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EXHIBIT (1)
$____________
CONSUMERS ENERGY COMPANY
__% Senior Secured Insured Quarterly Notes Due 2028
Underwriting Agreement
October , 1998
To the Representatives named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Dear Sirs:
Consumers Energy Company, a Michigan corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several Underwriters (as defined in Section 14 hereof) certain debt
securities, to be in the aggregate principal amount, to mature in the year and
to have the interest rate specified in Schedule III hereto (the "Securities"),
and hereby confirms its agreement with the Underwriters as set forth herein. The
Securities shall be issued pursuant to the Indenture dated as of February 1,
1998, between the Company and The Chase Manhattan Bank, as Trustee (the
"Trustee"), as amended and supplemented and to be supplemented by various
supplemental indentures, including the Third Supplemental Indenture dated as of
October __, 1998 relating to the Securities (such Indenture as so amended and
supplemented and to be supplemented, the "Indenture"). The Underwriters have
designated the Representa-
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tives to execute this Agreement on their behalf and to act for them in the
manner provided in this Agreement.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), a registration statement on Form
S-3 (Registration No. 333-65619) including a prospectus relating to the
Securities and such registration statement has become effective under the Act.
The registration statement, at the time such registration statement became
effective and as it may have been thereafter amended to the date of this
Agreement (including the documents then incorporated by reference therein) is
hereinafter referred to as the "Registration Statement." The prospectus forming
a part of the Registration Statement at the time the Registration Statement
became effective (including the documents then incorporated by reference
therein) is hereinafter referred to as the "Basic Prospectus," provided that in
the event that the Basic Prospectus shall have been amended, revised or
supplemented prior to the date of this Agreement, or if the Company shall have
supplemented the Basic Prospectus by filing any documents pursuant to Section 13
or 14 or 15 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the time the Registration Statement became effective and prior to
the date of this Agreement, which documents are deemed to be incorporated in the
Basic Prospectus, the term "Basic Prospectus" shall also mean such prospectus as
so amended, revised or supplemented. The Basic Prospectus, as it shall be
revised or supplemented to reflect the final terms of the offering and sale of
the Securities by a prospectus supplement relating to the Securities, and in the
form to be filed with, or transmitted for filing to, the Commission pursuant to
Rule 424 under the Act, is hereinafter referred to as the "Prospectus." Any
reference herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement or the Prospectus shall be deemed to include only
amendments or supplements to the Registration Statement or Prospectus, as the
case may be, and documents incorporated by reference therein after the date of
this Agreement and prior to the termination of the offering of the Securities by
the Underwriters.
Each of the Securities will be secured by First Mortgage Bonds ("First
Mortgage Bonds"), in the same aggregate principal amount, having the same stated
interest rate, maturity date and other terms as the Securities they secure, as
described in the Prospectus (as defined below). The First Mortgage Bonds are to
be issued by the Company under its Indenture, dated as of September 1, 1945,
between the Company and The Chase Manhattan Bank, as trustee (in such capacity,
the "Mortgage Trustee"), as amended and supplemented and to be supplemented by
various supplemental indentures (such Indenture, as so amended and supplemented
and to be supplemented, the "Mortgage").
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1. Purchase and Sale: Upon the basis of the representations and
warranties and on the terms and subject to the conditions herein set forth, the
Company agrees to sell to the respective Underwriters, severally and not
jointly, and the respective Underwriters, severally and not jointly, agree to
purchase from the Company, at the purchase price specified in Schedule III
hereto, the respective principal amounts of Securities set opposite their names
in Schedule II hereto.
The Company is advised by the Representatives that the Underwriter
propose to make a public offering of their respective portions of the Securities
as soon as practicable, in their judgment, after this Agreement has become
effective. The Company is further advised by the Representatives that the
Securities are to be offered to the public initially at ___% of the principal
amount of the Securities and to certain dealers selected by you at a price that
represents a concession not in excess of __% of the principal amount of the
Securities, and that any Underwriter may allow, and such dealers may reallow, a
concession not in excess of __% of the principal amount of the Securities to
certain other dealers.
2. Payment and Delivery: Payment for the Securities shall be made to
the Company or its order in Federal or other immediately available funds in New
York City (or such other place or places of payment as shall be agreed upon by
the Company and the Representatives in writing), upon the delivery of the
Securities at the offices of ________________(or such other place or places of
delivery as shall be agreed upon by the Company and the 2. Representatives) to
the Representatives for the respective accounts of the Underwriters against
receipt therefor signed by the Representatives on behalf of themselves and as
agent for the other Underwriters. Such payment and delivery shall be made at
10:00 A.M., New York time on __________________(or on such later business day as
shall be agreed upon by the Company and the Representatives in writing), unless
postponed in accordance with the provisions of Section 10 hereof. The day and
time at which payment and delivery for the Securities are to be made is herein
called the "Time of Purchase."
