EXHIBIT 1.1
Puget Sound Energy, Inc.
Senior Medium Term Notes, Series B
DISTRIBUTION AGREEMENT
March 3, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇ Financial Center
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Puget Sound Energy, Inc. a Washington corporation (the "Company"),
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confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc (each, an "Agent", and
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collectively, the "Agents," which term shall also include any additional agents
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named in any Terms Agreement (as defined herein)) with respect to the issue and
sale by the Company of its Senior Medium Term Notes, Series B, Due Nine Months
or More From Date of Issue (the "Notes"). The Notes are to be issued pursuant
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to an Indenture, dated as of December 1, 1997, as supplemented by a Second
Supplemental Indenture, dated as of March 1, 1999 (collectively, the
"Indenture"), between the Company and State Street Bank and Trust Company, as
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trustee (the "Trustee"). Prior to the Substitution Date (as defined in the
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Indenture), the Notes will be secured by the delivery to the Trustee of (i)
first mortgage bonds issued under the Company's electric mortgage indenture or
(ii) first mortgage bonds issued under the Company's gas mortgage indenture, as
specified in the Prospectus referred to below (collectively, the "Pledged
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Bonds"). As of the date hereof, the Company has authorized the issuance and
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sale of up to U.S. $500,000,000 aggregate initial offering price of Notes to or
through the Agents
pursuant to the terms of this Agreement. It is understood, however, that the
Company may from time to time authorize the issuance of additional Notes and
that such additional Notes may be sold to or through the Agents pursuant to the
terms of this Agreement, all as though the issuance of such Notes were
authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company to
one or more Agents as principal for resale to investors and other purchasers and
for the sale of Notes by the Company directly to investors (as may from time to
time be agreed to by the Company and the applicable Agent), in which case the
applicable Agent will act as an agent of the Company in soliciting offers for
the purchase of Notes.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-65053) for the
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registration of the Notes, under the Securities Act of 1933, as amended (the
"1933 Act") and the offering thereof from time to time in accordance with Rule
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415 of the rules and regulations of the Commission under the 1933 Act (the "1933
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Act Regulations"), and the Company has filed such post-effective amendments
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thereto as may be required prior to any acceptance by the Company of an offer
for the purchase of Notes. Such registration statement (as so amended, if
applicable) has been declared effective by the Commission and the Indenture has
been duly qualified under the Trust Indenture Act of 1939, as amended (the "1939
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Act"). Such registration statement (as so amended, if applicable) is referred
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to herein as the "Registration Statement"; and the final prospectus and all
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applicable amendments or supplements thereto (including the final prospectus
supplement and pricing supplement relating to the offering of Notes), in the
form first furnished to the applicable Agent(s), are collectively referred to
herein as the "Prospectus"; provided, however, that all references to the
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"Registration Statement" and the "Prospectus" shall also be deemed to include
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all documents incorporated therein by reference pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to any acceptance by
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the Company of an offer for the purchase of Notes; provided, further, that if
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the Company files a registration statement with the Commission pursuant to Rule
462(b) of the 1933 Act Regulations
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(the "Rule 462(b) Registration Statement"), then, after such filing, all
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references to the "Registration Statement" shall also be deemed to include the
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Rule 462(b) Registration Statement. A "preliminary prospectus" shall be deemed
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to refer to any prospectus used before the registration statement became
effective and any prospectus furnished by the Company after the registration
statement became effective and before any acceptance by the Company of an offer
for the purchase of Notes which omitted information to be included upon pricing
in a form of prospectus filed with the Commission pursuant to Rule 424(b) of the
1933 Act Regulations. For purposes of this Agreement, all references to the
Registration Statement, Prospectus or preliminary prospectus or to any amendment
or supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
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All references in this Agreement to financial statements and schedules
and other information which is "disclosed", "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus shall be deemed to include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, Prospectus or preliminary prospectus
shall be deemed to include the filing of any document under the 1934 Act which
is incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be.
1. Appointment as Agent.
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(1) Appointment. Subject to the terms and conditions stated
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herein and subject to the reservation by the Company of the right to sell Notes
directly on its own behalf, the Company hereby agrees that Notes will be sold
exclusively to or through the Agents. The Company agrees that it will not
appoint any other agents to act on its behalf, or to assist it, in the placement
of the Notes.
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(2) Sale of Notes. The Company shall not sell or approve the
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solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.
(3) Purchases as Principal. The Agents shall not have any
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obligation to purchase Notes from the Company as principal. However, absent an
agreement between an Agent and the Company that such Agent shall be acting
solely as an agent for the Company, such Agent shall be deemed to be acting as
principal in connection with any offering of Notes by the Company through such
Agent. Accordingly, the Agents, individually or in a syndicate, may agree from
time to time to purchase Notes from the Company as principal for resale to
investors and other purchasers determined by such Agents. Any purchase of Notes
from the Company by an Agent as principal shall be made in accordance with
Section 3(a) hereof.
