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$225,000,000 8.700% Senior Notes due 2009
$250,000,000 9.375% Senior Bonds due 2029
REGISTRATION RIGHTS AGREEMENT
Dated as of October 18, 1999
Among
MIDWEST ENERGY, INC.
AND
LEHMAN BROTHERS INC.
AND
J.P. MORGAN SECURITIES INC.
AND
MORGAN STANLEY DEAN WITTER
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TABLE OF CONTENTS
Page
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1. Definitions..............................................................................................1
2. Exchange Offer...........................................................................................4
3. Shelf Registration Statement.............................................................................7
(a) Shelf Registration Statement....................................................................7
(b) Withdrawal of Stop Orders.......................................................................8
(c) Supplements and Amendments......................................................................8
4. Liquidated Damages.......................................................................................8
5. Registration Procedures.................................................................................10
6. Registration Expenses...................................................................................17
7. Indemnification and Contribution........................................................................18
8. Underwritten Registrations..............................................................................22
9. Miscellaneous...........................................................................................22
(a) No Inconsistent Agreements.....................................................................22
(b) Amendments and Waivers.........................................................................22
(c) Notices........................................................................................23
(d) Successors and Assigns.........................................................................24
(e) Counterparts...................................................................................24
(f) Headings.......................................................................................24
(g) Governing Law..................................................................................24
(h) Severability...................................................................................25
(i) Securities Held by the Company, or Its Affiliates..............................................25
(j) Entire Agreement...............................................................................25
i
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
October 18, 1999, by and among Midwest Energy, Inc., a Delaware Corporation (the
"Company"), and Lehman Brothers Inc., J.P. Morgan Securities Inc. and Morgan
Stanley Dean Witter (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of October 13, 1999, by and among the Company and the
Initial Purchasers (the "Purchase Agreement") which provides for the sale by the
Company to the Initial Purchasers of its $225,000,000 8.700% Senior Notes due
2009 (the "Notes") and its $250,000,000 9.375% Senior Bonds due 2029 (the
"Bonds" and together with the Notes, the "Securities"). The Securities are to be
issued under an indenture, dated as of October 18, 1999 (the "Indenture"), by
and between the Company and The Bank of New York, as Trustee. In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Company has
agreed to provide the registration rights set forth in this Agreement for the
benefit of the Initial Purchasers and their direct and indirect transferees and
assigns.
The parties hereby agree as follows:
1. Definitions
Unless otherwise defined herein, terms defined in the Indenture shall
be used herein as defined therein. As used in this Agreement, the following
terms shall have the following meanings:
Advice: See Section 5 hereof.
Agreement: See the first introductory paragraph hereto.
Applicable Period: See Section 2(b) hereof.
Authenticating Agent: The Authenticating Agent as defined in the
Indenture.
Company: See the first introductory paragraph hereto.
Effectiveness Period: See Section 3(a) hereof.
Effectiveness Target Date: In the case of the Exchange Offer
Registration Statement, the 180th day after the effective date of the Merger. In
the case of the Shelf Registration Statement, the 180th day after the obligation
to file the Shelf Registration Statement first arises in accordance with clause
(i), (ii), (iii), (iv) or (v) of Section 2(c).
Event Date: See Section 4(b) hereof.
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Exchange Act: The U.S. Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a) hereof.
Exchange Offer Registration Statement: See Section 2(a) hereof.
Filing Date: In the case of the Exchange Offer Registration Statement,
the 90th day after the effective date of the Merger. In the case of the Shelf
Registration Statement, the 60th day after the obligation to file the Shelf
Registration Statement first arises in accordance with clause (i), (ii), (iii),
(iv) or (v) of Section 2(c).
Holder: Any holder of Transfer Restricted Securities.
Indenture: See the second introductory paragraph hereto.
Initial Purchasers: See the first introductory paragraph hereto.
Inspectors: See Section 5(m) hereof.
Issuance Date: The date of the issuance of the Securities under the
Indenture.
Liquidated Damages: See Section 4(a) hereof.
Merger: The merger of the Company with and into CILCORP Inc., pursuant
to the Merger Agreement dated as of November 22, 1998.
NASD: See Section 5(p) hereof.
Exchange Securities: See Section 2(a) hereof.
Securities: See the second introductory paragraph hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2(b) hereof.
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or
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supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
Records: See Section 5(m) hereof.
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Offer Registration Statement or the
Shelf Registration Statement, filed with the SEC pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The U.S. Securities and Exchange Commission.
Securities Act: The U.S. Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
Shelf Registration Statement: See Section 3(a) hereof.
Transfer Restricted Securities: Each Security until the earliest to
occur of (i) the date on which such Security has been exchanged by a Person
(other than a Participating Broker-Dealer) for one or more Exchange Securities
in the Exchange Offer, (ii) following the exchange by a Participating
Broker-Dealer in the Exchange Offer of such Security for one or more Exchange
Securities, the date on which such Exchange Securities are sold to a purchaser
who receives from such Participating Broker-Dealer on or prior to the date of
such sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such
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Security has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (iv) the date on which
such Security is distributed to the public pursuant to Rule 144 under the
Securities Act.