Delivery of the Securities shall be made in definitive, fully
registered form in authorized denominations registered in such names as the
Representatives may request in writing to the Company not later than two full
business days prior to the Time of Purchase, or if no such request is received,
in the names of the respective Underwriters for the respective principal amounts
of Securities set forth opposite the name of each Underwriter in Schedule II, in
denominations selected by the Company.
The Company agrees to make the Securities available for inspection
by the Underwriters at the offices of _________________________________ at least
24 hours
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prior to the Time of Purchase, in definitive, fully registered form, and as
requested pursuant to the preceding paragraph.
3. Conditions of Underwriters' Obligations: The several obligations
of the Underwriters hereunder are subject to the accuracy of the warranties and
representations on the part of the Company and to the following other
conditions:
(a) That all legal proceedings to be taken in connection with the
issue and sale of the Securities shall be reasonably
satisfactory in form and substance to Skadden, Arps, Slate
Xxxxxxx & Xxxx, L.L.P. ("Skadden, Arps"), counsel to the
Underwriters.
(b) That, at the Time of Purchase, the Representatives shall be
furnished with the following opinions, dated the day of the
Time of Purchase:
(1) Opinion of Xxxxxxx X. XxxXxxxxx, Esq.,counsel to the
Company, substantially to the effect set forth in
Exhibit A to this Agreement; and
(2) Opinion of Skadden, Arps, counsel to the Underwriters,
substantially to the effect set forth in Exhibit B to
this Agreement.
(c) That on the date of the Time of Purchase the Representatives
shall have received a letter from Xxxxxx Xxxxxxxx LLP
("Xxxxxx Xxxxxxxx") in form and substance satisfactory to the
Representatives, dated as of such date, (i) confirming that
they are independent public accountants within the meaning of
the Act and the applicable published rules and regulations of
the Commission thereunder, (ii) stating that in their opinion
the financial statements examined by them and included or
incorporated by reference in the Registration Statement
complied as to form in all material respects with the
applicable accounting requirements of the Commission,
including applicable published rules and regulations of the
Commission, and (iii) covering, as of a date not more than
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five business days prior to the date of such letter, such
other matters as the Representatives reasonably request.
(d) That, between the date of the execution of this Agreement and
the Time of Purchase, no material and adverse change shall
have occurred in the business, properties or financial
condition of the Company which, in the judgment of the
Representatives, after reasonable inquiries on the part of
the Representatives, impairs the marketability of the
Securities (other than changes referred to in or contemplated
by the Registration Statement or Prospectus).
(e) That, prior to the Time of Purchase, no stop order suspending
the effectiveness of the Registration Statement shall have
been issued under the Act by the Commission or proceedings
therefor initiated or threatened.
(f) That, at the Time of Purchase, the Company shall have
delivered to the Representatives a certificate of an
executive officer of the Company to the effect that, to the
best of his knowledge, information and belief there shall
have been no material adverse change in the business,
properties or financial condition of the Company from that
set forth in the Registration Statement or Prospectus (other
than changes referred to in or contemplated by the
Registration Statement or Prospectus).
(g) That the Company shall have performed such of its obligations
under this Agreement as are to be performed at or before the
Time of Purchase by the terms hereof.
(h) That any additional documents or agreements reasonably
requested by the Representatives or their counsel to permit
the Underwriters to perform their obligations or permit their
counsel to deliver opinions hereunder shall have been
provided to them.
(i) That between the date of the execution of this Agreement and
the day of the Time of Purchase there has been no
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downgrading of the investment ratings of any of the Company's
securities by Standard & Poor's Corporation, Xxxxx'x
Investors Service, Inc. or Duff & Xxxxxx Credit Rating Co.,
and the Company shall not have been placed on "credit watch"
or "credit review" with negative implications by any of such
statistical rating organizations if any of such occurrences
shall, in the reasonable judgment of the Representatives,
after reasonable inquiries on the part of the
Representatives, impair the marketability of the Securities.
(j) That any filing of the Prospectus and any supplements thereto
required pursuant to Rule 424 under the Act have been made in
compliance with Rule 424 in the time periods provided by Rule
424.
4. Conditions of the Company's Obligations: The obligations of the
Company hereunder are subject to the satisfaction of the condition set forth in
Section 3(e).
5. Certain Covenants of the Company: In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To use its best efforts to cause any post-effective
amendments to the Registration Statement to become effective
as promptly as possible. During the time when a Prospectus is
required to be delivered under the Act, the Company will
comply so far as it is able with all requirements imposed
upon it by the Act and the rules and regulations of the
Commission to the extent necessary to permit the continuance
of sales of or dealings in the Securities in accordance with
the provisions hereof and of the Prospectus.