(4) Solicitations as Agent. If agreed upon between an Agent and
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the Company, such Agent, acting solely as an agent for the Company and not as
principal, will solicit offers for the purchase of Notes. Such Agent will
communicate to the Company, orally, each offer for the purchase of Notes
solicited by it on an agency basis other than those offers rejected by such
Agent. Such Agent shall have the right, in its discretion reasonably exercised,
to reject any offer for the purchase of Notes, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein. The
Company may accept or reject any offer for the purchase of Notes, in whole or in
part. Such Agent shall make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer for the purchase of Notes
has been solicited by it on an agency basis and accepted by the Company. Such
Agent shall not have any liability to the Company in the event that any such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Notes to a purchaser whose offer has been solicited by
such Agent on an agency basis and accepted
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by the Company, the Company shall (i) hold such Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company and
(ii) pay to such Agent any commission to which it would otherwise be entitled
absent such default.
(5) Reliance. The Company and the Agents agree that any Notes
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purchased from the Company by one or more Agents as principal shall be
purchased, and any Notes the placement of which an Agent arranges as an agent of
the Company shall be placed, by such Agent in reliance on the representations,
warranties, covenants and agreements of the Company contained herein and on the
terms and conditions and in the manner provided herein.
2. Representations and Warranties.
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(1) The Company represents and warrants to each Agent as of the
date hereof, as of the date of each acceptance by the Company of an offer for
the purchase of Notes (whether to such Agent as principal or through such Agent
as agent), as of the date of each delivery of Notes (whether to such Agent as
principal or through such Agent as agent) (the date of each such delivery to
such Agent as principal is referred to herein as a "Settlement Date"), and as of
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any time that the Registration Statement or the Prospectus shall be amended or
supplemented (each of the times referenced above is referred to herein as a
"Representation Date"), as follows:
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(1) Due Incorporation, Valid Existence and Due
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Qualification of the Company. The Company has been duly organized and is
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validly existing as a corporation under the laws of the State of Washington
with corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and to enter
into this Agreement and consummate the transactions contemplated in the
Prospectus; the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to
so qualify or be in good standing would not result in a material adverse
change in
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the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect").
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(2) Significant Subsidiaries. The Company has no
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significant subsidiaries (as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the 1933 Act).
(3) Registration Statement and Prospectus. The Company
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meets the requirements for use of Form S-3 under the 1933 Act; the
Registration Statement (including any Rule 462(b) Registration Statement)
has become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement (including any Rule 462(b)
Registration Statement) has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with; the Indenture has been duly qualified under the 1939 Act; at
the respective times that the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto (including
the filing of the Company's most recent Annual Report on Form 10-K with the
Commission (the "Annual Report on Form 10-K")) became effective and at each
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Representation Date, the Registration Statement (including any Rule 462(b)
Registration Statement) and any amendments thereto complied and will comply
in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not and
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will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; each preliminary prospectus and
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the 1933 Act, complied when so filed in all material respects with the 1933
Act Regulations; each prelim-
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inary prospectus and the Prospectus delivered to the applicable Agent(s)
for use in connection with the offering of Notes are identical to any
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T; and at
the date hereof, at the date of the Prospectus and at each Representation
Date, neither the Prospectus nor any amendment or supplement thereto
included or will include an untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and
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warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the Prospectus made in reliance upon and
in conformity with information furnished to the Company in writing by the
Agents expressly for use in the Registration Statement or the Prospectus.
(4) Incorporated Documents. The documents incorporated
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or deemed to be incorporated by reference in the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the 1934 Act and
the rules and regulations of the Commission under the 1934 Act (the "1934
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Act Regulations") and, when read together with the other information in the
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Prospectus, at the date hereof, at the date of the Prospectus and at each
Representation Date, did not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(5) Independent Accountants. The accountants who
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certified the financial statements and any supporting schedules thereto
included in the Registration Statement and the Prospectus are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
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(6) Financial Statements. The consolidated financial
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statements of the Company included in the Registration Statement and the
Prospectus, together with the related schedules and notes, as well as those
financial statements, schedules and notes of any other entity included in
the Registration Statement and the Prospectus, present fairly the
consolidated financial position of the Company and its subsidiaries, or
such other entity, as the case may be, at the dates indicated and the
consolidated statement of operations, stockholders' equity and cash flows
of the Company and its subsidiaries, or such other entity, as the case may
be, for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles ("GAAP")
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applied on a consistent basis throughout the periods involved; the
supporting schedules, if any, included in the Registration Statement and
the Prospectus present fairly in accordance with GAAP the information
required to be stated therein; the selected financial data and the summary
financial information included in the Registration Statement and the
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement and the Prospectus; and
any pro forma consolidated financial statements of the Company and its
subsidiaries and the related notes thereto included in the Registration
Statement and the 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
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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.
(7) No Material Changes. Since the respective dates as of
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which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (1) there has been no event
or occurrence that would result in a Material Adverse Effect and (2) there
have been no
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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 considered as one enterprise.
(8) Authorization, etc. of this Agreement, the Indenture,
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the Notes and the Pledged Bonds. This Agreement has been duly authorized,
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executed and delivered by the Company; the Indenture has been duly
authorized, executed and delivered by the Company and will be a valid and
legally binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as enforcement thereof may be limited
by (1) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally or (2)
general equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law); the Notes and the Pledged
Bonds have been duly authorized by the Company for offer, sale, issuance
and delivery pursuant to this Agreement and, when issued, authenticated and
delivered in the manner provided for in the Indenture and delivered against
payment of the consideration therefor, will constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited
by (1) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally or (2)
general equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law); the Notes will be
substantially in a form previously certified to the Agents and contemplated
by the Indenture; and each holder of Notes will be entitled to the benefits
of the Indenture.