Trust Indenture Act: The U.S. Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Securities.
underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Company agrees to use its best efforts to file at its sole cost
and expense with the SEC no later than the Filing Date, unless prohibited by
applicable law or SEC policy, an offer to exchange (the "Exchange Offer") any
and all of the Transfer Restricted Securities for a like aggregate principal
amount of senior notes or senior bonds, as appropriate, of the Company, which
are substantially identical in all material respects to the Notes and Bonds,
respectively (collectively, the "Exchange Securities") (and which are entitled
to the benefits of the Indenture or a trust indenture which is substantially
identical in all material respects to the Indenture (other than such changes to
the Indenture or any such identical trust indenture as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification thereof
under the Trust Indenture Act) and which, in either case, has been qualified
under the Trust Indenture Act), except that the Exchange Securities shall have
been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Offer Registration Statement") and shall comply with all applicable
tender offer rules and regulations under the Exchange Act. The Company agrees to
(i) use its reasonable best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act on or before the
Effectiveness Target Date; (ii) keep the Exchange Offer open for at least 20
business days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is mailed to Holders; (iii) (A) file all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Securities Act and (C) cause all necessary filings in
connection with the registration and qualifications of the Exchange Securities
to be made under the blue sky laws of such jurisdictions as are necessary to
permit consummation of the Exchange Offer; and (iv) use its reasonable best
efforts to consummate the Exchange Offer on or prior to 30 days after the date
on which the Exchange Offer Registration Statement is declared effective by the
SEC; provided, however, that the Company shall not be required to (1) qualify as
a foreign corporation or as a dealer in securities in any jurisdiction where
they would not otherwise be required to qualify, (2) file any general consent to
service of process or (3) subject themselves to taxation in any such
jurisdiction if they are not so subject. Upon the Exchange Offer Registration
Statement being declared effective, the Company will
5
offer the Exchange Securities in exchange for surrender of the Securities. If
after such Exchange Offer Registration Statement is declared effective by the
SEC, the Exchange Offer or the issuance of the Exchange Securities thereunder is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Exchange Offer
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement. Each Holder who participates in the Exchange Offer will be
required to represent that (i) any Exchange Securities received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement or
understanding with any Person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Securities, (iii) it is not a
broker-dealer that acquired Securities directly from the Company, (iv) it is not
an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company
or, if it is such an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable
and (v) it is not acting on behalf of any Person who could not truthfully make
the foregoing representations. If such Holder is not a broker-dealer, such
Holder will be required to represent that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Securities. If such Holder
is a broker-dealer that will receive Exchange Securities for its own account in
exchange for Securities that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Securities. Upon consummation of the Exchange Offer in accordance with this
Section 2, the Company shall not have any further obligation to register
Transfer Restricted Securities pursuant to Section 2 hereof. No securities other
than the Exchange Securities shall be included in the Exchange Offer
Registration Statement.
(b) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution",
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the Staff of the SEC or such positions or policies, in
the judgment of the Initial Purchasers, represent the prevailing views of the
Staff of the SEC. Such "Plan of Distribution" section shall also expressly
permit the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers (unless such Participating Broker-Dealer will be reselling an
unsold allotment from the original sale of the Securities), and include a
statement describing the means by which Participating Broker-Dealers may resell
the Exchange Securities.
Upon written request after the consummation of the Exchange Offer, the
Company shall use its reasonable best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by any Participating Broker-Dealer subject to the prospectus delivery
requirements of the Securities Act and other Persons, if any, with similar
prospectus delivery requirements for such period of time as is necessary to
comply with applicable law in
6
connection with any resale of the Exchange Securities; provided, however, that
such period shall not exceed 180 days after the consummation of the Exchange
Offer (or such longer period if extended pursuant to the last paragraph of
Section 5 hereof) (the "Applicable Period").
Interest on the Exchange Securities will accrue from the last interest
payment date on which interest was paid on the Securities surrendered in
exchange therefor or, if no interest has been paid on the Securities, from the
Issuance Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York,
which may be the Trustee or an affiliate of the Trustee;
(3) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer the
Company shall:
(1) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Exchange Offer;
(2) deliver to the Trustee or Authenticating Agent for cancellation
all Securities so accepted for exchange; and
(3) cause the Trustee promptly to authenticate and deliver to each
Holder of the canceled Securities or Exchange Securities, in global
form in aggregate principal amount equal to the respective Securities
so accepted for exchange, as further set forth in the Indenture.
The Exchange Securities may be issued under (i) the Indenture or (ii)
an indenture substantially identical in all material respects to the Indenture,
which in either event shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture.