(b) To deliver to each of the Representatives a conformed copy of
the Registration Statement and any amendments thereto
(including all exhibits thereto) and full and complete sets
of all comments of the Commission or its staff and all
responses thereto with respect to the Registration Statement
and any amendments thereto, and to furnish to the
Representatives, for each of the Underwriters, conformed
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copies of the Registration Statement and any amendments
thereto, without exhibits.
(c) As soon as the Company is advised thereof, the Company will
advise the Representatives and confirm the advice in writing
of: (i) the effectiveness of any amendment to the
Registration Statement, (ii) any request made by the
Commission for amendments to the Registration Statement or
Prospectus or for additional information with respect
thereto, (iii) the suspension of qualification of the
Securities for sale under Blue Sky or state securities laws,
and (iv) the entry of a stop order suspending the
effectiveness of the Registration Statement or of the
initiation or threat or any proceedings for that purpose and,
if such a stop order should be entered by the Commission, to
make every reasonable effort to obtain the lifting or removal
thereof.
(d) To deliver to the Underwriters, without charge, as soon as
practicable, and from time to time during such period of time
(not exceeding nine months) after the date of the Prospectus
as they are required by law to deliver a prospectus, as many
copies of the Prospectus (as supplemented or amended if the
Company shall have made any supplements or amendments
thereto) as the Representatives may reasonably request; and
in case any Underwriter is required to deliver a prospectus
after the expiration of nine months after the date of the
Prospectus, to furnish to the Representatives, upon request,
at the expense of such Underwriter, a reasonable quantity of
a supplemental prospectus or of supplements to the Prospectus
complying with Section 10(a)(3) of the Act.
(e) The Company shall not, for a period of ten (10) days from the
Time of Purchase, without the prior written consent of the
Underwriter, offer or sell, enter into any agreement to sell,
grant any option for the sale of or otherwise dispose of any
Securities, any security convertible into or exchangeable
into or exercisable for Securities or any debt securities
substantially similar to the Securities (except for
Securities
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issued pursuant to this Agreement and any offering of Senior
Note Mortgage Bonds),
(f) For such period of time (not exceeding nine months) after the
date of the Prospectus as the Underwriters are required by
law to deliver a prospectus in respect of the Securities, if
any event shall have occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to
make the statements therein, in light of the circumstances
when the Prospectus is delivered to a purchaser, not
misleading, or if it becomes necessary to amend or supplement
the Prospectus to comply with law, to forthwith prepare and
file with the Commission an appropriate amendment or
supplement to the Prospectus and deliver to the Underwriters,
without charge, such number of copies thereof as may be
reasonably requested.
(g) To use its best efforts to qualify the Securities for offer
and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may designate and to pay
(or cause to be paid), or reimburse (or cause to be
reimbursed) the Underwriters and their counsel for,
reasonable filing fees and expenses in connection therewith
(including the reasonable fees and disbursements of counsel
to the Underwriters and filing fees and expenses paid and
incurred prior to the date hereof), provided, however, that
the Company shall not be required to qualify to do business
as a foreign corporation or as a securities dealer or to file
a general consent to service of process or to file annual
reports or to comply with any other requirements deemed by
the Company to be unduly burdensome.
(h) To pay all expenses, fees and taxes (other than transfer
taxes on sales by the respective Underwriters) in connection
with the issuance and delivery of the Securities, except that
the Company shall be required to pay the fees and
disbursements (other than disbursements referred to in
paragraph (g) of this Section 5) of Skadden, Arps, counsel to
the Underwriters, only in the events provided in paragraph
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(i) of this Section 5, the Underwriters hereby agreeing to
pay such fees and disbursements in any other event, and that
except as provided in Section (i), the Company shall not be
responsible for any out-of-pocket expenses of the
Underwriters in connection with their services hereunder
(i) If the Underwriters shall not take up and pay for the
Securities due to the failure of the Company to comply with
any of the conditions specified in Section 3 hereof, or, if
this Agreement shall be terminated in accordance with the
provisions of Section 11 hereof prior to the Time of
Purchase, to pay the reasonable fees and disbursements of
Skadden, Arps, counsel to the Underwriters, and, if the
Underwriters shall not take up and pay for the Securities due
to the failure of the Company to comply with any of the
conditions specified in Section 3 hereof, to reimburse the
Underwriters for their reasonable out-of-pocket expenses, in
an aggregate amount not exceeding a total of $____________,
incurred in connection with the financing contemplated by
this Agreement.
(j) Prior to the termination of the offering of the Securities,
to not file any amendment to the Registration Statement or
supplement to the Prospectus (including the Basic Prospectus)
unless the Company has furnished the Representatives and
counsel to the Underwriters with a copy for their review and
comment a reasonable time prior to filing and has reasonably
considered any comments of the Representatives, or any such
amendment or supplement to which such counsel shall
reasonably object on legal grounds in writing, after
consultation with the Representatives.
(k) To furnish the Representatives with copies of all documents
required to be filed with the Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act subsequent to the time
the Registration Statement becomes effective and prior to the
termination of the offering of the Securities.
