Material Adverse Effect.
(xx) 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.
(xxi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the performance by the Company of its obligations hereunder, in connection
with (a) the offering, issuance or sale of the Securities under this Agreement,
(b) the issuance and delivery to the Trustee of the Collateral Bonds, or (c) the
consummation of the transactions contemplated by this Agreement and the
Indenture, except such as have been already obtained or as may be required under
the 1933 Act or the 1933 Act Regulations or foreign or state securities or blue
sky laws.
(xxii) The Company has good and marketable title to the
properties specifically described in and conveyed by the Secured 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
Secured Indenture, to permissible encumbrances, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the execution of
the Original Secured Indenture, to any liens existing thereon or purchase money
liens placed thereon at the time of such acquisition as permitted by the Secured
Indenture, and to certain other
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reservations, rights of grantors under revocable permits, easements, licenses,
zoning 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 Secured 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 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 do not materially interfere with
the conduct of the business of the Company and its subsidiaries.
(xxiii) The Company and its subsidiaries possess all licenses,
franchises, permits, certificates, authorizations, approvals, consents, orders
and other operating rights (collectively, the "GOVERNMENTAL LICENSES") issued by
the Federal Energy Regulatory Commission, the State of Michigan, and all other
federal, state, local or foreign regulatory agencies or bodies, governmental
authorities or agencies necessary for the ownership or lease of the material
properties owned or leased by each of them and to conduct the business now
operated by each of them; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except where
the failure to so comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect except when the failure of such Governmental Licenses to be in full force
and effect would not, singly or in the aggregate, have a Material Adverse 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.
(xxiv) The Company is a "public utility company" and a
"subsidiary company" of MCN Energy Group Inc. ("MCN"), 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).
(xxv) Except as described in the Registration Statement and
except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) none of the Company or any of its subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance
or code, including any judicial or administrative order, consent, decree
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or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "HAZARDOUS
MATERIALS") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
the "ENVIRONMENTAL LAWS"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are in compliance with their requirements, or (C) there
are no pending or threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries.
(xxvi) None of the Company or its subsidiaries is, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus, and
upon the issuance and delivery to the Trustee of the Collateral Bonds, none will
be, an "investment company" or an entity under the "control" of an "investment
company" as such terms are defined under the Investment Company Act of 1940, as
amended (the "1940 ACT").
(xxvii) 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.
(xxviii) None of the Company and 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
Securities.
(xxix) 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.
(xxx) The Company has authorized all necessary action to be
taken by it for the procurement of an irrevocable financial guarantee insurance
policy (the "Insurance Policy") issued by MBIA Insurance Corporation (the
"Insurer"), insuring the payment of principal and interest on the Securities,
when due.
(b) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters in connection
with the offering of the
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Securities shall be deemed a representation and warranty by the Company, as the
case may be, to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to the 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 price per security set
forth in Schedule I hereto, the respective principal amounts of the Securities
set forth opposite the name of the such Underwriter, plus any additional
principal amount of Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b) Delivery of and payment for the Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New
York, New York 10019, or at such other place as shall be agreed upon by the
Underwriters and the Company, at 9:00 a.m. (Eastern time) on the third (fourth,
if pricing of the Securities occurs after 4:00 p.m. (Eastern time) on any given
day) business day after the date of execution of this Agreement (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
Underwriters and the Company (such time and date of payment and delivery being
referred to herein as the "CLOSING DATE").
(c) The Collateral Bonds that will secure the obligations of the
Company in respect of the Securities will be issued and delivered to the Trustee
of the Collateral Bonds on the Closing Date.
(d) On the Closing Date the Company shall deliver the Securities to
The Depository Trust Company, on behalf of the Underwriters, for the account of
each Underwriter against payment to the Company by wire transfer of immediately
available funds to a bank account designated by the Company. It is understood
that each Underwriter has authorized the Underwriters, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Securities 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 Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Date, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(e) Upon delivery, the Securities shall be in registered form and in
such denominations as set forth on Schedule I hereto. The certificates
representing the Securities shall be registered in the name of Cede & Co. and
shall be made available for inspection by the Underwriters in New York, New York
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 Securities and the Collateral Bonds, to be filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations and will take
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus.