(c) If (i) the Company is not permitted to file the Exchange Offer
Registration Statement or to consummate the Exchange Offer because the Exchange
Offer is not permitted by
7
applicable law or SEC policy, (ii) any Holder of Transfer Restricted Securities
that is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) notifies the Company on or before the 20th business day
following the consummation of the Exchange Offer that (a) applicable law or SEC
policy prohibits the Holder from participating in the Exchange Offer, (b) such
Holder may not resell the Exchange Securities acquired by it in the Exchange
Offer to the public without delivering a prospectus and the prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (c) such Holder is a broker-dealer and holds
Securities acquired directly from the Company or an affiliate of the Company,
(iii) the Exchange Offer Registration Statement is not for any other reason
declared effective within 180 days after the effective date of the Merger, (iv)
any Holder (other than a Participating Broker-Dealer) is not eligible to
participate in the Exchange Offer, or in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive Exchange
Securities on the date of the exchange that may be sold without restriction
under U.S. Federal securities laws (other than due solely to the status of such
Holder as an affiliate of the Company within the meaning of the Securities Act
or due to the requirement that such Holder deliver a Prospectus in connection
with any resale of the Exchange Securities) or (v) the Exchange Offer has been
completed and in the opinion of counsel for the Initial Purchasers a
Registration Statement must be filed and a prospectus must be delivered by the
Initial Purchasers in connection with any offering or sale of Transfer
Restricted Securities, then the Company shall promptly deliver written notice
thereof (the "Shelf Notice") to the Trustee and in the case of clauses (i) and
(iii), all Holders and in the case of clauses (ii), (iv) and (v), the affected
Holders, and shall at its own cost file a Shelf Registration Statement pursuant
to Section 3 hereof. Following the delivery of a Shelf Notice in accordance with
this Section 2(c) and compliance with Section 3(a), the Company shall not have
any further obligations under this Section 2.
3. Shelf Registration Statement
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
(a) Shelf Registration Statement. The Company will: (A) use its best
efforts to file with the SEC a Registration Statement (which filing may be a
confidential filing) for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Transfer Restricted Securities (the "Shelf
Registration Statement"), within 60 days of the earliest to occur of clauses (i)
through (v) in Section 2(c) above and (B) use its reasonable best efforts to
cause the Shelf Registration Statement to be declared effective by the SEC on or
prior to the 180th day after such obligation arises. No Holder shall be entitled
to the benefits of Section 4 of this Agreement unless and until such Holder
shall have provided all information reasonably requested by the Company (after
conferring with counsel), and such Holder shall not be entitled to such benefits
with respect to any period during which such information was not provided. Each
Holder to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading; provided, further, that if the Company files a Shelf
Registration Statement pursuant to this Section 3(a), it need not abandon the
attempt to cause the SEC to declare the Exchange Offer Registration Statement
effective, and it may satisfy its obligations to register the Securities
pursuant to this
8
Agreement either by complying with Section 2 and/or Section 3. The Shelf
Registration Statement shall be on Form S-3 or another appropriate form
permitting registration of such Transfer Restricted Securities for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings), or may be an amendment to the
Exchange Offer Registration Statement. The Company shall not permit any
securities other than the Transfer Restricted Securities to be included in the
Shelf Registration Statement.
The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended to
ensure that it is available for resales of Securities by the holders of Transfer
Restricted Securities entitled to this benefit and to ensure that such Shelf
Registration Statement conforms and continues to conform with the requirements
of this Agreement, the Securities Act and the policies, rules and regulations of
the SEC, as announced from time to time, until the second anniversary of the
Issuance Date, subject to extension pursuant to the last paragraph of Section 5
hereof (the "Effectiveness Period"), or such shorter period ending when all
Transfer Restricted Securities covered by the Shelf Registration Statement have
been sold in the manner set forth and as contemplated in the Shelf Registration
Statement or when the Transfer Restricted Securities become eligible for resale
pursuant to Rule 144 under the Securities Act without volume restrictions, if
any.
(b) Withdrawal of Stop Orders. If the Shelf Registration Statement
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Company shall use its reasonable best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly supplement
and amend the Shelf Registration Statement if required by the rules, regulations
or instructions applicable to the registration form used for such Shelf
Registration Statement, if required by the Securities Act, or during the
shortest of such periods set forth in the second paragraph of Section 3(a)
hereof if reasonably requested by the Holders of a majority in aggregate
principal amount of Transfer Restricted Securities covered by such Registration
Statement or by any underwriter of such Transfer Restricted Securities based on
a reasonable belief that such supplement or amendment is required by law.
