1
EXHIBIT 1(b)
SEMCO ENERGY INC.
(A MICHIGAN CORPORATION)
$105,000,000
8.95% REMARKETABLE OR REDEEMABLE SECURITIES (ROARS(SM))*
Due 2008
(Remarketing Date July 1, 2003)
UNDERWRITING AGREEMENT
June 26, 0000
XXXX XX XXXXXXX SECURITIES LLC
Banc One Capital Markets, Inc.
First Union Securities, Inc.
c/o Banc of America Securities LLC
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
SEMCO Energy, Inc., a Michigan corporation (the "Company"), proposes to
sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, $105,000,000 principal amount of its 8.95% Remarketable or
Redeemable Securities due 2008 (the "Securities"), to be issued under an
indenture (the "Base Indenture"), dated as of October 23, 1998, between the
Company and Bank One Trust Company, National Association, as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture, dated as of
June 16, 2000 and the Second Supplemental Indenture to be dated as of June 29,
2000 (the Base Indenture, as supplemented and amended, being referred to as the
"Indenture"). In connection with the issuance of the Securities, the Company and
Banc of America Securities LLC, as remarketing agent (the "Remarketing Agent"),
will enter into a remarketing agreement (the "Remarketing Agreement"). To the
extent there are no additional Underwriters listed on Schedule I other than you,
the term Representatives as used herein shall mean you, as Underwriters, and the
terms Representatives and Underwriters shall mean either the singular or plural
as the context requires.
---------------
* ROARS is a service xxxx of Banc of America Securities LLC.
2
Certain terms used herein are defined in Section 17 hereof.
Any reference herein to the Registration Statement, the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue date of the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus, as the case may be;
and any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Basic Prospectus, any Preliminary
Final Prospectus or the Final Prospectus shall be deemed to refer to and include
the filing of any document under the Exchange Act after the Effective Date of
the Registration Statement or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be, deemed
to be incorporated therein by reference.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties. The Company represents and
warrants to and agrees with each Underwriter as of the date hereof and as of the
Closing Date (as defined in Section 3 below) (each, a "Representation Date") as
follows:
(i) The Company meets the requirements for use of Form S-3
under the Act and has prepared and filed with the Commission a registration
statement (Registration Statement No. 333-91815) on Form S-3, including a
related basic prospectus, for registration under the Act of the offering and
sale of the Securities. The Company may have filed one or more amendments
thereto, including a Preliminary Final Prospectus, each of which has previously
been furnished to you. The Registration Statement, as so amended, has been
declared effective by the Commission. The Company will next file with the
Commission a final prospectus supplement relating to the Securities in
accordance with Rules 430A and 424(b). The Company has included in such
registration statement, as amended, all information (other than Rule 430A
Information) required by the Act and the rules thereunder to be included in such
registration statement and the Final Prospectus. As filed, such final prospectus
supplement or such amendment and form of final prospectus supplement shall
contain all Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not completed at
the Execution Time, shall contain only such specific additional information and
other changes (beyond that contained in the Basic Prospectus and any Preliminary
Final Prospectus) as the Company has advised you, prior to the Execution Time,
will be included or made therein. The Registration Statement, at the Execution
Time, meets the requirements set forth in Rule 415(a)(1)(x).
(ii) On the Effective Date, the Registration Statement did,
and when the Final Prospectus is first filed in accordance with Rule 424(b) and
on the Closing Date (as defined herein), the Final Prospectus (and any
supplement thereto) will, comply in all material respects
-2-
3
with the applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder; on the Effective Date and at
the Execution Time, the Registration Statement did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; on the Closing Date the Indenture will comply in all material
respects with the applicable requirements of the Trust Indenture Act and the
rules thereunder; and, on the date of any filing pursuant to Rule 424(b) and on
the Closing Date, the Final Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to (i) that part of
the Registration Statement which shall constitute the Statement of Eligibility
and Qualification (Form T-1) under the Trust Indenture Act of the Trustee or
(ii) the information contained in or omitted from the Registration Statement or
the Final Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Representatives specifically for inclusion in the
Registration Statement or the Final Prospectus (or any supplement thereto).