(9) Descriptions of the Indenture, the Notes and the
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Pledged Bonds. The Indenture, the Notes and the Pledged Bonds conform and
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will conform in all material respects to the statements relating thereto
contained in the Prospectus and are substantially in the form filed
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or incorporated by reference, as the case may be, as an exhibit to the
Registration Statement.
(10) Accuracy of Exhibits. There are no contracts or
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documents which are required to be described in the Registration Statement,
the Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(11) Absence of Defaults and Conflicts. Neither the
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Company nor any of its subsidiaries is in violation of the provisions of
its charter or by-laws 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 of its
subsidiaries 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 of its
subsidiaries is subject (collectively, "Agreements and Instruments"),
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except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement, the
Indenture, the Notes and the Pledged Bonds and any other agreement or
instrument entered into or issued or to be entered into or issued by the
Company in connection with the transactions contemplated by the Prospectus,
the consummation of the transactions contemplated in the Prospectus
(including the issuance and sale of the Notes and the use of proceeds
therefrom as described in the Prospectus) and the compliance by the Company
with its obligations hereunder and under the Indenture, the Notes and the
Pledged Bonds and such other agreements or instruments have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or the passage of time or
both, conflict with or constitute a breach of, or default or 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
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all or a portion of such indebtedness by the Company or any of its
subsidiaries (a "Repayment Event") under, or result in the creation or
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imposition of any lien, charge or encumbrance upon any assets, properties
or operations of the Company or any of its subsidiaries pursuant to, any
Agreements and Instruments, nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any of its
subsidiaries 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 of
its subsidiaries or any of their assets, properties or operations.
(12) Absence of Proceedings. There is no action, suit,
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proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or to the
knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries which is required to be disclosed in the
Registration Statement and the Prospectus (other than as stated therein),
or which may reasonably be expected to result in a Material Adverse Effect,
or which may reasonably be expected to materially and adversely affect the
assets, properties or operations thereof, the performance by the Company of
its obligations under this Agreement, the Indenture, the Notes and the
Pledged Bonds or the consummation of the transactions contemplated in the
Prospectus; and the aggregate of all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or
of which any of their respective assets, properties or operations is the
subject which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the
business, may not reasonably be expected to result in a Material Adverse
Effect.
(13) Possession of Licenses and Permits. The Company and
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its subsidiaries possess such franchises, permits, licenses, approvals,
consents, certificates of public convenience and necessity and other
authorizations (collectively,
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"Governmental Licenses") issued by the appropriate federal, state, local or
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foreign regulatory agencies or bodies, including, without limitation, the
Washington Utilities and Transportation Commission (the "Utilities
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Commission") and cities and towns within the service territory of the
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Company, necessary for the Company and its subsidiaries to conduct the
business now operated by them and for the Company to own and operate the
its electric plant and its gas plant; 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, result in a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not result in 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.
(14) Environmental Laws. Except as otherwise stated in the
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Registration Statement and the Prospectus 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, 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,
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distribution, use,
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treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
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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 may
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.
(15) No Filings, Regulatory Approvals etc. The Utilities
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Commission has issued an Order Establishing Compliance with RCW 80.08.040
with respect to the Notes and the Pledged Bonds (the "Order") and the Order
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has not been rescinded, annulled or modified. No other filing with, or
approval, authorization, consent, license, registration, qualification,
order or decree of, any court or governmental authority or agency, domestic
or foreign, is necessary or required for the performance by the Company of
its obligations under this Agreement, the Indenture, the Notes and the
Pledged Bonds or in connection with the transactions contemplated in the
Prospectus, except such as have been previously obtained or rendered, as
the case may be.
(16) Investment Company Act. The Company is not, and upon
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the issuance and sale of the Notes as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the ("1940 Act").
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(17) Ratings. The Medium-Term Note Program under which
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the Notes are issued (the "Program"), as well as the Notes, are rated
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[Baa1]
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by ▇▇▇▇▇'▇ Investors Service, Inc. and [A-] by Standard & Poor's Ratings
Service, or such other rating as to which the Company shall have most
recently notified the Agents pursuant to Section 4(a) hereof.
(2) Additional Certifications. Any certificate signed by any
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officer of theCompany or any of its subsidiaries and delivered to one or more
Agents or to counsel for the Agents in connection with an offering of Notes to
one or more Agents as principal or through an Agent as agent shall be deemed a
representation and warranty by the Company to such Agent or Agents as to the
matters covered thereby on the date of such certificate and, unless subsequently
amended or supplemented, at each Representation Date subsequent thereto.