4. Liquidated Damages
(a) The Company and the Initial Purchasers agree that the Holders of
Securities will suffer damages if the Company fails to fulfill its obligations
under Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, the Company
agrees to pay, as liquidated damages, additional interest on the Securities
("Liquidated Damages") under the circumstances and to the extent set forth below
(each of which shall be given independent effect and shall not be duplicative):
(i) if neither the Exchange Offer Registration Statement nor the
Shelf Registration Statement has been filed on or prior to the
applicable Filing Date, then,
9
commencing on the 1st day after the applicable Filing Date, Liquidated
Damages shall accrue on the Securities over and above the stated
interest at a rate of 0.50% per annum;
(ii) if neither the Exchange Offer Registration Statement nor the
Shelf Registration Statement is declared effective by the SEC on or
prior to the applicable Effectiveness Target Date, then, commencing on
the 1st day after the applicable Effectiveness Target Date, Liquidated
Damages shall accrue on the Securities included or which should have
been included in such Registration Statement over and above the stated
interest at a rate of 0.50% per annum;
(iii) if the Exchange Offer has not been consummated within 30 days
after the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement, then, commencing on the 31st day after such
Effectiveness Target Date, Liquidated Damages shall accrue on the
Securities over and above the stated interest at a rate of 0.50% per
annum; or
(iv) (A) the Exchange Offer Registration Statement is filed and
declared effective but thereafter ceases to be effective or fails to be
usable for its intended purpose at any time during the Applicable
Period and is not declared effective again within five business days
thereafter or (B) the Shelf Registration Statement is filed and
declared effective but thereafter ceases to be effective or fails to be
usable for its intended purpose at any time during the Effectiveness
Period and is not declared effective again within five business days
thereafter, Liquidated Damages shall accrue on the Securities over and
above the stated interest rate at a rate of 0.50% per annum (it being
understood and agreed that, notwithstanding any provision to the
contrary, so long as any Security which is the subject of a Shelf
Notice is then covered by an effective Shelf Registration Statement, no
Liquidated Damages shall accrue on such Security);
provided, however, that in no event shall the Liquidated Damages exceed 0.50%
per annum; and provided further that (1) upon the filing of the Exchange Offer
Registration Statement or a Shelf Registration Statement as required hereunder
(in the case of clause (i) of this Section 4(a)), (2) upon the effectiveness of
the Exchange Offer Registration Statement or the Shelf Registration Statement as
required hereunder (in the case of clause (ii) of this Section 4(a)), (3) upon
the consummation of the Exchange Offer (in the case of clause (iii) of this
Section 4(a)), and (4) upon the effectiveness or usability of the Exchange Offer
Registration Statement which had ceased to remain effective or be usable (in the
case of clause (iv)(A) of this Section 4(a)), or upon the effectiveness or
usability of the Shelf Registration Statement which had ceased to remain
effective or be usable (in the case of clause (iv)(B) of this Section 4(a)),
Liquidated Damages on the affected Securities as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Company shall notify the Trustee within five business days
after each and every date on which an event first occurs in respect of which
Liquidated Damages is required to be paid (an "Event Date"). Any amounts of
Liquidated Damages due pursuant to (a)(i), (a)(ii), (a)(iii) or (a)(iv) of this
Section 4 will be payable to DTC or its nominee in its capacity as the
10
registered holder of affected Securities in cash semi-annually on each April 15
and October 15 (to the holders of record on the April 1 and October 1
immediately preceding such dates), commencing with the first such date occurring
after any such Liquidated Damages commences to accrue. The amount of Liquidated
Damages will be determined by multiplying the Liquidated Damages rate by the
principal amount of the affected Securities of such Holders, multiplied by a
fraction, the numerator of which is the number of days such Liquidated Damages
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360. The Company
shall notify the Trustee within five business days of the cessation of any
requirement to pay Liquidated Damages hereunder.
(c) Notwithstanding the foregoing, the Company shall not be required to
pay the additional interest described in clause (a) of this Section 4 to a
Holder with respect to the Securities held by such Holder if the applicable
event pursuant to clause (a) of this Section 4 arises by reason of the failure
of such Holder to provide such information (i) the Company may reasonably
request, with reasonable prior written notice, for use in the Shelf Registration
Statement or any Prospectus included therein to the extent the Company
reasonably determines that such information is required to be included therein
by applicable law, (ii) the NASD or the Commission may request in connection
with such Shelf Registration Statement, or (iii) that is required to comply with
the agreements of such Holder contained in clause (a) of Section 3 to the extent
compliance thereof is necessary for the Shelf Registration Statement to be
declared effective.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Company shall use its reasonable best efforts to
effect such registration(s) to permit the sale of the securities covered thereby
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder, the Company shall:
(a) Prepare and file with the SEC prior to the applicable Filing Date,
a Registration Statement or Registration Statements as prescribed by Sections 2
or 3 hereof, and use its reasonable best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein; provided,
however, that (i) the Company shall afford any Holder of Transfer Restricted
Securities covered by such Registration Statement or any Participating
Broker-Dealer who seeks to sell Exchange Securities during the Applicable
Period, or their counsel, upon such Holder's written request to the Company, an
opportunity to review copies of all such documents proposed to be filed, and
(ii) if such filing is pursuant to Section 3, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto (including
documents that would be incorporated therein by reference after the initial
filing of the Registration Statement), the Company shall afford the counsel for
the Holders of the Transfer Restricted Securities covered by such Registration
Statement or any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period an opportunity to review copies of all
such documents proposed to be filed.