(iii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included or incorporated by
reference in the Registration Statement and the Final Prospectus are independent
public accountants with respect to the Company and its subsidiaries as required
by the Act and the rules and regulations of the Commission thereunder.
(iv) Financial Statements. The financial statements of the
Company included in the Registration Statement and the Final Prospectus,
together with the related schedules and notes, present fairly the financial
position of (1) the Company and its consolidated subsidiaries and (2) ENSTAR
Natural Gas Company (a division of the Company) and Alaska Pipeline Company (a
subsidiary of the Company) (collectively, "ENSTAR") as at the dates indicated
and the statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified. 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 Final Prospectus present fairly
in accordance with GAAP the information required to be stated therein. The pro
forma financial statements of the Company and its consolidated subsidiaries and
the related notes thereto included or incorporated by reference in the
Registration Statement and the Final Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The selected financial information and the financial data included or
incorporated by reference in the Final Prospectus present fairly the information
shown therein and have been compiled on a basis
-3-
4
consistent with that of the audited financial statements included in the
Registration Statement and the Final Prospectus subject to year end audit
adjustments.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration Statement
and the Final Prospectus, except as otherwise stated therein, (A) 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, in each case whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries, and (C) except for regular quarterly dividends on the Common
Stock in amounts per share that are consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Michigan and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Final Prospectus and to enter into and perform its obligations under each of the
Operative Agreements to which it is a party; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
other 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 result in a
Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of Regulation
S-X) (each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Final 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 so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the capital stock of
each such Subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, directly or through
subsidiaries, 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 was issued in violation of the preemptive or other similar rights
of any securityholder of such Subsidiary. The only subsidiaries of the Company
are (A) the subsidiaries listed on Schedule II hereto and (B) certain other
subsidiaries which, considered in the aggregate as a single subsidiary, do not
constitute a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
-4-
5
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Final Prospectus under the
captions "Description of Capital Stock", "Selected Financial Information" and
"Capitalization" (except for subsequent issuances, if any, pursuant to this
Agreement, pursuant to reservations, agreements or employee benefit plans or the
Company's Direct Stock Purchase and Dividend Reinvestment Plan referred to in
the Final Prospectus or pursuant to the exercise of options outstanding as of
the date of the Final Prospectus or issued pursuant to existing employee benefit
plans in the ordinary course of business consistent with prior practice). The
shares of issued and outstanding capital stock have been duly authorized and
validly issued and are fully paid and non-assessable; none of the outstanding
shares of capital stock was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.
(ix) Solicitation. The Company has not paid or agreed to pay
to any person any compensation for soliciting another to purchase any Securities
(except as contemplated by this Agreement).
(x) Authorization of this Agreement. This Agreement has
been duly authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture and the Securities. The
Indenture has been duly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery of the Indenture by the
Trustee, the Indenture constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally or by general equitable principles (regardless of whether enforcement
is considered in a proceeding in equity or at law). The Securities have been
duly authorized by the Company and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by
the Underwriters pursuant to this Agreement, will constitute legal, valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally or by general equitable principles (regardless of whether enforcement
is considered in a proceeding in equity or at law). The Securities will be in
the form contemplated by, and each registered holder thereof, will be entitled
to the benefits of the Indenture.
(xii) Authorization of the Remarketing Agreement. The
Remarketing Agreement has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery of the
Remarketing Agreement by Banc of America Securities, LLC, the Remarketing
Agreement constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
-5-
6
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally or by general equitable principles (regardless of whether enforcement
is considered in a proceeding at law or in equity).