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(l) So long as may be required by law for the distribution of the
Securities by the Underwriters or by any dealers that
participate in the distribution thereof, the Company will
comply with all requirements under the Exchange Act relating
to the timely filing with the Commission of its reports
pursuant to Section 13 of the Exchange Act and of its proxy
statements pursuant to Section 14 of the Exchange Act.
6. Representations and Warranties of the Company: The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Registration Statement has become effective under the
Act; a true and correct copy of the Registration Statement in
the form in which it became effective has been delivered to
each of the Representatives and to the Representatives for
each of the Underwriters (except that copies delivered for
the Underwriters excluded exhibits to such Registration
Statement); any filing of the Prospectus and any supplements
thereto required pursuant to Rule 424(b) has been or will be
made in the manner required by Rule 424(b) and within the
time period required by Section 3(j) hereof; no stop order
suspending the effectiveness of the Registration Statement is
in effect, and no proceedings for such purposes are pending
before or, to the knowledge of the Company, threatened by the
Commission. On the effective date of the Registration
Statement, the Registration Statement and the Basic
Prospectus complied, or were deemed to have complied, and on
its respective issue date, each preliminary prospectus filed
pursuant to Rule 424(b) complied, and the Basic Prospectus
complied, and on its issue date, the Prospectus will comply,
or will be deemed to comply, in all material respects with
the applicable provisions of the Act, the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act") and the
published rules and regulations of the Commission, none of
the Registration Statement on its effective date, the Basic
Prospectus on its issue date, or any other preliminary
prospectus, on its issue date, contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as of
its issue date and, as amended or supplemented, if
applicable, as of the Time of Purchase, will not contain any
untrue statement
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of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
except that the Company makes no warranty or representation
to any Underwriter with respect to any statements or
omissions made therein in reliance upon and in conformity
with information furnished in writing to the Company by, or
through the Representatives on behalf of, any Underwriter
expressly for use therein, or to any statements in or
omissions from that part of the Registration Statement that
shall constitute the Statement of Eligibility and
Qualification under the Trust Indenture Act of the Trustee
under the Indenture.
(b) The documents incorporated by reference in the Registration
Statement, any preliminary prospectus, the Basic Prospectus
and the Prospectus, when they were filed (or, if an amendment
with respect to any such document was filed, when such
amendment was filed) with the Commission, conformed in all
material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated
thereunder, and any further documents so filed and
incorporated by reference will, when they are filed with the
Commission, conform in all material respects to the
requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder; none of
such documents, when it was filed (or, if an amendment with
respect to any such document was filed, when such amendment
was filed), contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading; and no such further document, when it is filed,
will contain an untrue statement
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of a material fact or will 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 are made, not misleading.
(c) 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 all requisite authority to own or lease
its properties and conduct its business as described in the
Prospectus and to consummate the transactions contemplated
hereby, and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of
its business as described in the Prospectus or its ownership
or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the
Company.
(d) The Securities are in the form contemplated by the Indenture
and have been duly authorized by the Company. At the Time of
Purchase, the Securities will have been duly executed and
delivered by the Company and, when authenticated by the
Trustee in the manner provided for in the Indenture and
delivered against payment therefor as provided in this
Agreement, will constitute valid and binding obligations of
the Company, enforceable against the Company in accordance
with their terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally or by general principles of
equity (regardless of whether enforcement is considered in a
proceeding at law or in equity). The Securities conform in
all material respects to the descriptions thereof in the
Prospectus.
(e) This Agreement has been duly authorized, executed and
delivered by the Company, and the Company has full corporate
power and authority to enter into this Agreement.
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(f) Each of the Indenture and the Mortgage has been duly
authorized by the Company. At the Time of Purchase, the
Indenture and the Mortgage will have been duly executed and
delivered by the Company and will constitute a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or by general
principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity); the
Indenture and the Mortgage conform in all material respects
to the description thereof in the Prospectus; and the
Indenture and the Mortgage conform to the requirements of the
Trust Indenture Act.
(g) The First Mortgage Bonds are in the form contemplated by the
Mortgage and have been duly authorized by the Company. At the
Time of Purchase, the First Mortgage Bonds (i) will have been
duly executed and delivered by the Company and, when
authenticated by the Mortgage Trustee in the manner provided
for in the Mortgage, (ii) will constitute valid and binding
obligations of the Company, enforceable against the Company
in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally or by general principals of
equity (regardless of whether enforcement is considered in a
proceeding at law or in equity), will be entitled to the
security afforded by the Mortgage equally and ratably with
all securities outstanding thereunder and (iii) will be owned
and held by the Trustee, in trust, for the benefit of the
holders of all securities from time to time outstanding under
the Indenture. The First Mortgage Bonds conform in all
material respects to the descriptions thereof in the
Prospectus.