11
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any Prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that it is in the best
interests of the Company not to disclose the existence of or facts surrounding
any proposed or pending material event or transaction involving the Company, the
Company may (i) in the event a Shelf Registration Statement has been filed,
allow the Shelf Registration Statement to fail to be effective or usable as a
result of such nondisclosure for up to 60 days during the Effectiveness Period,
but in no event for any period in excess of 30 consecutive days, and (ii) in the
event the Exchange Offer is consummated, allow the Exchange Offer Registration
Statement to fail to be effective or usable as a result of such non-disclosure
for up to 15 days during the Applicable Period.
(c) If (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, notify the Holders of Transfer
Restricted Securities, or each such Participating Broker-Dealer, as the case may
be, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any Holder
may, upon request, obtain, at the sole expense of the Company, one conformed
copy of such Registration Statement or post-effective amendment including
financial statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the SEC of any
stop order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in connection with
sales of the Transfer Restricted Securities or resales of Exchange Securities by
Participating Broker-Dealers the representations and warranties of the Company
contained in any agreement (including any underwriting agreement), contemplated
by Section 5(l) hereof, cease to be true and correct, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Transfer Restricted Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event, the existence of any fact known to the Company that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or
12
that requires the making of any changes in or amendments or supplements to such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use its reasonable efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Transfer Restricted Securities
or the Exchange Securities for sale in any jurisdiction, and, if any such order
is issued, to use its reasonable efforts to obtain the withdrawal of any such
order at the earliest possible moment.
(e) If (l) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, furnish to each selling Holder of
Transfer Restricted Securities and to each such Participating Broker-Dealer who
so requests and to counsel and each managing underwriter, if any, at the sole
expense of the Company, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto, including
financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits.
(f) If (l) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, deliver to each Holder of Transfer
Restricted Securities, or each such Participating Broker-Dealer, as the case may
be, at the sole expense of the Company, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto as such Persons may reasonably request; and, subject to
the last paragraph of this Section 5, the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the Holders
of Transfer Restricted Securities or each such Participating Broker-Dealer, as
the case may be, and the underwriters or agents, if any, and dealers (if any),
in connection with the offering and sale of the Transfer Restricted Securities
covered by, or the sale by Participating Broker-Dealers of the Exchange
Securities pursuant to, such Prospectus and any amendment or supplement thereto.
(g) Prior to any public offering of Transfer Restricted Securities or
Exchange Securities or any delivery of a Prospectus contained in the Exchange
Offer Registration Statement by any Participating Broker-Dealer who seeks to
sell Exchange Securities during the
13
Applicable Period, use its reasonable best efforts to register or qualify (and
to cooperate with selling Holders of Transfer Restricted Securities or each such
Participating Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Transfer Restricted Securities) for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder, Participating Broker-Dealer, or the managing underwriter
or underwriters reasonably request in writing; provided, however, that where
Exchange Securities held by Participating Broker-Dealers or Transfer Restricted
Securities are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform necessary Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 5(g); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Securities held by Participating Broker-Dealers or the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself to
taxation in any such jurisdiction where it is not then so subject.
(h) If a Shelf Registration Statement is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Transfer Restricted Securities to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with DTC, and
enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders may reasonably request at least three
business days prior to any such sale.
(i) If (l) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, upon the occurrence of any event
contemplated by Section 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable
prepare and (subject to Section 5(b) hereof) file with the SEC a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Transfer Restricted Securities being sold
thereunder or to the purchasers of the Exchange Securities to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus 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 light of the circumstances under which they were made,
not misleading. If the Company so notifies the Holders to suspend the use of the
Prospectus after the occurrence of such an event, the Holders shall suspend use
of the Prospectus, and not communicate such material non-public information to
any third party, and
14
not sell or purchase, or offer to sell or purchase, any securities of the
Company, until the Company has amended or supplemented the Prospectus to correct
such misstatement or omission.
(j) Use its reasonable best efforts to cause the offered securities
covered by the Registration Statement to continue to be rated by the rating
agencies that initially rated the Securities during the period that the
Registration Statement is required hereunder to remain effective (it being
acknowledged, however, that the foregoing shall not be deemed to require the
Company to maintain the rating of such offered securities at the rating given
the Securities).
(k) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, provide a CUSIP number, and ISIN
Code for Transfer Restricted Securities or Exchange Securities, as the case may
be.