(xiii) Descriptions of the Securities and the Operative
Agreements. The Securities and the Operative Agreements, as of each
Representation Date, conform and will conform, as applicable, in all material
respects to the statements relating thereto contained in the Final
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) Absence of Defaults and Conflicts. None of the Company
or any of the Company's subsidiaries is in violation of its charter or bylaws or
other constitutive documents or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any subsidiary of the
Company is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any subsidiary of the Company is
subject (collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect. The execution, delivery and
performance by the Company of the Operative Agreements and the consummation of
the transactions contemplated therein or in the Registration Statement and the
Prospectus (including, the issuance and sale of the Securities and the use of
the proceeds from the sale of the Securities as described in the Prospectus
under the caption "Use of Proceeds") and the compliance by the Company with
their 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 or Repayment Event (as defined below) 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 of the Company pursuant
to, the Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a Material
Adverse Effect), nor will such actions result in any violation of the provisions
of the charter or bylaws or other constitutive documents of the Company or any
subsidiary of the Company or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary of the Company or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or a
subsidiary of the Company.
(xv) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent, that, individually or in the aggregate, may
reasonably be expected to result in a Material Adverse Effect.
-6-
7
(xvi) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any
subsidiary of the Company, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which, individually or in the
aggregate, might reasonably be expected to result in a Material Adverse Effect,
or which, individually or in the aggregate, might reasonably be expected to
materially and adversely affect the properties or assets thereof, the
consummation of the transactions contemplated in the Operative Agreements or the
performance by the Company of its obligations under any of the Operative
Agreements; the aggregate of all pending legal or governmental proceedings to
which the Company or any subsidiary of the Company is a party or of which any of
their respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material Adverse
Effect.
(xvii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration Statement, the
Final Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described or filed as required.
(xviii) Possession of Intellectual Property. Except as
disclosed in the Final Prospectus, the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, other than those the absence of which would not
have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interests of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
(xix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required in connection with the offering of the Securities, for the due
authorization, execution and delivery by the Company of the Operative Agreements
or for the performance by the Company of its obligations under any of the
Operative Agreements to which it is a party, except such as has been already
obtained or as may be required under the Act and the rules and regulations of
the Commission thereunder or state securities or blue sky laws.
-7-
8
(xx) Possession of Licenses and Permits. The Company and
its subsidiaries own or possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them other than those the
absence of which would not have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to 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 invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries
have good and marketable title to all material real properties owned by the
Company and its subsidiaries and good title to all other properties owned by
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 Final Prospectus or (b) do not, singly or in the aggregate,
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 or any of its
subsidiaries; and all of the leases and subleases material to the business of
the Company and its subsidiaries, considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the Final
Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary under
any of the leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease.
(xxii) Investment Company Act. The Company is not, and upon
the issuance and sale (as applicable) of the Securities as herein contemplated
and the application of the net proceeds therefrom as described in the Final
Prospectus, will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxiii) Public Utility Holding Company Act. The Company is
presently exempt from the provisions of the Public Utility Holding Company Act
of 1935, as amended (except Section 9(a)(2) thereof).
(xxiv) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any judicial or
administrative order,
-8-
9
consent, decree 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,
"Environmental Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (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 and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(b) Officer's Certificates. 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 Securities shall be deemed a
representation and warranty by the Company, as applicable, to the Underwriters
as to the matters covered thereby.
SECTION 2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, the Securities, in the
respective principal amounts set forth opposite such Underwriter's name in
Schedule I hereto, at a purchase price equal to 99.359% of the principal amount
thereof (the "Purchase Price").
SECTION 3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 AM, New York City time, on June 29, 2000, or
at such time on such later date not more than three Business Days after the
foregoing date as the Representatives shall designate, which date and time may
be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives, of the Purchase Price thereof to or upon the order of the
Company by wire transfer payable in immediately available funds to an account
specified by the Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company unless the Representatives shall
otherwise instruct.
SECTION 4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Prospectus.