(b) The Company, subject to Section 3(c), will comply with the
requirements of Rule 430A or Rule 434 of the 1933 Act Regulations, as
applicable, and will notify the Underwriters 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) of 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 and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or Prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. 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 Underwriters notice of their 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 Underwriters 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 Underwriters or counsel for the
Underwriters shall object.
(d) The Company has furnished or will deliver to the Underwriters 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 Underwriters,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the Underwriters
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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.
(e) 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. 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.
(f) The Company will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, 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 or amend or supplement any
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 time to amend the Registration Statement or
amend or supplement any 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.
(g) The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Underwriters may designate; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to 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 Securities 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 Securities.
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(h) The Company will timely file such reports pursuant to the 1934 Act
as are necessary in order to make generally available to its securityholders and
to deliver to the Underwriters as soon as practicable an earnings statement for
the purposes of, and to provide the benefits contemplated by, the last paragraph
of Section 11(a) of the 1933 Act.
(i) The Company will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under the caption
"Use of Proceeds."
(j) On the Closing Date, the Company will issue and deliver the
Collateral Bonds to the Trustee as security for the Securities as described in
the Prospectus under the caption "Description of the Senior Notes--Security;
Release Date."
(k) 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 430A or 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 430A or Rule 434 and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or Term Sheet, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(l) 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 earlier of (i) 10:00 p.m. Eastern time on the date of
this Agreement and (ii) the time confirmations are sent or given, as specified
by Rule 462(b)(2).
(m) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(n) So long as any of the Securities are outstanding, to make generally
available and, upon request, furnish the Underwriters copies of all reports and
financial statements furnished by the Company to each securities exchange on
which securities issued by the Company may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the 1934 Act
of the 1934 Act Regulations.
(o) 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, pledge, sell, offer 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 Securities, without the prior written consent of
Merrill Lynch,
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except for the offer by the Company of $55,000,000 aggregate principal amount of
its 6.85% Senior Secured Insured Quarterly Notes due June 1, 2038.
(p) 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 Securities.
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
(including financial statements and exhibits) as originally filed and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the Indenture and any and such other documents as may be required in
connection with the offering, purchase, sale and delivery of the Securities and
the issuance and delivery of the Collateral Bonds; (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, as well as the preparation, issuance and delivery of the
certificates for the Collateral Bonds to the Trustee, including any costs, taxes
and expenses incident to the issuance and delivery of the Securities; (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors
or agents; (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(g), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto; (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheet, the Prospectus and any amendments or
supplements thereto; (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto; (viii)
the fees and disbursements of the Trustee, including the fees and disbursements
of counsel to the Trustee; (ix) any fees payable to the Commission; and (x) any
fees payable in connection with the rating of the Securities by rating agencies.
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained or in
certificates of any officer of the Company delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
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(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act and on the date hereof and on
the Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, 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 Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b) (or any required post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rule 430A), 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).
(b) On the Closing Date the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Date, of
Ronald E. Christian, Esq., Vice President, General Counsel and Secretary of the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, 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 State of Michigan.
(ii) The Company has 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 this Agreement.
(iii) 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, individually or in the aggregate, result in a
Material Adverse Effect.
(iv) The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding 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; under any agreement to which the
Company, or any of its subsidiaries is a party, or otherwise.
(v) The Securities are in the form contemplated
by the Indenture, have been duly and validly authorized by the Company
and, when executed by the
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Company and authenticated by the Trustee in the manner provided for in
the Indenture and delivered by the Company against payment of the
purchase price therefor, 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 the Bankruptcy Exceptions. Each holder of the
Securities will be entitled to the benefits provided by the Indenture;
the form of certificate used to evidence the Securities is in due and
proper form and complies with the requirements of the Indenture; and
the Securities and the Indenture conform in all material respects to
the descriptions thereof contained in the Prospectus.
(vi) The Collateral Bonds are in the form
contemplated by the Secured Indenture, have been duly and validly
authorized by the Company and, when executed by the Company and
authenticated by the trustee under the Secured Indenture in the manner
provided for in the Secured Indenture, and issued and delivered by the
Company to the trustee as security for the Securities, 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 the Bankruptcy
Exceptions. The form of certificate used to evidence the Collateral
Bonds is in due and proper form and complies with the requirements of
the Secured Indenture; and the Collateral Bonds and the Secured
Indenture conform in all material respects to the descriptions thereof
contained in the Prospectus.