(h) The Company has all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and
has made all declarations and filings with, all federal,
state,
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local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to
conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain
or file would not have a material adverse effect on the
Company.
(i) An appropriate order has been entered by the Federal Energy
Regulatory Commission under the Federal Power Act authorizing
the issuance and sale of the Securities and the issuance of
the First Mortgage Bonds, and such order is in full force and
effect. No other order, license, consent, authorization or
approval of, or exemption by, or the giving of notice to, or
the registration with any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, and no filing, recording, publication or
registration in any public office or any other place, was or
is now required to be obtained by the Company to authorize
its execution or delivery of, or the performance of its
obligations under, this Agreement or the Securities, except
such as have been obtained or may be required under state
securities or Blue Sky laws or as referred to in the Basic
Prospectus.
(j) None of the issuance and sale of the Securities, or the First
Mortgage Bonds, or the execution or delivery by the Company
of, or the performance by the Company of its obligations
under, this Agreement did or will conflict with, result in a
breach of any of the terms or provisions of, or constitute a
default or require the consent of any party under the
Company's Articles of Incorporation or by-laws, any material
agreement or instrument to which it is a party, any existing
applicable law, rule or regulation or any judgment, order or
decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the
Company or any of its properties or assets, or did or will
result in the creation or imposition of any lien on the
Company's properties or assets.
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(k) Except as disclosed in the Basic Prospectus, there is no
action, suit, proceeding, inquiry or investigation (at law or
in equity or otherwise) pending or, to the knowledge of the
Company, threatened against the Company, by any governmental
authority that (i) questions the validity, enforceability or
performance of this Agreement or the Securities or (ii) if
determined adversely, is likely to have a material adverse
effect on the business or financial condition of the Company,
or materially adversely affect the ability of the Company to
perform its obligations hereunder or the consummation of the
transactions contemplated by this Agreement.
(l) There has not been any material and adverse change in the
business, properties or financial condition of the Company
from that set forth in the Registration Statement (other than
changes referred to in or contemplated by the Registration
Statement or the Basic Prospectus).
(m) Except as set forth in the Basic Prospectus, no event or
condition exists that constitutes, or with the giving of
notice or lapse of time or both would constitute, a default
or any breach or failure to perform by the Company in any
material respect under any indenture, mortgage, loan
agreement, lease or other material agreement or instrument to
which the Company is a party or by which it or any of its
properties may be bound.
(n) The Company has duly authorized all necessary action to be
taken by it for the procurement of an irrevocable financial
guarantee insurance policy issued by Ambac Assurance
Corporation, insuring the payment of principal and interest
on the Securities when due.
7. Representation and Warranties of Underwriters: Each Underwriter
warrants and represents that the information, if any, furnished in writing to
the Company through the Representatives expressly for use in the Registration
Statement and Prospectus is correct in all material respects as to such
Underwriter. Each Underwriter, in addition to other information furnished to the
Company for use in the Registration Statement and
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Prospectus, herewith furnishes to the Company for use in the Registration
Statement and Prospectus, the information stated herein with regard to the
public offering, if any, by such Underwriter and represents and warrants that
such information is correct in all material respects as to such Underwriter.
8. Indemnification:
(a) The Company agrees, to the extent permitted by law, to
indemnify and hold harmless each of the Underwriters and each
person, if any, who controls any such Underwriter within the
meaning of Section 15 of the Act or Section 20 of 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 or otherwise, and to
reimburse the Underwriters and such controlling person or
persons, if any, for any legal or other expenses incurred by
them in connection with defending any action, suit or
proceeding (including governmental investigations) as
provided in Section 8(c) hereof, insofar as such losses,
claims, damages, liabilities or actions, suits or proceedings
(including governmental investigations) arise out of or are
based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement,
any preliminary prospectus as of its issue date (if used
prior to the date of the Basic Prospectus), the Basic
Prospectus (if used prior to the date of the Prospectus), the
Prospectus, or, if the Prospectus shall be amended or
supplemented, in the Prospectus as so amended or supplemented
(if such Prospectus or such Prospectus as amended or
supplemented is used after the period of time referred to in
Section 5(e) hereof, it shall contain or be used with such
amendments or supplements as the Company deems necessary to
comply with Section 10(a) of the Act), or arise out of or are
based upon any omission or
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alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims,
damages, liabilities or actions arise out of or are based
upon any such untrue statement or alleged untrue statement or
omission or alleged omission which was made in such
preliminary prospectus, Basic Prospectus, Registration
Statement or Prospectus, or in the Prospectus as so amended
or supplemented, in reliance upon and in conformity with
information furnished in writing to the Company by, or
through the Representatives on behalf of, any Underwriter
expressly for use therein or with any statements in or
omissions from that part of the Registration Statement that
shall constitute the Statement of Eligibility and
Qualification under the Trust Indenture Act of the Trustee
under the Indenture, and except that this indemnity shall not
inure to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses,
claims, damages, liabilities or actions, suits or proceedings
arising from the sale of the Securities to any person if a
copy of the Prospectus, as the same may then be supplemented
or amended (excluding, however, any document then
incorporated or deemed incorporated therein by reference),
was not sent or given by or on behalf of such Underwriter to
such person (i) with or prior to the written confirmation of
sale involved or (ii) as soon as available after such written
confirmation, relating to an event occurring prior to the
payment for and delivery to such person of the Securities
involved in such sale, and the omission or alleged omission
or untrue statement or alleged untrue statement was corrected
in the Prospectus as supplemented or amended at such time.