-9-
10
SECTION 5. Agreements. The Company agrees with the several
Underwriters that:
(a) Prior to the termination of the offering of the Securities, the
Company will not file any amendment to the Registration Statement or any
supplement (including the Final Prospectus or any Preliminary Final Prospectus)
to the Basic Prospectus or any Rule 462(b) Registration Statement unless the
Company has furnished you a copy of the same for your review prior to filing and
will not file any such proposed amendment or supplement or Rule 462(b)
Registration Statement to which you reasonably object. Subject to the foregoing
sentence, the Company will cause the Final Prospectus and any supplement thereto
to be filed with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence satisfactory
to the Representatives of such timely filing. The Company will promptly advise
the Representatives (1) when the Final Prospectus, and any supplement thereto,
shall have been filed (if required) with the Commission pursuant to Rule 424(b)
or when any Rule 462(b) Registration Statement shall have been filed with the
Commission, (2) when, prior to termination of the offering of the Securities,
any amendment to the Registration Statement shall have been filed or become
effective, (3) of any request by the Commission or its staff for any amendment
of the Registration Statement, or any Rule 462(b) Registration Statement, or for
any supplement to the Final Prospectus or for any additional information, (4) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening of any proceeding
for that purpose and (5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order or the suspension of any such qualification and, if issued, to
obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Final Prospectus as then supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend the Registration Statement
or supplement the Final Prospectus to comply with the Act or the Exchange Act or
the respective rules thereunder, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the Commission, subject
to the first sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (3) supply any supplemented Final Prospectus to you in such
quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the provisions
of Section 11(a) of the Act and Rule 158 under the Act.
-10-
11
(d) The Company will furnish to the Representatives and counsel for the
Underwriters, without charge, copies of the Registration Statement, showing
signatures (including exhibits thereto) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act, as many
copies of each Preliminary Final Prospectus and the Final Prospectus and any
supplement thereto as the Representatives may reasonably request. The Company
will pay the expenses of printing or other production of all documents relating
to the offering.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect so
long as required for the distribution of the Securities and will pay any fee of
the National Association of Securities Dealers, Inc., in connection with its
review of the offering; provided that in no event shall the Company be obligated
to qualify to do business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of Banc of
America Securities LLC, offer, sell, contract to sell, pledge, or otherwise
dispose of, (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company) directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act, any debt
securities issued or guaranteed by the Company (other than the Securities) or
publicly announce an intention to effect any such transaction, within 30 days
after the Closing Date.
(g) The Company will not take, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities. The Company will use the proceeds of the offering
as described in the Final Prospectus under "Use of Proceeds."
(h) The Company, during the period when the Final Prospectus is
required to be delivered under the Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to the Act and the
Exchange Act within the time periods required by the same.
SECTION 6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time and the Closing
-11-
12
Date, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) If filing of the Final Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
will be filed in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have requested and caused Xxxxxxxxx Xxxxxx PLLC,
Special Counsel to the Company, and Xxxxxx X. Xxxxxxx, Esq., General Counsel to
the Company, to have furnished to the Representatives their opinion, dated the
Closing Date and addressed to the Representatives, in combination to the effect
that:
(i) the Company meets the requirements for the use of the Form
S-3 under the Act;
(ii) the Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, any Preliminary Final
Prospectus and the Final Prospectus, and any supplements thereto, pursuant to
Rule 424(b) have been made in the manner and within the time period required by
Rule 424(b); to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened, and the Registration Statement
and the Final Prospectus (other than the financial statements and other
financial information contained therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act and the
respective rules thereunder;
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Final Prospectus (other than
the financial statements and supporting schedules and other financial data
included or incorporated by reference therein or omitted therefrom, as to which
such counsel need not express an opinion), when they became effective or were
filed with the Commission, as the case may be, complied in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder;
(iv) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its subsidiaries are a
party are accurate in all material respects; to the best of such counsel's
knowledge, there are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the
-12-
13
descriptions thereof or references thereto are correct in all material respects,
and, to the best of such counsel's knowledge, no default exists in the due
performance or observance of any obligation, agreement, covenant or condition