(vii) The issuance and delivery by the Company
of the Collateral Bonds to the Trustee constitute a sale by the Company
of the Collateral Bonds to the Trustee as of the Closing Date, or, if
not a sale, the grant by the Company to the Trustee of a perfected
security interest in the Collateral Bonds for the benefit of the
holders of the Securities.
(viii) Except as to property acquired
subsequent to the date of execution of the Thirty-fifth Supplemental
Indenture, the Company has good and marketable title to the property
specifically or generally described in the Secured 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 Secured Indenture, to permitted liens, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the
execution of the Original Secured Indenture, to any liens existing
thereon or purchase money liens placed thereon at the time of such
acquisition as permitted by the Secured Indenture, and to certain other
reservations, rights of grantors under revocable permits, easements,
licenses, zoning laws and ordinances and restrictions and minor defects
or irregularities of title which do not, in the opinion of such
counsel, materially impair the use of the property affected thereby in
the operation of the business of the Company; 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
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and do not interfere with the conduct of the business of the Company
and its subsidiaries.
(ix) The Secured Indenture constitutes a
legally valid and enforceable first mortgage lien, except as the same
may be limited by the laws of the State of Michigan (where the property
covered thereby is located) affecting the remedies for the enforcement
of the security provided for therein, which laws do not, in the opinion
of such counsel, 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 other than the lien
of the Secured Indenture, permitted liens, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the
execution of the Original Secured Indenture, any liens existing thereof
or purchase money liens placed thereon at the time of such acquisition
as permitted by the grantors under revocable permits, easements,
licenses, zoning laws and ordinances and restrictions and minor defects
or irregularities of title which do not, in the opinion of such
counsel, materially impair the use of the property affected thereby in
the operation of the business of the Company.
(x) All taxes and fees required to be paid by
the laws of the State of Michigan and jurisdictional subdivisions
thereof with respect to (A) the Secured Indenture and the issuance and
delivery of the Collateral Bonds and (B) the Indenture and the issuance
and delivery of the Securities, have been paid.
(xi) 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, individually or in the aggregate, have a Material Adverse Effect.
Except as otherwise disclosed in the Registration Statement and the
Prospectus, all of the issued and outstanding 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 and, to the best
of such counsel's knowledge, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. None of the
outstanding shares of capital stock of any subsidiary of the Company
was issued in violation of preemptive or other similar rights of any
securityholder of such subsidiary.
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(xii) This Agreement has been duly authorized,
executed and delivered by the Company.
(xiii) The Registration Statement, including
any Rule 462(b) Registration Statement, has been declared 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 or any Rule 462(b) Registration Statement
has been issued under the 1933 Act and no proceedings therefor have
been initiated or, to the best knowledge of such counsel, threatened by
the Commission.
(xiv) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations; the
Indenture and the Statements of Eligibility on Form T-1 with respect to
the Trustee filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
(xv) The documents incorporated by reference in
the Prospectus (other than the financial statements and supporting
schedules therein, as to which such counsel need express no opinion),
when they were filed with the Commission complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
(xvi) The Company meets the registrant
requirements for use of Form S-3 under the 1933 Act Regulations.
(xvii) The Indenture has been duly and validly
authorized, executed and delivered by the Company and qualified under
the 1939 Act and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xviii) The Secured Indenture has been duly and
validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except to
the extent that the enforcement thereof may be limited by the
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Bankruptcy Exceptions; the Secured Indenture has been duly qualified
under the 1939 Act.
(xix) The execution, delivery and performance
by the Company of this Agreement; the execution, delivery and
performance by the Company of the Indenture, the Securities, the
Secured Indenture, the Collateral 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; the consummation of the transactions contemplated herein and
therein and in the Registration Statement and Prospectus (including the
issuance and sale of the Securities, the issuance and delivery to the
Trustee of the Collateral Bonds, and the use of the proceeds from the
sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds"); and compliance by the Company with its obligations
hereunder and thereunder do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary thereof pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to such
counsel, to which the Company or its subsidiaries is a party or by
which any of them may be bound, or to which any of the properties,
assets or operations of the Company or its subsidiaries is subject,
except for such conflicts, breaches, defaults, liens, charges or
encumbrances that would not, singly or in the aggregate, result in a
Material Adverse Effect, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any if
its subsidiaries, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to such counsel, 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, assets or operations.