3. Purchases as Principal; Solicitations as Agent.
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(1) Purchases as Principal. Notes purchased from the Company by the
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Agents, individually or in a syndicate, as principal shall be made in accordance
with terms agreed upon between the Agents and the Company as set forth in a
terms agreement between the Agents and the Company (the "Terms Agreement")
(which terms, unless otherwise agreed, shall, to the extent applicable, include
those terms specified in the form of such agreement attached as Exhibit A hereto
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and shall be agreed upon orally, with written confirmation prepared by such
Agent or Agents and mailed to the Company). An Agent's commitment to purchase
Notes as principal shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Unless the context
otherwise requires, references herein to "this Agreement" shall include the
applicable Terms Agreement or other agreement of one or more Agents to purchase
Notes from the Company as principal. Each purchase of Notes, unless otherwise
agreed, shall be at a discount from the principal amount of each such Note
equivalent to the applicable commission set forth in Schedule A hereto. The
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Agents may engage the services of any broker or dealer in connection with the
resale of the Notes purchased by them as principal and may allow all or any
portion of the discount received from the Company in connection with such
purchases to such brokers or deal-
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ers. At the time of each purchase of Notes from the Company by one or more
Agents as principal, such Agent or Agents shall specify the requirements for the
officers' certificate, opinion of counsel and comfort letter pursuant to
Sections 7(b), 7(c) and 7(d) hereof.
If the Company and two or more Agents enter into an agreement pursuant to
which such Agents agree to purchase Notes from the Company as principal and one
or more of such Agents shall fail at the Settlement Date to purchase the Notes
which it or they are obligated to purchase (the "Defaulted Notes"), then the
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nondefaulting Agents shall have the right, within 24 hours thereafter, to make
arrangements for one of them or one or more other Agents or underwriters to
purchase all, but not less than all, of the Defaulted Notes in such amounts as
may be agreed upon and upon the terms herein set forth; provided, however, that
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if such arrangements shall not have been completed within such 24-hour period,
then:
(a) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of Notes to be so purchased by
all of such Agents on the Settlement Date, the nondefaulting Agents shall
be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective initial underwriting
obligations bear to the underwriting obligations of all nondefaulting
Agents; or
(b) if the aggregate principal amount of Defaulted Notes exceeds 10%
of the aggregate principal amount of Notes to be so purchased by all of
such Agents on the Settlement Date, such agreement shall terminate without
liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default. In the event of any such default
which does not result in a termination of such agreement, either the
nondefaulting Agents or the Company shall have the right to postpone the
Settlement Date for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or the Prospectus or in any other
documents or arrangements.
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(2) Solicitations as Agent. On the basis of the
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representations and warranties herein contained, but subject to the terms and
conditions herein set forth, when agreed by the Company and an Agent, such
Agent, as an agent of the Company, will use its reasonable efforts to solicit
offers for the purchase of Notes upon the terms set forth in the Prospectus. The
Agents are not authorized to appoint sub-agents with respect to Notes sold
through them as agent. All Notes sold through an Agent as agent will be sold at
100% of their principal amount unless otherwise agreed upon between the Company
and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers for the purchase of Notes through an Agent, as an agent
of the Company, commencing at any time for any period of time or permanently.
As soon as practicable after receipt of instructions from the Company, such
Agent will suspend solicitation of offers for the purchase of Notes from the
Company until such time as the Company has advised such Agent that such
solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent, as an
agent of the Company, as set forth in Schedule A hereto.
----------
(3) Administrative Procedures. The purchase price,
-------------------------
interest rate or formula, maturity date and other terms of the Notes specified
in Exhibit A hereto (as applicable) shall be agreed upon between the Company and
---------
the applicable Agent(s) and specified in a pricing supplement to the Prospectus
(each, a "Pricing Supplement") to be prepared by the Company in connection with
------------------
each sale of Notes. Except as otherwise specified in the applicable Pricing
Supplement, the Notes will be issued in denominations of U.S. $1,000 or any
larger amount that is an integral multiple of U.S. $1,000. Administrative
procedures with respect to the issuance and sale of the Notes (the "Procedures")
----------
shall be agreed upon from time to time among the Company, the Agents and the
Trustee. The Agents and the Company agree to perform, and the Company agrees to
cause the Trustee to
16
agree to perform, their respective duties and obligations specifically provided
to be performed by them in the Procedures.
4. Covenants of the Company.
------------------------
The Company covenants and agrees with each Agent as follows:
(1) Notice of Certain Events. The Company will notify the
------------------------
and confirm such notice in writing, of (i) the effectiveness of any post-
effective amendment to the Registration Statement or the filing of any amendment
or supplement to the Prospectus (other than any amendment or supplement thereto
providing solely for the determination of the variable terms of the Notes or
relating solely to the offering of securities other than the Notes), (ii) the
receipt of any comments from the Commission, (iii) any request by the Commission
for any amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information, (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, or of any order preventing or suspending the use of any preliminary
prospectus, or of the initiation of any proceedings for that purpose, (v) any
change in the rating assigned by any nationally recognized statistical rating
organization to the Program or any debt securities (including the Notes) of the
Company, or the public announcement by any nationally recognized statistical
rating organization that it has under surveillance or review, with possible
negative implications, its rating of the Program or any such debt securities, or
the withdrawal by any nationally recognized statistical rating organization of
its rating of the Program or any such debt securities and (iv) the expected date
of any Substitution Date under the Indenture. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(2) Filing or Use of Amendments. The Company will give
---------------------------
the Agents advance notice of its intention to file or prepare any additional
registration statement with respect to the registration of additional Notes, any
amendment to the Registration Statement (in-
17
cluding any filing under Rule 462(b) of the 1933 Act Regulations) or any
amendment or supplement to the prospectus included in the Registration Statement
at the time it became effective or to the Prospectus (other than an amendment or
supplement thereto providing solely for the determination of the variable terms
of the Notes or relating solely to the offering of securities other than the
Notes or an amendment or supplement pursuant to the requirements of the 1934 Act
and the 1934 Act Regulations), will furnish to the Agents copies of any such
document a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such document to which the Agents or
counsel for the Agents shall object.