contained in such contracts and other documents (except for such defaults that
would not have a Material Adverse Effect);
(v) no holders of securities of the Company have rights
under the Company's charter or by-laws or any other agreement or contract to the
registration of such securities under the Registration Statement;
(vi) the Securities conform to the description thereof
contained in the Final Prospectus in all material respects;
(vii) the Indenture has been duly authorized, executed and
delivered by the Company, has been duly qualified under the Trust Indenture Act,
and (assuming due authorization, execution and delivery thereof by the Trustee)
constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether considered in
a proceeding in equity or at law); and the Securities have been duly authorized
by the Company and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to time
in effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether considered in a proceeding in equity or at law). The Securities will
be in the form contemplated by, and each registered holding thereof, will be
entitled to the benefits of the Indenture;
(viii) the Remarketing Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a legal, valid and
binding instrument enforceable against the Company in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether considered in a proceeding in
equity or at law);
(ix) each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the Final
Prospectus, and
-13-
14
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such qualification,
except where the failure to so qualify is not reasonably likely to have a
Material Adverse Effect;
(x) all the outstanding shares of capital stock of the
Company and of each of the Subsidiaries have been duly and validly authorized
and issued and are fully paid and nonassessable, and, except as otherwise set
forth in the Final Prospectus, all outstanding shares of capital stock of each
of the Subsidiaries are owned of record by the Company either directly or
through wholly owned Subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, after due inquiry, any other
security interest, claim, lien or encumbrance;
(xi) the authorized, issued and outstanding capital stock of
the Company is as set forth in the Final Prospectus under the captions
"Description of Capital Stock", "Selected Financial Information", and
"Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans or the Company's Direct Stock
Purchase and Dividend Reinvestment Plan referred to in the Final Prospectus or
the exercise of options outstanding on the date of the Final Prospectus or
issued pursuant to existing employee benefit plans in the ordinary course of
business consistent with past practice);
(xii) there is no pending, or, to the knowledge of such
counsel, threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries or its or their property, of a character required to
be disclosed in the Registration Statement which is not adequately disclosed in
the Final Prospectus, and the description of the litigation and other
proceedings included or incorporated by reference in the Registration Statement
or Final Prospectus present a fair and accurate summary of those matters;
(xiii) no consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in connection with
the transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the state securities or blue sky laws
of any jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters (about which such counsel need express no
opinion) in the manner contemplated in this Agreement and in the Final
Prospectus and such other approvals (specified in such opinion) as have been
obtained;
(xiv) neither the execution and delivery of the Indenture,
the Securities or the Remarketing Agreement, the issue and sale of the
Securities, nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will conflict with, result
in a breach or violation or constitute a default under (i) the charter or
by-laws of the Company or its Subsidiaries, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the
Company or its Subsidiaries is a party or bound or to which its or their
-14-
15
property is subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or the Subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or the Subsidiaries or any of its
or their properties, except in the case of clause (ii) above, such conflict,
breach, violation or default which is not reasonably likely to have a Material
Adverse Effect;
(xv) except as set forth in the Final Prospectus, the
Company and the Subsidiaries possess and are in compliance with all approvals,
certificates, authorizations, licenses and permits issued by the appropriate
state, Federal or foreign regulatory agencies or bodies necessary to conduct
their business as described in the Final Prospectus, except where the failure to
possess such approvals, certificates, authorizations, licenses and permits to be
in compliance therewith would not be reasonably likely to have a Material
Adverse Effect and to the knowledge of such counsel, none of the Company or its
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such approval, certificate, authorization, license or
permit which, individually or in the aggregate, if it became the subject of an
unfavorable decision, ruling or finding, would be reasonably likely to have a
Material Adverse Effect;
(xvi) this Agreement has been duly authorized, executed and
delivered by the Company;
(xvii) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Final Prospectus, will not be an "investment company"
required to be registered under the Investment Company Act of 1940, as amended;
and
(xviii) the Company is presently exempt from the provisions of
the Public Utility Holding Company Act of 1935 (except Section 9(a)(2) thereof).
Furthermore, following the opinion paragraphs, each such counsel shall state the
following:
"We have participated in conferences with officers and other
representatives of the Company, representatives of the independent
auditors of the Company and your representatives and counsel at which
the contents of the Registration Statement, Preliminary Final
Prospectus and/or Final Prospectus and related matters were discussed.