(l) In connection with any underwritten offering of Transfer Restricted
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Securities and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
facilitate the registration or the disposition of such Transfer Restricted
Securities and, in such connection, (i) make such representations and warranties
to, and covenants with, the underwriters with respect to the business of the
Company, CILCORP and CILCORP's subsidiaries (including any acquired business,
properties or entity, if applicable) and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Securities, and confirm
the same in writing if and when requested; (ii) obtain the written opinion of
counsel to the Company and written updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters, addressed
to the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of debt similar to the Securities; (iii)
obtain "cold comfort" letters and updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data are, or are required to be, included or incorporated by reference
in the Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings of
debt similar to the Securities; and (iv) if an underwriting agreement is entered
into, it shall provide that Holders of Transfer Restricted Securities that are
sold pursuant to such underwriting agreement shall pay all underwriting
discounts, if any, and commissions and transfer taxes, if any, relating to the
sale or dispositions of such Securities, and the same shall contain
indemnification provisions and procedures no less favorable than those set forth
in Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Transfer Restricted
Securities covered by such Registration Statement and the managing underwriter
or underwriters or agents) with respect to all parties to be indemnified
pursuant to said provisions and procedures, including, without limitation, the
15
Holders of Transfer Restricted Securities and the underwriters. The above shall
be done at each closing under such underwriting agreement, or as and to the
extent required thereunder.
(m) If (1) a Shelf Registration Statement is filed pursuant to Section
3 hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, make available for inspection by a
representative of the selling Holders of a majority in aggregate principal
amount of such Transfer Restricted Securities being sold, or each such
Participating Broker-Dealer, as the case may be, and any underwriter
participating in any such disposition of Transfer Restricted Securities, if any
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (collectively, the
"Records") and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities. As a
condition to supplying such information, the Company shall receive an agreement
in writing from the Inspectors agreeing that records which the Company
determines, in good faith, to be confidential and notifies Inspectors of such
confidentiality shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is in the reasonable opinion of counsel to the
Company necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii)
disclosure of such information is, in the reasonable opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim, suit or
proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, relating to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder, or (iv)
the information in such Records has been made generally available to the public
other than as a result of a disclosure by any Inspector in violation of this
Section 5(m). Each selling Holder of such Transfer Restricted Securities and
each such Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Company unless and until such information is generally
available to the public other than as a result of a disclosure by any Inspector
in violation of this Section 5(m). Each selling Holder of such Transfer
Restricted Securities and each such Participating Broker-Dealer or underwriter,
as the case may be, will be required further to agree that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company at its sole
expense to undertake appropriate action to prevent disclosure of the Records
deemed confidential.
(n) Provide an indenture trustee for the Transfer Restricted Securities
or the Exchange Securities, as the case may be, and use its best efforts to
cause the Indenture or the trust indenture provided for in Section 2(a) hereof,
as the case may be, to be qualified under the Trust Indenture Act not later than
the effective date of the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under any such indenture and the Holders of the Transfer Restricted Securities,
to effect such changes
16
to such indenture as may be required for such indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and execute, and use its
reasonable best efforts to cause such trustee to execute all documents as may be
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable such indenture to be so qualified in a timely
manner.
(o) Use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC.
(p) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
The Company may require each seller of Transfer Restricted Securities
as to which any Shelf Registration Statement is being effected to (i) furnish to
the Company in writing such information specified in Item 507 and Item 508, as
applicable, of Regulation S-K under the Securities Act or any other information
required by the Securities Act or applicable United States state securities laws
for use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein and (ii) make such representations, in
each case as the Company may, from time to time, reasonably request. The Company
may exclude from such registration the Transfer Restricted Securities of any
seller who unreasonably fails to furnish such information or make such
representations within a reasonable time after receiving such request. Each
seller as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such seller
not materially misleading.
Each Holder of Transfer Restricted Securities and each Participating
Broker-Dealer agrees by acquisition of such Transfer Restricted Securities or
Exchange Securities to be sold by such Participating Broker-Dealer, as the case
may be, that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or
5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Transfer Restricted Securities covered by such Registration Statement or
Prospectus or Exchange Securities to be sold by such Holder or Participating
Broker-Dealer, as the case may be, until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto and, if so directed by
the Company, such holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such holder's
possession, of the prospectus covering such Securities current at the time of
receipt of such notice, or certify in writing as to the destruction thereof. In
the event the Company shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted Securities covered by
such Registration Statement or Exchange Securities to be sold by such
Participating Broker-Dealer, as the case may be, shall
17
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(i) hereof or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Exchange Offer Registration Statement or a Shelf Registration Statement is
filed or becomes effective, including, without limitation, (i) all registration
and filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Transfer Restricted Securities or
Exchange Securities and determination of the eligibility of the Transfer
Restricted Securities or Exchange Securities for investment under the laws of
such jurisdictions (x) where the holders of Transfer Restricted Securities are
located, in the case of the Exchange Securities, or (y) as provided in Section
5(g) hereof, in the case of Transfer Restricted Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the Applicable
Period)); (ii) printing expenses, including, without limitation, the printing of
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities included in any
Registration Statement or by any Participating Broker-Dealer, as the case may
be, (iii) reasonable fees and disbursements of counsel for the Company and
reasonable fees and disbursements of special counsel for the sellers of Transfer
Restricted Securities (subject to the provisions of Section 6(b) hereof),
however, such fees of counsel for the sellers shall be limited to not more than
one counsel for sellers; (iv) reasonable fees and disbursements of all
independent certified public accountants referred to in Section 5(l)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (v) rating agency
fees, if any, and any fees associated with making the Exchange Securities
eligible for trading through DTC, (vi) Securities Act liability insurance, if
the Company desires such insurance, (vii) reasonable fees and expenses of all
other Persons retained by the Company, (viii) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (ix) the
expense of any annual audit, (x) the reasonable fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, and (xi) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) The Company shall reimburse the Holders of the Transfer Restricted
Securities being registered in a Shelf Registration Statement for the reasonable
fees and disbursements of not more than one counsel chosen by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities to
be included in such Registration Statement (which counsel shall be Simpson
Thacher & Bartlett unless otherwise affirmatively stated by the Holders)
provided, further, however, that if the Company permits an Underwritten
18
Offering, the Company shall not be responsible for any fees and expenses of any
underwriter including any underwriting discounts and commissions or any legal
fees and expenses of counsel to the underwriters (except for the reasonable fees
and disbursements of counsel in connection with state securities or Blue Sky
qualification of any of the Registrable Securities or the Exchange Securities).