(3) Delivery of the Registration Statement. The Company
--------------------------------------
has furnished to each Agent and to counsel for the Agents, without charge,
signed and conformed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and signed and conformed copies of all
consents and certificates of experts. The Registration Statement and each
amendment thereto furnished to the Agents will be identical to any
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(4) Delivery of the Prospectus. The Company will deliver
---------------------------
to each Agent, without charge, as many copies of each preliminary prospectus as
such Agent may reasonably request, and the Company hereby consents to the use of
such copies for purposes permitted by the 1933 Act. The Company will furnish to
each Agent, without charge, such number of copies of the Prospectus (as amended
or supplemented) as such Agent may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Agents will be identical to
any electronically transmitted copies thereof filed with the Commission pursuant
to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(5) Preparation of Pricing Supplements. The Company will
----------------------------------
prepare, with respect to any Notes to be sold to or through one or more Agents
pursuant to this Agreement, a Pricing Supplement with respect to such
18
Notes in a form previously approved by the Agents. The Company will deliver such
Pricing Supplement no later than 11:00 a.m., New York City time, on the business
day following the date of the Company's acceptance of the offer for the purchase
of such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3)
under the 1933 Act not later than the close of business of the Commission on the
fifth business day after the date on which such Pricing Supplement is first
used.
(6) Revisions of Prospectus -- Material Changes. Except
-------------------------------------------
as otherwise provided in subsection (m) of this Section 4, if at any time during
the term of this Agreement any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the Agents or
counsel for the Company, to amend the Registration Statement in order that the
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or to amend or supplement the
Prospectus in order that the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company shall give
immediate notice, confirmed in writing, to the Agents to cease the solicitation
of offers for the purchase of Notes in their capacity as agents and to cease
sales of any Notes they may then own as principal, and the Agents shall as soon
as practicable cease any such solicitation or sales, and the Company will
promptly prepare and file with the Commission, subject to Section 4(b) hereof,
such amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement and Prospectus comply with such
requirements, and the Company will furnish to the Agents, without charge, such
number of copies of such amendment or supplement as the Agents may reasonably
request. In addition, the Company will comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations so
19
as to permit the completion of the distribution of each offering of Notes.
(7) Prospectus Revisions -- Periodic Financial Information.
------------------------------------------------------
Except as otherwise provided in subsection (m) of this Section 4, on or prior to
the date on which there shall be released to the general public interim
financial statement information related to the Company with respect to each of
the first three quarters of any fiscal year or preliminary financial statement
information with respect to any fiscal year, the Company shall furnish such
information to the Agents, confirmed in writing, and shall, as required by the
1933 Act and the 1933 Act Regulations, cause the Prospectus to be amended or
supplemented to include financial information with respect thereto and
corresponding information for the comparable period of the preceding fiscal
year, as well as such other information and explanations as shall be necessary
for an understanding thereof or as shall be required by the 1933 Act or the 1933
Act Regulations.
(8) Prospectus Revisions -- Audited Financial Information.
-----------------------------------------------------
Except as otherwise provided in subsection (m) of this Section 4, on or prior to
the date on which there shall be released to the general public financial
information included in or derived from the audited consolidated financial
statements of the Company for the preceding fiscal year, the Company shall
furnish such information to the Agents, confirmed in writing, and shall, as
required by the 1933 Act and the 1933 Act Regulations, cause the Prospectus to
be amended or supplemented to include such audited consolidated financial
statements and the report or reports, and consent or consents to such inclusion,
of the independent accountants with respect thereto, as well as such other
information and explanations as shall be necessary for an understanding of such
consolidated financial statements or as shall be required by the 1933 Act or the
1933 Act Regulations.
(9) Earnings Statements. The Company will timely file such
-------------------
reports pursuant to the 1934 Act as are necessary in order to make generally
available to its security holders an earnings statement for the purposes of, and
to provide the benefits contemplated by, the last paragraph of Section 11(a) of
the 1933 Act.
20
(10) Reporting Requirements. The Company, during the period
----------------------
when the Prospectus is required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time periods prescribed by the 1934 Act and the 1934
Act Regulations.
(11) Restriction on Offers and Sales of Securities. Unless
---------------------------------------------
otherwise agreed upon between one or more Agents acting as principal and the
Company, between the date of an agreement made in accordance with Section 3(a)
hereof by such Agent(s) to purchase the related Notes from the Company and the
Settlement Date with respect thereto, the Company will not, without the prior
written consent of such Agent(s), issue, sell, offer or contract to sell, grant
any option for the sale of, or otherwise dispose of, any debt securities of the
Company (other than the Notes that are to be sold pursuant to such agreement or
commercial paper in the ordinary course of business).
(12) Use of Proceeds. The Company will use the net proceeds
---------------
received by it from the issuance and sale of the Notes in the manner specified
in the Prospectus.