Because the purpose of our professional engagement was not to establish
or confirm factual matters and because the scope of our examination of
the affairs of the Company did not permit us to verify the accuracy,
completeness or fairness of the statement set forth in the Registration
Statement, Preliminary Final Prospectus and/or Final Prospectus, we are
not passing upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement, Preliminary Final Prospectus and/or Final
Prospectus, except to the extent set forth below in the last sentence
hereof. On the basis of the foregoing, and except for the financial
statements and schedules and other financial data included therein, as
to which we express no
-15-
16
opinion or belief, no facts have come to our attention that lead us to
believe that: (a) the Registration Statement, as of its effective date
and as of the date hereof, contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact
necessary to make the statements therein not misleading and (b) the
Preliminary Final Prospectus and/or Final Prospectus, as of their
effective or respective dates, as applicable, and as of the date
hereof, contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Furthermore, on the basis of the foregoing,
and insofar as the statements in the Registration Statement,
Preliminary Final Prospectus and/or Final Prospectus under the caption
'Description of the ROARS', 'Description of Debt Securities', and
'Summary' purport to describe specific provisions of the Indenture,
such statements present in all material respects an accurate summary of
such provisions."
(c) The Company shall have requested and caused Xxxxxxxxx Xxxxxx PLLC,
Special Tax Counsel to the Company to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the Representatives that
the statements set forth in the Final Prospectus under the caption "Certain
United States Federal Income Tax Considerations" insofar as they purport to
constitute summaries of matters of United States federal income tax law and
regulations or legal conclusions with respect thereto, constitute accurate
summaries of the matters discussed therein in all material respects.
(d) The Representatives shall have received from LeBoeuf, Lamb, Xxxxxx
& XxxXxx, L.L.P., counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to the
issuance and sale of the Securities, the Indenture, the Remarketing Agreement,
the Registration Statement, the Final Prospectus (together with any supplement
thereto) and other related matters as the Representatives 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.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Final Prospectus, any supplements to
the Final Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the Closing
Date with the same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has
-16-
17
been issued and no proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus (exclusive of any
supplement thereto), there has been no material change in the condition
(financial or otherwise), earnings, business or properties or prospects of the
Company and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Final Prospectus (exclusive of any supplement thereto).
(f) The Company shall have requested and caused Xxxxxx Xxxxxxxx
LLP to have furnished to the Representatives, at the Execution Time and at the
Closing Date, letters, (which may refer to letters previously delivered to one
or more of the Representatives), dated respectively as of the Execution Time and
as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within the
meaning of the Act and the Exchange Act and the respective applicable rules and
regulations adopted by the Commission thereunder and that they have conducted an
audit of the consolidated financial information of the Company for the year
ended December 31, 1999 and as of December 31, 1999 and have performed a review
of the unaudited interim financial information of the Company for the
three-month period ended March 31, 2000, and as at March 31, 2000, in accordance
with Statement on Auditing Standards No. 71, and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in the
Registration Statement and the Final Prospectus and reported on by them comply
as to form in all material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related rules and regulations adopted by
the Commission;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its subsidiaries; their
limited review, in accordance with standards established under Statement on
Auditing Standards No. 71, of the unaudited interim financial information for
the three-month period ended March 31, 2000 and as at March 31, 2000
incorporated by reference in the Registration Statement and the Final
Prospectus; carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the Board of
Directors of the Company; and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the Company and its
subsidiaries, nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated by reference in the Registration Statement and the Final
Prospectus do not comply as to form in all material respects with
applicable accounting requirements of the Act and with the related
-17-
18
rules and regulations adopted by the Commission with respect to
financial statements included or incorporated by reference in quarterly
reports on Form 10-Q under the Exchange Act; and said unaudited
financial statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited financial statements included or incorporated by
reference in the Registration Statement and the Final Prospectus;
(2) with respect to the period subsequent to March 31, 2000
there were any changes, at a specified date not more than five days
prior to the date of the letter, in the long-term debt of the Company
and its subsidiaries or capital stock of the Company or decreases in
the shareholders' equity of the Company as compared with the amounts
shown on the March 31, 2000 consolidated balance sheet included or
incorporated by reference in the Registration Statement and the Final
Prospectus, except in all instances for changes or decreases set forth
in the Registration Statement, the Final Prospectus or in such letter,
in which case the letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said explanation is not
deemed necessary by the Representatives;
(3) the information included or incorporated by reference in
the Registration Statement and Final Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Information), Item 302
(Supplementary Financial Information), Item 402 (Executive
Compensation) and Item 503(d) (Ratio of Earnings to Fixed Charges) does
not conform in all material respects with the disclosure requirements
of Regulation S-K; and
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards, including a
reading of the pro forma combined statement of income of the Company for the
year ended December 31, 1999, incorporated by reference in the Registration
Statement and Final Prospectus and the inquiry of certain officials of the
Company who have responsibility for financial and accounting matters about
whether such pro forma combined statement of income complies as to form in all
material respects with the applicable accounting requirements of rule 11-02 of
Regulation S-X, and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention that caused them to believe that
such pro forma combined statement of income, incorporated by reference in the
Registration Statement and Final Prospectus, does not comply as to form in all
material respects with the applicable accounting requirements of rule 11-02 of
Regulation S-X.