(c) The Company shall not be responsible for any fees and expenses of
the Initial Purchaser, except for such fees related to state securities or Blue
Sky qualification described in Section 6(a) above.
7. Indemnification and Contribution
(a) The Company shall indemnify and hold harmless each Holder of
Transfer Restricted Securities offered pursuant to a Shelf Registration
Statement, each Participating Broker-Dealer selling Exchange Securities during
the Applicable Period and the Initial Purchasers and the officers and employees,
each agent of each such person and each Person, if any, who controls any such
Person within the meaning of the Securities Act (each a "Participant") from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to the exchange of or sales of the Transfer
Restricted Securities), to which that Participant may become subject, under the
Securities Act, Exchange Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus, (ii) the omission or alleged omission to state therein
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or failure to act, or any
alleged act or failure to act, by any Participant in connection with, or
relating in any manner to, the Transfer Restricted Securities or the
registration contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the Company not shall
be liable in the case of any matter covered by this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by such Participant
through its negligence or wilful misconduct), and shall reimburse each
Participant promptly upon demand for any legal or other expenses reasonably
incurred by that Participant in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred in each and every case; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement or Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application in reliance upon and in conformity
with the written information furnished to the Company by or on behalf of any
Participant specifically for inclusion therein; provided, further, that with
respect to any such untrue statement in or omission from any preliminary
prospectus, the indemnity agreement contained in this Section 7(a) shall not
inure to the benefit of any such Participant to the extent that the sale to the
Person asserting any such loss, claim, damage, liability or action was an
initial
19
resale by such Participant and any such loss, claim, damage, liability or action
of or with respect to such Participant results from the fact that both (A) to
the extent required by applicable law, a copy of the Prospectus was not sent or
given to such Person at or prior to the written confirmation of the sale of such
securities to such Person and (B) the untrue statement in or omission from such
preliminary prospectus was corrected in the Prospectus unless, in either case,
such failure to deliver the Prospectus was a result of non-compliance by the
Company with Section 5(f) of this Agreement. The foregoing indemnity agreement
is in addition to any liability which the Company may otherwise have to any
Participant.
(b) Each Holder of Transfer Restricted Securities offered pursuant to a
Shelf Registration Statement, each Participating Broker-Dealer selling Exchange
Securities during the Applicable Period and the Initial Purchasers (each a
"Participant Indemnifying Party"), severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its directors
or agent of each such person and each Person, if any, who controls the Company
within the meaning of the Securities Act from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof, to
which the Company or any such director, officer, employee, agent or controlling
Person may become subject, under the Securities Act, Exchange Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any preliminary prospectus or the Registration Statement
or Prospectus, or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state therein any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the written information furnished to the
Company by that Participant Indemnifying Party, and shall reimburse the Company
and any such director, officer, employee, agent or controlling Person for any
legal or other expenses reasonably incurred by the Company or any such director,
officer, employee, agent or controlling Person in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred in each and every case. The
foregoing indemnity agreement is in addition to any liability which any
Participant Indemnifying Party may otherwise have to the Company or any such
director, officer or controlling Person.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent it did not otherwise learn of
such action and such omission results in the forfeiture by the indemnifying
party or material impairment of substantial rights and defenses and, provided,
further, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under this Section 7. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly
20
notified indemnifying party, to assume the defense thereof with counsel
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment
thereof has been specifically authorized by the indemnifying party in writing,
(ii) such indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the reasonable
judgement of such counsel it is advisable for such indemnified party to employ
separate counsel or (iii) the indemnifying party has failed to assume the
defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by the Participants, if the
indemnified parties under this Section 7 consist of any Participants, or by the
Company, if the indemnified parties under this Section 7 consist of the Company
or any of its respective directors, officers, employees, agents of such persons
or controlling Persons. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 7(a) and 7(b), shall use its reasonable efforts
to cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld) settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent (a) includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding and (b) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 7(a) or 7(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, contribute to the aggregate loss, claim, damage or liability, or
21
action in respect thereof, in such proportion as shall be appropriate to reflect
the relative benefits received by the Company on the one hand and the
Participants on the other from the offering of the Securities and the relative
fault of the Company on the one hand and the Participants on the other with
respect to the statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Participants on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities (before deducting
expenses underwriting discounts and commissions) received by the Company on the
one hand, and the total underwriting discounts and commissions received by the
Participants with respect to the Securities purchased under the Purchase
Agreement, on the other hand, bear to the total gross proceeds from the offering
of the Securities under the Purchase Agreement. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company on the one hand, or the Participants on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Participants agree that it would not be just and equitable
if contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. Notwithstanding the provisions
of this Section 7(d), no Participant shall be required to contribute any amount
in excess of the amount by which the total price at which the Securities
purchased by it were resold exceeds the amount of any damages which such has
otherwise paid or become liable to pay by reason of any 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 Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Participant's obligations to contribute as
provided in this Section 7(d) are several in proportion to their respective
purchase obligations and not joint.