(13) Suspension of Certain Obligations. The Company shall
---------------------------------
not be required to comply with the provisions of subsections (f), (g) or (h) of
this Section 4 during any period from the time (i) the Agents shall have
suspended solicitation of offers for the purchase of Notes in their capacity as
agents pursuant to a request from the Company and (ii) no Agent shall then hold
any Notes purchased from the Company as principal, as the case may be, until the
time the Company shall determine that solicitation of offers for the purchase of
Notes should be resumed or an Agent shall subsequently purchase Notes from the
Company as principal.
5. Conditions of Agents' Obligations.
---------------------------------
The obligations of one or more Agents to purchase Notes from the
Company as principal and to solicit offers for the purchase of Notes as an agent
of the Company, and the obligations of any purchasers of Notes sold through an
Agent as an agent of the Company, will be subject to the accuracy of the
representations and war-
21
ranties on the part of the Company herein contained or contained in any
certificate of an officer of the Company or any of its subsidiaries delivered
pursuant to the provisions hereof, to the performance and observance by the
Company of its covenants and other obligations hereunder, and to the following
additional conditions precedent:
(1) Effectiveness of Registration Statement. The
---------------------------------------
Registration Statement (including any Rule 462(b) Registration Statement) has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Agents.
(2) Legal Opinions. On the date hereof, the Agents shall
--------------
have received the following legal opinions, dated as of the date hereof and in
form and substance reasonably satisfactory to the Agents (it being understood
that such legal opinions will be subject to reasonable and customary
assumptions, qualifications and exclusions):
(1) Opinion of Counsel for the Company. The favorable
----------------------------------
opinion of ▇▇▇▇▇▇▇ Coie LLP counsel for the Company, to the effect set
forth in Exhibit B hereto and to such further effect as the Agents may
reasonably request.
(2) Opinion of Counsel for the Agents. The favorable
---------------------------------
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Agents, relating to statements or omissions of material facts included in
the Registration Statement and the Prospectus.
(3) Officer's Certificate. On the date hereof, there shall
---------------------
not have been, since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial
22
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Agents shall have received a
certificate of the President or a Vice President of the Company and of the chief
financial officer, chief accounting officer or treasurer of the Company, dated
as of the date hereof, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties of the Company herein
contained are true and correct with the same force and effect as though
expressly made at and as of the date of such certificate, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the date of such certificate, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or, to the best of such officer's knowledge, are threatened by the Commission.
(4) Comfort Letter of PricewaterhouseCoopers, LLP On
---------------------------------------------
the date hereof, the Agents shall have received a letter from
PricewaterhouseCoopers LLP, dated as of the date hereof and in form and
substance satisfactory to the Agents, to the effect set forth in Exhibit C
hereto.
(5) Additional Documents. On the date hereof, counsel to
--------------------
the Agents shall have been furnished with such documents and opinions as such
counsel may reasonably require for the purpose of enabling such counsel to pass
upon the issuance and sale of Notes as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
and warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of Notes as herein contemplated shall be reasonably satisfactory in form
and substance to the Agents and to counsel to the Agents.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the applicable Agent or Agents by notice to the Company at any time and any
such termination shall be without liability
23
of any party to any other party except as provided in Section 10 hereof and
except that Sections 8, 9, 11, 14 and 15 hereof shall survive any such
termination and remain in full force and effect.
6. Delivery of and Payment for Notes Sold through an Agent as Agent.
----------------------------------------------------------------
Delivery of Notes sold through an Agent as an agent of the Company
shall be made by the Company to such Agent for the account of any purchaser only
against payment therefor in immediately available funds. In the event that a
purchaser shall fail either to accept delivery of or to make payment for a Note
on the date fixed for settlement, such Agent shall promptly notify the Company
and deliver such Note to the Company and, if such Agent has theretofore paid the
Company for such Note, the Company will promptly return such funds to such
Agent. If such failure has occurred for any reason other than default by such
Agent in the performance of its obligations hereunder, the Company will
reimburse such Agent on an equitable basis for its loss of the use of the funds
for the period such funds were credited to the Company's account.
7. Additional Covenants of the Company.
-----------------------------------
The Company further covenants and agrees with each Agent as follows:
(1) Reaffirmation of Representations and Warranties. Each
-----------------------------------------------
acceptance by the Company of an offer for the purchase of Notes (whether to one
or more Agents as principal or through an Agent as agent), and each delivery of
Notes (whether to one or more Agents as principal or through an Agent as agent),
shall be deemed to be an affirmation that the representations and warranties of
the Company herein contained are true and correct at the time of such acceptance
or sale, as the case may be, and an undertaking that such representations and
warranties will be true and correct at the time of delivery to such Agent(s) or
to the purchaser or its agent, as the case may be, of the Notes relating to such
acceptance or sale, as the case may be, as though made at and as of each such
time (it being understood that such representations and warranties shall relate
to the Registration
24
Statement and Prospectus as amended and supplemented to each such time).