(xx) To the best of such counsel's knowledge,
there is not any action, suit, proceeding, inquiry or investigation
pending or threatened before or 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 disclosed therein), or which might reasonably be expected to, singly
or in the aggregate, result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
assets, properties or operations thereof or the consummation of the
transactions contemplated in this Agreement, the Indenture or the
Secured Indenture, or the performance by the Company of its obligations
hereunder and thereunder; and the aggregate of all pending legal or
governmental proceedings to which the Company or any of its
subsidiaries is a party or to which any of their respective property or
assets is the subject which are not described in the Registration
Statement or the Prospectus, including ordinary routine litigation
incidental to the business of the Company or its
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subsidiaries, could not reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect.
(xxi) The information and statements in the
Prospectus under the captions "Summary of the Offer," "The Company,"
"Use of Proceeds," "Description of the First Mortgage Bonds,"
"Description of the Senior Debt Securities" and the "Description of the
Senior Notes," to the extent that they involve matters of law,
summaries of legal matters, the Company's charter and by-laws, legal
documents or proceedings, or legal conclusions, have been reviewed by
such counsel and are correct in all material respects.
(xxii) To the best of such counsel's knowledge,
there are no statutes or regulations that are required to be described
in the Prospectus that are not described as required.
(xxiii) To the best of such counsel's knowledge
and information, 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, loan or credit agreement, note, lease,
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them or any of their
respective properties or assets are bound, except for violations and
defaults that would not, singly or in the aggregate, result in a
Material Adverse Effect.
(xxiv) All descriptions in the Prospectus of
contracts and other documents to which the Company or any of its
subsidiaries is a party are accurate in all material respects. To the
best of such counsel's knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan or credit
agreements, notes, leases or other instruments required to be described
or referred to in the Registration Statement or incorporated by
reference as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto, and
the descriptions thereof or references thereto are correct in all
material respects. No default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in the Secured Indenture, any other contract, indenture,
mortgage, agreement, note, lease or other instrument so described,
referred to, filed or incorporated by reference.
(xxv) All legally required proceedings in
connection with the authorization, issuance and validity of the
Securities and the sale of the Securities in accordance with this
Agreement (other than the filing of post-issuance reports, the
non-filing of which would not render the Securities invalid), and in
connection with the issuance and delivery to the Trustee of the
Collateral Bonds, have been taken; and no
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filing with, authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act
and the 1933 Act Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states,
as to which such counsel need express no opinion) is necessary or
required in connection with the due authorization, execution and
delivery of this Agreement or for the offering, issuance and sale of
the Securities, the issuance and delivery of the Collateral Bonds, or
the performance by the Company of its obligations in this Agreement,
the Secured Indenture, the Indenture and the Securities.
(xxvi) The Company and its subsidiaries possess
all licenses, franchises, permits, certificates, authorizations,
approvals, consents, orders and other operating rights (collectively,
the "GOVERNMENTAL LICENSES") issued by the Federal Energy Regulatory
Commission; the State of Michigan, and all other federal, state, local
or foreign regulatory agencies or bodies, 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 as described in the Registration
Statement and the Prospectus except where the failure to so comply
would not, singly or in the aggregate, have a Material Adverse Effect;
all such licenses, franchises, permits, certificates, authorizations,
approvals, consents and orders are in full force and effect, except
when the failure of such Governmental Licenses to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse
Effect; and contain no unduly burdensome provisions that would
interfere with the conduct of the business of the Company or 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.
(xxvii) Each of the Company and its
subsidiaries has good and marketable title to all material real and
personal property owned by each of them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are
described in the Registration Statement and the Prospectus or (b) do
not, singly or in the aggregate, materially affect the value of such
property and do not materially interfere with the use made and proposed
to be made of such property by the Company or any of its subsidiaries;
and any real property and buildings held under lease by the Company, or
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 conduct of the business of the Company or such
subsidiaries.
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(xxviii) The Company is not an "investment
company" or an entity under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
(xxix) MCN and the Company are presently exempt
from the provisions of the Public Utility Holding Company Act of 1935
(except Section 9 thereof) which would otherwise require either of them
to register thereunder.