(g) The Company shall have requested and caused KPMG LLP to have
furnished to the Representatives, at the Execution Time and at the Closing Date,
a letter (which may refer to letters previously delivered to one or more of the
Representatives), dated as of the Execution Time, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable rules and regulations adopted by the Commission thereunder
and that they have performed a review of the financial information of ENSTAR for
the year ended December 31,
-18-
19
1999, and as at December 31, 1999, in accordance with Statement on Auditing
Standards No. 71, and stating in effect that in their opinion the audited
financial statements and financial statement schedules included or incorporated
by reference in the Registration Statement and the Final Prospectus and reported
on by them comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related rules
and regulations adopted by the Commission.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease in the items
specified in the letter or letters referred to in paragraph (f) of this Section
6 or (ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business, properties
or prospects of the Company and its subsidiaries, taken as a whole, whether or
not arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Prospectus (exclusive of any supplement
thereto) the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the reasonable judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(i) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities to a rating below
Investment Grade by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act) or any notice given of
any intended or potential decrease in any such rating or of a possible change to
a rating below Investment Grade.
(j) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel for
the Underwriters, at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, on the
Closing Date.
-19-
20
SECTION 7. Payment of Expenses. (a) The Company will pay all expenses
incident to the performance of the obligations of the Company under this
Agreement, including (i) the costs associated with the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the costs
associated with the preparation, printing and delivery to the Underwriters of
this Agreement, any agreement among Underwriters, the other Operative Agreements
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the costs
associated with the preparation, issuance and delivery of the Securities to the
Underwriters, including any transfer taxes and any stamp or other duties payable
upon the sale, issuance or delivery of the Securities to the Underwriters, (iv)
the fees and disbursements of the counsel, accountants and other advisors or
agents (including transfer agents and registrars) to the Company, as well as the
fees and disbursements of the Trustee and any Depositary, and their respective
counsel, (v) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, and the Prospectus and any amendments or supplements
thereto, (vi) the fees charged by nationally recognized statistical rating
organizations for the rating of the Securities, (vii) the qualification of the
Securities under securities laws in accordance with the provisions of Section
5(e) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, and (viii) the
cost of making the Securities eligible for clearance and settlement through the
facilities of The Depository Trust Company.