The Company's indemnity agreement contained in this Section 8(a), and
the covenants, representations and warranties of the Company contained in this
Agreement, shall remain in full force and effect regardless of any investigation
made by or on behalf of any person, and shall survive the delivery of and
payment for the Securities hereunder, and the indemnity agreement contained in
this Section 8 shall survive any termination of this Agreement. The liabilities
of the Company in this Section 8(a) are in addition to any other liabilities of
the Company under this Agreement or otherwise.
(b) Each Underwriter agrees, severally and not jointly, to the
extent permitted by law, to indemnify, hold harmless and
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reimburse the Company, its directors and such of its officers
as shall have signed the Registration Statement, each other
Underwriter and each person, if any, who controls the Company
or any such other Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, to the same
extent and upon the same terms as the indemnity agreement of
the Company set forth in Section 8(a) hereof, but only with
respect to alleged untrue statements or omissions made in the
Registration Statement, the Basic Prospectus or in the
Prospectus, as amended or supplemented, (if applicable) in
reliance upon and in conformity with information furnished in
writing to the Company by such Underwriter expressly for use
therein.
The indemnity agreement on the part of each Underwriter contained in
this Section 8(b) and the representations and warranties of such Underwriter
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of the Company or any other person, and
shall survive the delivery of and payment for the Securities hereunder, and the
indemnity agreement contained in this Section 8(b) shall survive any termination
of this Agreement. The liabilities of each Underwriter in Section 8(b) are in
addition to any other liabilities of such Underwriter under this Agreement or
otherwise.
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(c) If a claim is made or an action, suit or proceeding
(including governmental investigations) is commenced or
threatened against any person as to which indemnity may be
sought under Section 8(a) or 8(b), such person (the
"Indemnified Person") shall notify the person against whom
such indemnity may be sought (the "Indemnifying Person")
promptly after any assertion of such claim threatening to
institute an action, suit or proceeding or if such an action,
suit or proceeding is commenced against such Indemnified
Person, promptly after such Indemnified Person shall have
been served with a summons or other first legal process,
giving information as to the nature and basis of the claim.
Failure to so notify the Indemnifying Person shall not,
however, relieve the Indemnifying Person from any liability
which it may have on account of the indemnity under Section
8(a) or 8(b) if the Indemnifying Person has not been
prejudiced in any material respect by such failure. Subject
to the immediately succeeding sentence, the Indemnifying
Person shall assume the defense of any such litigation or
proceeding, including the employment of counsel and the
payment of all expenses, with such counsel being designated,
subject to the immediately succeeding sentence, in writing by
the Representatives in the case of parties indemnified
pursuant to Section 8(b) and by the Company in the case of
parties indemnified pursuant to Section 8(a). Any Indemnified
Person shall have the right to participate in such litigation
or proceeding and to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include (x)
the Indemnifying Person and (y) the Indemnified Person and,
in the written opinion of counsel to such Indemnified Person,
representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest
between them, in either of which cases the reasonable fees
and expenses of counsel (including disbursements) for such
Indemnified Person shall
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be reimbursed by the Indemnifying Person to the Indemnified
Person. If there is a conflict as described in clause (ii)
above, and the Indemnified Persons have participated in the
litigation or proceeding utilizing separate counsel whose
fees and expenses have been reimbursed by the Indemnifying
Person and the Indemnified Persons, or any of them, are found
to be solely liable, such Indemnified Persons shall repay to
the Indemnifying Person such fees and expenses of such
separate counsel as the Indemnifying Person shall have
reimbursed. It is understood that the Indemnifying Person
shall not, in connection with any litigation or proceeding or
related litigation or proceedings in the same jurisdiction as
to which the Indemnified Persons are entitled to such
separate representation, be liable under this Agreement for
the reasonable fees and out-of-pocket expenses of more than
one separate firm (together with not more than one
appropriate local counsel) for all such Indemnified Persons.