Moreover, such counsel shall confirm that nothing has
come to such counsel's attention that would lead such counsel to
believe that the Registration Statement, including any Rule 430A
Information and Rule 434 Information (if applicable)(except for
financial statements and the notes thereto, the financial schedules and
any other financial data included or incorporated by reference therein,
as to which such counsel need express no opinion), at the time such
Registration Statement became effective or at the date of this
Agreement, 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 the Prospectus or
any amendment or supplement thereto (except for financial statements
and the notes thereto, the financial schedules, and any other financial
data included or incorporated by reference therein, as to which such
counsel need express no opinion), at the time the Prospectus were
issued, at the time of any such amended or supplemented Prospectus were
issued or at the Closing Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the Underwriters, in
form and substance satisfactory to the Underwriters, with respect to such
matters as the Underwriters may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In giving such opinion, LeBoeuf, Lamb,
Greene & MacRae, L.L.P. may rely as to certain matters of Michigan law upon the
opinion of Ronald E. Christian, Esq., counsel for the Company, which shall be
delivered in accordance with Section 5(b)(1) hereof.
(c) On the Closing Date, the Underwriters shall have received a
certificate of the President or a Vice President of the Company and of the Chief
Financial Officer or Chief Accounting Officer of the Company, dated as of the
Closing Date, to the effect that (i) there has been no 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, whether or not in the ordinary course of business, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Date,
(iii) the Company has complied with all
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agreements and satisfied all conditions on its part to be performed or satisfied
on or prior to the Closing Date, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been initiated or threatened by the Commission.
(d) At the time of the execution of this Agreement, the Underwriters
shall have received from Deloitte & Touche LLP a letter dated such date in form
and substance satisfactory to the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth below and as to such other matters as the Underwriters may
reasonably request, that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements
and any financial statement schedules audited by them and included or
incorporated by reference in the Registration Statement and the
Prospectus, as amended or supplemented, comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations;
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
including a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
condensed consolidated financial statements included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Registration Statement and the Prospectus, as amended or supplemented,
for the periods specified in such letter, a reading of the latest
available unaudited interim consolidated financial statements of the
Company and its subsidiaries, a reading of the minutes of the Company
and its subsidiaries since the audited consolidated financial
statements set forth in the Company's Annual Report on Form 10-K for
the most recent year, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated financial
statements set forth in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented do not
comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act and the 1934 Act
Regulations as they apply to Form 10-Q or any material
modifications should be made for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
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financial statements set forth in the Company's Annual Report
on Form 10-K for the most recent year ended incorporated by
reference in the Registration Statement and the Prospectus as
amended or supplemented;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus, as amended or
supplemented, do not agree with the corresponding items in the
unaudited consolidated financial statements from which such
data and items were derived;
(C) any unaudited pro forma consolidated condensed
financial statements or any unaudited pro forma consolidating
financial statements included or incorporated by reference in
the Prospectus, as amended or supplemented, do not comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations or
the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
(D) as of a specified date not more than five days
prior to the date of this Agreement, there has been any
decrease or increase in the capital stock or any increase or
decrease in long-term debt including capital lease obligations
and current maturities (except for sinking fund and
installment requirements under their long-term debt
agreements, terms of the preferred securities of subsidiaries
and purchases in the open market in anticipation thereof) or
any increase in short-term debt, or any decrease in
consolidated common shareholders' equity of the Company and
its consolidated subsidiaries (other than periodic dividends
declared to shareholders), in each case as compared with the
corresponding amounts shown in the latest consolidated
statement of financial position of the Company and its
subsidiaries incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented,
except in each case for increases or decreases which the
Prospectus as amended or supplemented, including financial
information incorporated by reference, discloses have occurred
or may occur or which are described in such letter;
(E) for the period from the date of the latest
consolidated financial statements included or incorporated by
reference in the Prospectus, as amended or supplemented, to
the end of the latest period for which unaudited condensed
consolidated financial statements or financial information are
available there were any decreases in consolidated operating
revenues, operating income, net income or earnings available
for Common Stock of the Company and its consolidated
subsidiaries, or any increases in any items specified by the
Underwriters, in each case as compared with the corresponding
period in the preceding year and with any other period of
corresponding length specified by
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the Underwriters, except in each case for increases or
decreases which the Prospectus, as amended or supplemented,
including financial information incorporated by reference,
discloses have occurred or may occur or which are described in
such letter; and
(F) the unaudited condensed consolidated financial
statements referred to in Clause (E) are not stated on a basis
substantially consistent with the audited consolidated
financial statements incorporated by reference in the
Registration Statement and the Prospectus, as amended or
supplemented.