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied, because of any termination pursuant
to Section 10(i) or (ii) hereof or because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the Underwriters,
the Company will reimburse the Underwriters severally through Banc of America
Securities LLC on demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
SECTION 8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person who controls any Underwriter within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or in any
amendment thereof, or in the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required
-20-
21
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the left column on the cover page regarding
delivery of the Securities, the third paragraph under the heading "Underwriting"
concerning the concession and reallowance and the fifth, sixth and seventh
paragraphs under the heading "Underwriting" concerning over-allotment and
stabilization transactions by the Underwriters constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Final Prospectus or the Final Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such
-21-
22
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party, it being understood that the
indemnifying party shall not be liable for more than one separate firm (in
addition to one local firm in each jurisdiction) for all indemnified parties in
each jurisdiction in which any claim or action arising out of the same general
allegations or circumstances is brought. An indemnifying party will not, without
the prior written consent of the indemnified parties, 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 includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
An indemnifying party will not, without the prior written consent of the
indemnified party, enter into any settlement or compromise or consent to the
entry of any judgment.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Underwriters severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and by the
Underwriters on the other from the offering of the Securities; provided,
however, that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Underwriters on the
other in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received by
the Underwriters shall be deemed to be equal to the total underwriting discounts
and commissions, in each case as set forth on the cover page of the Final
Prospectus. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
provided by the Company on the one hand or the Underwriters on the other, and
the relative intent, knowledge, access to information and opportunity to correct
or
-22-
23
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
SECTION 9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate principal amount of Securities set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
nondefaulting Underwriters do not purchase all the Securities, this Agreement
will terminate without liability to any nondefaulting Underwriter or the
Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
SECTION 10. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representatives, by notice given to the
Company prior to delivery of and payment for the Securities, if at any time
prior to such time (i) there has been, subsequent to the Execution Time or, if
earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto), any change, or any development involving
a prospective change, in or affecting the business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
-23-
24
contemplated in the Final Prospectus (exclusive of any supplement thereto) the
effect of which is, in the reasonable judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the Securities as contemplated by the Registration
Statement (exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto), or (ii) there has been, subsequent to the
Execution Time, any decrease in the rating of any of the Company's debt
securities to a level below Investment Grade by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act) or any notice given of any intended or potential decrease in any such
rating or of a possible change in any such rating to a rating below Investment
Grade, or (iii) if trading in the common stock or any other security of the
Company has been suspended or limited by the Commission, the New York Stock
Exchange, or if trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, or (iv) a banking moratorium shall have been
declared either by Federal or New York or Michigan State authorities, or (v)
there shall have occurred any material adverse change in the financial markets
in the United States or any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the
reasonable judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the
Final Prospectus (exclusive of any supplement thereto).
SECTION 11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
SECTION 12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to Banc of America Securities LLC General Counsel
(fax no.: (000) 000-0000) and confirmed to Banc of America Securities LLC at 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: General Counsel;
or, if sent to the Company, will be mailed, delivered or telefaxed to 000 Xxxxx
Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000, Attention of Xxxxxxxxx Xxxxxxx (fax no:
(000) 000-0000).
SECTION 13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
-24-
25
SECTION 14. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK.
SECTION 15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
SECTION 16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
SECTION 17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in Section
1(a) above contained in the Registration Statement at the Effective Date
including any Preliminary Final Prospectus.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law executive order or regulation to close in New
York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to the
Securities that was first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus.
"Investment Grade" shall mean BBB- or above in the case of ratings
assigned by Standard & Poor's Rating Services and its successors (or its
equivalent under any successor ratings category of Standard & Poor's Rating
Services and its successors), or Baa3 on the case or ratings assigned by Xxxxx'x
Investors Service, Inc. and its successors (or its equivalent under any
successor ratings category of Xxxxx'x Investors Service, Inc. and its
successors).
-25-
26
"Operative Agreements" shall refer collectively to the Indenture, the
Second Supplemental Indenture, the Remarketing Agreement and this Agreement.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus, together
with the Basic Prospectus.
"Registration Statement" shall mean the registration statement referred
to in Section 1(a) above, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date, shall also mean such registration
statement as so amended or such Rule 462(b) Registration Statement, as the case
may be. Such term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the registration statement referred to in Section 1(a)
hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
SEMCO ENERGY INC.
By:/s/ X. Xxxxxxx
--------------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
-26-
27
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
By: BANC OF AMERICA SECURITIES LLC
By: /s/ X. XxXxxxxxx
----------------
Name:
Title:
-27-
28
SCHEDULE I
Principal Amount of Securities
to Underwriters be Purchased
------------------------------
Banc of America Securities LLC..................................... $73,500,000
Banc One Capital Markets, Inc...................................... $15,750,000
First Union Securities, Inc........................................ $15,750,000
Total.............................................................. $105,000,000
-28-
29
SCHEDULE II
Subsidiaries
SEMCO Energy Ventures, Inc.
Alaska Pipeline Company
-29-