Subject to the next paragraph, all such fees and expenses
shall be reimbursed by payment to the Indemnified Persons of
such reasonable fees and expenses of counsel promptly after
payment thereof by the Indemnified Persons. In furtherance of
the requirement above that fees and expenses of any separate
counsel for the Indemnified Persons shall be reasonable, the
Representatives and the Company agree that the Indemnifying
Person's obligations to pay such fees and expenses shall be
conditioned upon the following:
(1) in case separate counsel is proposed to be retained by
the Indemnified Persons pursuant to clause (ii) of the
preceding paragraph, the Indemnified Persons shall in
good faith fully consult with the Indemnifying Person in
advance as to the selection of such counsel;
(2) reimbursable fees and expenses of such separate counsel
shall be detailed and supported in a manner reasonably
acceptable to the Indemnifying Person (but nothing
herein shall be deemed to require the furnishing to the
Indemnifying Person of any information, including
without
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limitation, computer print-outs of lawyers' daily time
entries, to the extent that, in the judgment of such
counsel, furnishing such information might reasonably be
expected to result in a waiver of any attorney-client
privilege); and
(3) the Company and the Representatives shall cooperate in
monitoring and controlling the fees and expenses of
separate counsel for Indemnified Persons for which the
Indemnifying Person is liable hereunder, and the
Indemnified Person shall use every reasonable effort to
cause such separate counsel to minimize the duplication
of activities as between themselves and counsel to the
Indemnifying Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 8, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
9. Contribution: If the indemnification provided for in Section 8
above is unavailable to or insufficient to hold harmless an Indemnified Person
under such Section in respect of any losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in respect
thereof) referred to therein, then each Indemnifying Person under Section 8
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Person on the one hand and the Indemnified Person
on the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each Indemnifying Person shall contribute to such amount paid or
payable by such Indemnified Person in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of each
Indemnifying Person, if any, on the one hand and the Indemnified Person on the
other in connection with the statements or omissions which
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resulted in such losses, claims, damages or liabilities (or actions, suits or
proceedings (including governmental investigations) in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the total underwriting discounts
and commission received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus, bear to the aggregate public offering
price of the Securities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section 9. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental proceedings) in respect
thereof) referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Person in
connection with investigating or defending any such action, suits or proceedings
(including governmental proceedings) or claim, provided that the provisions of
Section 8 have been complied with (in all material respects) in respect of any
separate counsel for such Indemnified Person. Notwithstanding the provisions of
this Section 9, no Underwriter shall be required to contribute any amount
greater than the excess of (i) the total price at which the Securities
underwritten by it and distributed to the public were offered to the public over
(ii) the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 9 to contribute are several in
proportion to their respective underwriting obligations and not joint.
The agreement with respect to contribution contained in Section 9
hereof shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any Underwriter, and shall survive
delivery of and payment for the Securities hereunder and any termination of this
Agreement.
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10. Substitution of Underwriters: If any Underwriter under this
agreement shall fail or refuse (otherwise than for some reason sufficient to
justify in accordance with the terms hereof, the termination of its obligations
hereunder) to purchase the Securities which it had agreed to purchase on the
Time of Purchase, the Representatives shall immediately notify the Company and
the Representatives and the other Underwriters may, within 36 hours of the
giving of such notice, determine to purchase, or to procure one or more other
members of the National Association of Securities Dealers, Inc. ("NASD") (or, if
not members of the NASD, who are foreign banks, dealers or institutions not
registered under the Exchange Act and who agree in making sales to comply with
the NASD's Rules of Fair Practice), satisfactory to the Company, to purchase,
upon the terms herein set forth, the principal amount of Securities which the
defaulting Underwriter had agreed to purchase. If any non-defaulting Underwriter
or Underwriters shall determine to exercise such right, the Representatives
shall give written notice to the Company of such determination within 36 hours
after the Company shall have received notice of any such default, and thereupon
the Time of Purchase shall be postponed for such period, not exceeding three
business days, as the Company shall determine. If in the event of such a
default, the Representatives shall fail to give such notice, or shall within
such 36-hour period give written notice to the Company that no other Underwriter
or Underwriters, or others, will exercise such right, then this Agreement may be
terminated by the Company, upon like notice given to the Representatives within
a further period of 36 hours. If in such case the Company shall not elect to
terminate this Agreement, it shall have the right, irrespective of such default:
(a) to require such non-defaulting Underwriters to purchase and
pay for the respective principal amounts of Securities which
they had severally agreed to purchase hereunder, as herein
above provided, and, in addition, the principal amount of
Securities which the defaulting Underwriter shall have so
failed to purchase up to a principal amount thereof equal to
one-ninth (1/9) of the respective principal amounts of
Securities which such non-defaulting Underwriters have
otherwise agreed to purchase hereunder; and/or
(b) to procure one or more other members of the NASD (or, if not
members of the NASD, who are foreign banks, dealers or
institutions not registered under the Exchange Act and who
agree in making sales to comply with the NASD's Rules of Fair
Practice), to purchase, upon the terms herein set forth, the
principal amount of Securities which such
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defaulting Underwriter had agreed to purchase, or that
portion thereof which the remaining Underwriters shall not be
obligated to purchase pursuant to the foregoing clause (a).