8. Underwritten Registrations
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
9. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, nor will it, after the date of this Agreement, enter into any agreement
with respect to any of its securities that is inconsistent with the rights
granted to the Holders of Transfer Restricted Securities in this Agreement or
otherwise conflicts with the provisions hereof.
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(b) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Company and the Initial Purchasers and, in circumstances that
would adversely affect the Holders of then outstanding Transfer Restricted
Securities, the Holders of not less than a majority in aggregate principal
amount of any series of the then outstanding Transfer Restricted Securities with
respect to such series of Transfer Restricted Securities and (B) in
circumstances that would adversely affect the Participating Broker-Dealers, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Securities held by all Participating
Broker-Dealers with respect to Exchange Securities; provided, however, that
Section 7 and this Section 9(b) may not be amended, modified or supplemented
without the prior written consent of each Holder and each Participating
Broker-Dealer (including any Person who was a Holder or Participating
Broker-Dealer of Transfer Restricted Securities or Exchange Securities, as the
case may be, disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders of Transfer Restricted Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Transfer
Restricted Securities may be given by Holders of at least a majority in
aggregate principal amount of the Transfer Restricted Securities being sold by
such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(c) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(1) if to a Holder of the Transfer Restricted Securities or any
Participating Broker-Dealer, at the most current address of such Holder
or Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture, with a copy in like
manner to the Initial Purchasers as follows:
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Facsimile No: 212-528-8822
Attention: Syndicate Department
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No: 212-455-2502
Attention: Andrew Keller, Esq.
23
(2) if to the Initial Purchasers, at the addresses specified in
Section 9(c)(1);
(3) if to the Company, as follows:
Midwest Energy, Inc.
1001 North 19th Street
20th Floor
Arlington, Virginia 22209
Facsimile No: 703-528-4510
Attention: President
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, NW
Washington, D.C. 20005
Facsimile No: 202-393-5760
Attention: Stephen W. Hamilton, Esq.
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company shall be entitled to act and rely
upon any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Transfer Restricted Securities.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
24
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Each of the parties hereto hereby submits to the non-exclusive
jurisdiction of the Federal and State Courts of the Borough of Manhattan in the
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
The Company hereby irrevocably waives, to the extent permitted by law,
any immunity to jurisdiction to which it may otherwise be entitled (including,
without limitation, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it
arising out of or based on this Agreement or the transactions contemplated
hereby.
The provisions of this Section 9(g) are intended to be effective upon
the execution of this Agreement without any further action by the Company or the
Initial Purchasers and the introduction of a true copy of this Agreement into
evidence shall be conclusive and final evidence as to such matters.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(i) Securities Held by the Company, or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held by the
Company or its "affiliates" (as such term is defined in Rule 405 under the
Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(j) Entire Agreement. This Agreement, together with the Purchase
Agreement, the Indenture and the Pledge Agreement, is intended by the parties as
a final and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein and
any and all prior oral or written agreements, representations, or warranties,
contracts, understandings, correspondence, conversations and memoranda between
the Initial Purchasers on the one hand and the Company on the other, or between
or among any agents, representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest with respect to the subject
matter hereof and thereof are merged herein and replaced hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MIDWEST ENERGY, INC.
By: /s/ Paul D. Stinson
--------------------------------
Name: Paul D. Stinson
Title: Vice President
LEHMAN BROTHERS INC.,
for itself and on behalf of the
several Initial Purchasers
By: /s/ David Schwarzbach
--------------------------------
Authorized Representative