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus, as amended or supplemented, and included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial
statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K
for such fiscal years;
(v) In addition to the limited procedures, reading of minutes,
inquiries and other procedures referred to in clause (iii) and (iv)
above, they have carried out certain other specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information which are derived from the general accounting and financial
records of the Company and its subsidiaries, which appear in the
Prospectus, as amended or supplemented, and the Registration Statement,
in The Company's Annual Report on Form 10-K for the latest year ended
and in the Company's Quarterly Reports on Form 10-Q since the latest
Annual Report on Form 10-K and which are specified by the Underwriters,
and have compared certain of such amounts, percentages and financial
information with the accounting and financial records of the Company
and its subsidiaries and have found them to be in agreement; and
(vi) If applicable and agreed to by the parties to this
Agreement, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the selected financial data, pro forma financial information,
prospective financial statements, consolidating financial statements
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Underwriters.
(e) On the Closing Date, the Underwriters shall have received from
Deloitte & Touche LLP a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made
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in the letter furnished pursuant to subsection (d) of this Section, except that
the specified date referred to shall be a date not more than three business days
prior to the Closing Date.
(f) On the Closing Date, the Underwriters shall have received
satisfactory evidence that the Insurance Policy has been issued by the Insurer
and confirmation that the Securities shall be rated "Aaa" by Moody's Investors
Service Inc. and "AAA" by Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.; and the Company shall have delivered to the Underwriters a
letter, dated the Closing Date, from such rating agencies, in form satisfactory
to the Underwriters, confirming that the Securities have such ratings; and since
the date of this Agreement there shall not have occurred any decrease in the
ratings of any of the securities of the Company or of the Securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the 1933 Act Regulations) and no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the securities of the Company or of
the Securities.
(g) On the Closing Date, the Underwriters shall have received from
Kutak Rock, counsel to the Insurer, an opinion substantially in the form
attached hereto as Schedule III.
(h) On the Closing Date, the Underwriters shall have received a
certificate of an appropriate officer of the Insurer, dated as of the Closing
Date, to the effect that the information being presented in the Prospectus
Supplement is true and accurate in all material respects with respect to the
Insurer, that there is no pending litigation against the Insurer that would
materially affect the Insurer's ability to perform its obligations, and that all
necessary corporate action has been take with respect to the execution, delivery
and performance of the Insurance Policy, and that the execution and delivery of
the Insurance Policy do not conflict with the organizational documents of the
Insurer.
(i) On the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement, may be
terminated by the Underwriters by notice to the Company at any time on or prior
to the Closing Date, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
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SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided,
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, the fees, expenses and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
further, that such indemnity with respect to the preliminary prospectus shall
not inure to the benefit of the Underwriters (or any person controlling such
Underwriters) from whom the person asserting any such loss, liability, claim,
damage or expense purchased any of the Securities
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which are the subject thereof if such person did not receive a copy of the
Prospectus (or the Prospectus as amended or supplemented) (in each case
exclusive of the documents from which information is incorporated by reference)
at or prior to the written confirmation of the sale of such Securities to such
person in any case where the Company complied with its obligations under
Sections 3(e) and 3(g) hereof and any such untrue statement or omission or
alleged untrue statement or omission of a material fact contained in such
preliminary prospectus (or any amendment or supplement thereto) was corrected in
the Prospectus (or the Prospectus as amended or supplemented).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise
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or consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or claim
and (ii) does 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 at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of such Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of such Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand 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 or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
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The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the 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 any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the aggregate principal amount of Securities set forth opposite
their respective names in Schedule II to this Agreement, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of any Underwriter or controlling person,
or by or on behalf of the Company, and shall survive delivery of and payment for
the Securities to the Underwriters.
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SECTION 9. Termination of Agreement.
(a) The Underwriters may terminate this Agreement, by notice to the
Company at any time on or prior to the Closing Date, if (i) there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change or any
development which could reasonably be expected to result in a prospective
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, whether or not arising in the
ordinary course of business, or (ii) there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or escalation of hostilities or other calamity or crisis, or any
change or development involving a prospective change in national or
international political, financial or economic conditions the effect of which is
such as to make it, in the judgment of the Underwriters, impracticable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company or any of its affiliates has been
suspended or limited by the Commission, the National Association of Securities
Dealers, Inc. ("NASD") or the New York Stock Exchange, or if trading generally
on either the American Stock Exchange, the New York Stock Exchange or in the
over-the-counter market has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by either of said exchanges or by such system or by order of
the Commission, NASD or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal, New York or Michigan
authorities.