(2) Subsequent Delivery of Certificates. Each time that
-----------------------------------
(i) the Registration Statement or the Prospectus shall be amended or
supplemented (other than by an amendment or supplement providing solely for the
determination of the variable terms of the Notes or relating solely to the
offering of securities other than the Notes), (ii) (if required in connection
with the purchase of Notes from the Company by one or more Agents as principal)
the Company sells Notes to one or more Agents as principal or (iii) the Company
sells Notes in a form not previously certified to the Agents by the Company, the
Company shall furnish or cause to be furnished to the Agent(s), forthwith a
certificate dated the date of filing with the Commission or the date of
effectiveness of such amendment or supplement, as applicable, or the date of
such sale, as the case may be, in form reasonably satisfactory to the Agent(s)
to the effect that the statements contained in the certificate referred to in
Section 5(c) hereof which were last furnished to the Agents are true and correct
at the time of the filing or effectiveness of such amendment or supplement, as
applicable, or the time of such sale, as the case may be, as though made at and
as of such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in Section 5(c) hereof, modified as necessary to relate
to the Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such certificate (it being understood that, in the case
of clause (ii) above, any such certificate shall also include a certification
that there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise since the date of the
agreement by such Agent(s) to purchase Notes from the Company as principal).
(3) Subsequent Delivery of Legal Opinions. Each time that
-------------------------------------
(i) the Registration Statement or the Prospectus shall be amended or
supplemented (other than by an amendment or supplement providing solely for the
determination of the variable terms of the Notes or
25
relating solely to the offering of securities other than the Notes), (ii) (if
required in connection with the purchase of Notes from the Company by one or
more Agents as principal) the Company sells Notes to one or more Agents as
principal or (iii) the Company sells Notes in a form not previously certified to
the Agents by the Company, the Company shall furnish or cause to be furnished
forthwith to the Agent(s) and to counsel to the Agents the written opinion of
▇▇▇▇▇▇▇ Coie LLP counsel to the Company, or other counsel reasonably
satisfactory to the Agent(s), dated the date of filing with the Commission or
the date of effectiveness of such amendment or supplement, as applicable, or the
date of such sale, as the case may be, in form and substance reasonably
satisfactory to the Agent(s), of the same tenor as the opinion referred to in
Section 5(b)(1) hereof, but modified, as necessary, to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion or, in lieu of such opinion, counsel last
furnishing such opinion to the Agents shall furnish the Agent(s) with a letter
substantially to the effect that the Agent(s) may rely on such last opinion to
the same extent as though it was dated the date of such letter authorizing
reliance (except that statements in such last opinion shall be deemed to relate
to the Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such letter authorizing reliance).
(4) Subsequent Delivery of Comfort Letters. Each time that
--------------------------------------
(i) the Registration Statement or the Prospectus shall be amended or
supplemented to include additional financial information (other than by an
amendment or supplement relating solely to the issuance and/or offering of
securities other than the Notes) or (ii) (if required in connection with the
purchase of Notes from the Company by one or more Agents as principal) the
Company sells Notes to one or more Agents as principal, the Company shall cause
PricewaterhouseCoopers LLP forthwith to furnish to the Agent(s) a letter, dated
the date of filing with the Commission or the date of effectiveness of such
amendment or supplement, as applicable, or the date of such sale, as the case
may be, in form satisfactory to the Agent(s), of the same tenor as the letter
referred to in Section 5(d) hereof but modified to relate to the Registration
Statement and Prospec-
26
tus as amended and supplemented to the date of such letter.
8. Indemnification.
---------------
(1) Indemnification of the Agents. The Company agrees to
-----------------------------
indemnify and hold harmless each Agent and each person, if any, who controls
such Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act as follows:
(1) against any and all loss, liability, claim and
damage whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of an untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(2) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
8(d) hereof) any such settlement is effected with the written consent of
the Company; and
(3) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by such
Agent), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatso-
27
ever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not
paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
-------- -------
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by the Agents
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and provided further, that such indemnity with respect to the
-------- -------
Prospectus shall not inure to the benefit of any Agent (or any person
controlling any Agent) from whom the person asserting any such loss, liability,
claim, damage or expense purchased the Notes which are the subject thereof if
such person did not receive a copy of the Prospectus (or the Prospectus as
supplemented), excluding documents incorporated therein by reference, at or
prior to the confirmation of the sale of such Notes to such person in any case
where such delivery is required by the 1933 Act and the untrue statement or
omission of a material fact contained in the Prospectus was corrected in the
Prospectus as supplemented.
(2) Indemnification of Company, Directors and Officers.
--------------------------------------------------
Each Agent severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 8(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agents expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
28
(3) Actions Against Parties; Notification. Each
-------------------------------------
indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 8(a) hereof, counsel to the indemnified parties shall be selected by
the applicable Agent(s) and, in the case of parties indemnified pursuant to
Section 8(b) hereof, counsel to the indemnified shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
-------- -------
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or 9 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
29
(4) Settlement without Consent if Failure to Reimburse. If
--------------------------------------------------
at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable in accordance with Section
8(a)(iii) for any settlement of the nature contemplated by Section 8(a)(ii)
effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
9. Contribution. If the indemnification provided for in Section 8
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the applicable Agent(s), on the other hand, from the offering of the
Notes that were the subject of the claim for indemnification or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the applicable Agent(s), on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and
the applicable Agent(s), on the other hand, in connection with the offering of
the Notes that were the subject of the claim for indemnification shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of such Notes (before deducting expenses) received by the Company and
the total discount or commission received by each appli-
30
cable Agent, as the case may be, bears to the aggregate initial offering price
of such Notes.