In the event the Company shall exercise its rights under clause (a)
and/or (b) above, the Company shall give written notice thereof to the
Representatives within such further period of 36 hours, and thereupon the Time
of Purchase shall be postponed for such period, not exceeding five business
days, as the Company shall determine. In the event the Company shall be entitled
to but shall not elect to exercise its rights under clause (a) and/or (b), the
Company shall be deemed to have elected to terminate this Agreement.
Any action taken by the Company under this Section 10 shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement. Termination by the Company under this Section
10 shall be without any liability on the part of the Company or any
non-defaulting Underwriter.
In the computation of any period of 36 hours referred to in this
Section 10, there shall be excluded a period of 24 hours in respect of each
Saturday, Sunday or legal holiday which would otherwise be included in such
period of time.
11. Termination of Agreement: This Agreement may be terminated at any
time prior to the Time of Purchase by the Representatives, if, prior to such
time (i) trading generally in securities on the New York Stock Exchange shall
have been suspended by the Commission or the New York Stock Exchange, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or over-the-counter market, (iii) a general moratorium on commercial
banking activities in New York shall have been declared by federal or New York
State authorities or (iv) there shall have occurred any outbreak or material
escalation of hostilities or any material adverse disruption in financial
markets or any other calamity or crisis, the effect of which on the financial
markets of the United States is such as to impair, in the Representatives'
reasonable judgment, after having made due inquiry, the marketability of the
Securities.
If the Representatives elect to terminate this Agreement, as provided
in this Section 11, the Representatives will promptly notify the Company and
each other Underwriter by telephone or telecopy, confirmed by letter. If this
Agreement shall not be carried out by any Underwriter for any reason permitted
hereunder, or if the sale of the Securities to the Underwriters as herein
contemplated shall not be carried out because the Company is not able to comply
with the terms hereof, the Company shall not be under any obligation
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under this Agreement and shall not be liable to any Underwriter or to any member
of any selling group for the loss of anticipated profits from the transactions
contemplated by this Agreement and the Underwriters shall be under no liability
to the Company nor be under any liability under this Agreement to one another.
Notwithstanding the foregoing, the provisions of Sections 5(g), 5(i), 8
and 9 shall survive any termination of this Agreement.
12. Notices: All notices hereunder shall, unless otherwise expressly
provided, be in writing and be delivered at or mailed to the following addresses
or be sent by telecopy as follows: if to the Underwriters or the
Representatives, to the Representatives at the address or number, as
appropriate, designated in Schedule I hereto, and, if to the Company, to
Consumers Energy Company, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 00000,
Attention: Senior Vice President and Chief Financial Officer (Telecopy:
517-788-0351).
13. Parties in Interest: The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters, the Company (including the
directors thereof and such of the officers thereof as shall have signed the
Registration Statement), and the controlling persons, if any, referred to in
Section 8 hereof, and their respective successors, assigns, executors and
administrators, and, except as expressly otherwise provided in Section 10
hereof, no other person shall acquire or have any right under or by virtue of
this Agreement.
14. Definition of Certain Terms: The term "Underwriters," as used
herein, shall be deemed to mean the several persons, firms or corporations,
named in Schedule II hereto (including the Representatives herein mentioned, if
so named), and the term "Representatives," as used herein, shall be deemed to
mean the representative or representatives designated by, or in the manner
authorized by, the Underwriters in Schedule I hereto. All obligations of the
Underwriters hereunder are several and not joint. If there shall be only one
person, firm or corporation named in Schedule I and Schedule II hereto, the term
"Underwriters" and the term "Representatives," as used herein, shall mean such
person, firm or corporation. If the firm or firms listed in Schedule I hereto
are the same as the firm or firms listed in Schedule II hereto, then the terms
"Underwriters" and "Representatives," as used herein, shall each be deemed to
refer to such firm or firms. The term "successors" as used in this Agreement
shall not include any purchaser, as such purchaser, of any of the Securities
from any of the respective Underwriters.
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15. Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
16. Counterparts: This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such respective counterparts shall together
constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between each of the Underwriters and the Company.
Very truly yours,
CONSUMERS ENERGY COMPANY
By:
Accepted: [DATE]
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As Representatives
By:
----------------------------------
By:
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Schedule I
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Attention: Syndicate Desk
Telecopy:
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Schedule II
Underwriters Principal Amount of Securities
to be Purchased
. . . . . . . . . . . . . . . . . . . . . . . . . . . __________
. . . . . . . . . . . . . . . . . . . . . . . . . . . __________
. . . . . . . . . . . . . . . . . . . . . . . . . . . __________
. . . . . . . . . . . . . . . . . . . . . . . . . . . __________
Total. . . . . . . __________
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Schedule III
Information Regarding the Securities
1. Aggregate Principal Amount:
2. Maturity Date:
3. Interest Rate: ___%
4. Price to be paid to the Company: ___% of the principal amount
29