(b) The Underwriters may terminate this Agreement, by notice to the
Company at any time on or prior to the Closing Date, if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Prospectus, any change or any development which would materially
and adversely affect the Insurer's condition (financial or otherwise) or
operations or which would materially and adversely affect the Insurer's ability
to perform its obligations under the Insurance Policy.
(c) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6, 7 and 8 shall
survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Date to purchase the Securities
which it or they are obligated to purchase under this Agreement (the "DEFAULTED
SECURITIES"), the Underwriters shall have the right, within 24 hours thereafter,
to make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Underwriters shall not have completed such arrangements
within
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such 24-hour period, then this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Underwriters or the Company shall have the right
to postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or the Prospectus or
in any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Merrill Lynch & Co. at World Financial Center
- - North Tower, New York, New York 10281-1327 with a copy to LeBoeuf, Lamb,
Greene & MacRae, L.L.P., 125 West 55th Street, New York, New York 10019-5389,
attention of William S. Lamb, Esq.; notices to the Company shall be directed to
it at Michigan Consolidated Gas Company, 500 Griswold Street, Detroit, Michigan
48226, attention of Ronald E. Christian, Esq., Vice President, General Counsel
and Secretary.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Company, and the Underwriters and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal Underwriters, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors and legal Underwriters, and said
controlling persons and officers and directors and their heirs and legal
Underwriters, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. SPECIFIED TIMES OF DAY REFER
TO NEW YORK CITY TIME UNLESS OTHERWISE INDICATED.
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
MICHIGAN CONSOLIDATED GAS
COMPANY
By: /s/ Howard L. Dow, III
---------------------------------------------
Name: Howard L. Dow, III
Title: Senior Vice President, Treasurer and
Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
A.G. EDWARDS & SONS, INC.
By: MERRILL LYNCH & CO.
By: /s/ Anthony Leness
-----------------------------
Authorized Signatory
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SCHEDULE I
UNDERWRITERS: Merrill Lynch & Co,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
A.G. Edwards & Sons, Inc.
PURCHASE PRICE AND DESCRIPTION OF THE SECURITIES:
TITLE: 6.85% Senior Notes due 2039.
PRINCIPAL AMOUNT: $55,000,000
PURCHASE PRICE: 96.85% of the principal amount thereof.
INDENTURE: Indenture, dated as of June 1, 1998, between Michigan
Consolidated Gas Company and Citibank, N.A., as trustee.
DATE OF MATURITY: June 1, 2039
INTEREST RATE: 6.85%
INTEREST PAYMENT DATES: March 1, June 1, September 1 and December 1.
REDEMPTION PROVISIONS: As set forth in the Prospectus under the
caption headed "Description of the Senior
Notes - Optional Redemption."
AUTHORIZED DENOMINATIONS: $25 and integral multiples thereof.
OTHER PROVISIONS:
TIME AND DATE OF DELIVERY AND PAYMENT:
TIME: 9:00 A.M. (Eastern time)
DATE: June 9, 1999
LOCATION: LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019-5389
36
PLACE OF DELIVERY AND PAYMENT:
DELIVERY: Merrill Lynch & Co.
c/o The Depository Trust Company
55 Water Street
New York, New York 10041
PAYMENT: Wire Transfer of same day funds.
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SCHEDULE II
Principal Amount
Name of Underwriter of the Securities
------------------- -----------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................ $30,000,000
A.G. Edwards & Sons, Inc................................................. $25,000,000
-----------
Total..................................................................... $55,000,000
===========
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SCHEDULE III
FORM OF OPINION OF INSURER'S COUNSEL
The opinion of Insurer's counsel shall be to the effect that:
1. [Name of Insurer] (the "Corporation") is a stock insurance
corporation, duly incorporated and validly existing under the laws of [State],
and is licensed and authorized to issue the Insurance Policy under the laws of
[State].
2. The Insurance Policy has been duly executed and is a valid
and binding obligation of the Corporation enforceable in accordance with its
terms.
3. The Insurance Policy is not required to be registered under
the Securities Act.
4. The statements set forth under the caption "The Policy and
the Insurer" in the Prospectus Supplement dated June 4, 1999 insofar as such
statements constitute a description of the Insurance Policy, accurately
summarize the Insurance Policy.
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