The relative fault of the Company, on the one hand, and the applicable
Agent(s), on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the applicable Agent(s) and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Agents 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 applicable Agent(s) 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.
Notwithstanding the provisions of this Section 9, (i) no Agent shall
be required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise been required to pay by
reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In addition, in connection with an offering of Notes
purchased from the Company by two or more Agents as principal, the respective
obligations of such Agents to contribute pursuant to this Section 9 are several,
and not joint, in proportion to the aggregate principal amount of Notes that
each such Agent has agreed to purchase from the Company.
For purposes of this Section 9, each person, if any, who controls an
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as such Agent, and each director
of the Company, each officer of the Company
31
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
10. Payment of Expenses.
-------------------
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(1) The preparation, filing, printing and delivery of the
Registration Statement as originally filed and all amendments thereto and any
preliminary prospectus, the Prospectus and any amendments or supplements
thereto;
(2) The preparation, printing and delivery of this Agreement
and the Indenture;
(3) The preparation, issuance and delivery of the Notes,
including any fees and expenses relating to the eligibility and issuance of
Notes in book-entry form and the cost of obtaining CUSIP or other identification
numbers for the Notes;
(4) The fees and disbursements of the Company's accountants,
counsel and other advisors or agents (including any calculation agent) and of
the Trustee and its counsel;
(5) The reasonable fees and disbursements of counsel to the
Agents incurred in connection with the establishment of the Program and incurred
from time to time in connection with the transactions contemplated hereby;
(6) The fees charged by nationally recognized statistical
rating organizations for the rating of the Program and the Notes;
(7) The fees and expenses incurred in connection with any
listing of Notes on a securities exchange;
(8) The filing fees incident to, and the reasonable fees and
disbursements of counsel to the
32
Agents in connection with, the review, if any, by the National Association of
Securities Dealers, Inc. (the "NASD"); and
----
(9) Any advertising and other out-of-pocket expenses of the
Agents incurred with the approval of the Company.
11. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery.
--------
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto or thereto shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Agents or any controlling person of an Agent, or by or on behalf of the
Company, and shall survive each delivery of and payment for the Notes.
12. Termination.
-----------
(1) Termination of this Agreement. This Agreement
-----------------------------
(excluding any agreement by one or more Agents to purchase Notes from the
Company as principal) may be terminated for any reason, at any time by either
the Company or an Agent, as to itself, upon the giving of 30 days' prior written
notice of such termination to the other party hereto.
(2) Termination of Agreement to Purchase Notes as Principal.
--------------------------------------------------------
The applicable Agent(s) may terminate any agreement by such Agent(s) to purchase
Notes from the Company as principal, immediately upon notice to the Company, at
any time prior to the Settlement Date relating thereto, if (i) there has been,
since the date of such agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
there has occurred any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or
33
development or event involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the reasonable judgment of such Agent(s), impracticable
to market such Notes or enforce contracts for the sale of such Notes, or (iii)
trading in any securities of the Company has been suspended or limited by the
Commission or a national securities exchange, or if trading generally on the New
York Stock Exchange or the American Stock Exchange or in the NASDAQ National
Market has been suspended or limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by either of
said exchanges or by such system or by order of the Commission, the NASD or any
other governmental authority, or (iv) a banking moratorium has been declared by
either Federal or New York authorities, or (v) the rating assigned by any
nationally recognized statistical rating organization to the Program or any debt
securities (including the Notes) of the Company as of the date of such agreement
shall have been lowered or withdrawn since that date or if any such rating
organization shall have publicly announced that it has under surveillance or
review its rating of the Program or any such debt securities, or (vi) there
shall have come to the attention of such Agent(s) any facts that would cause
such Agent(s) to believe that the Prospectus, at the time it was required to be
delivered to a purchaser of such Notes, included an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time of
such delivery, not misleading.
(3) General. In the event of any such termination, neither
-------
party will have any liability to the other party hereto, except that (i) the
Agents shall be entitled to any commissions earned in accordance with the third
paragraph of Section 3(b) hereof, (ii) if at the time of termination (a) any
Agent shall own any Notes purchased by it from the Company as principal or (b)
an offer to purchase any of the Notes has been accepted by the Company but the
time of delivery to the purchaser or his agent of such Notes relating thereto
has not occurred, the covenants set forth in Sections 4 and 7 hereof shall
remain in effect until such Notes are so resold or delivered, as the case may
be, and (iii) the covenant set forth in Section 4(i) hereof, the provisions
34
of Section 10 hereof, the indemnity and contribution agreements set forth in
Sections 8 and 9 hereof, and the provisions of Sections 11, 14 and 15 hereof
shall remain in effect.
(1)
13. Notices.
-------
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Puget Sound Energy, Inc.
▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Agents:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
World Financial Center
▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: MTN Product Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Medium Term Note Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.
14. Parties.
-------
This Agreement shall inure to the benefit of and be binding upon the
Agents and the Company and their
35
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective successors and the controlling
persons, officers and directors referred to in Sections 8 and 9 hereof and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the parties hereto and their respective
successors, and said controlling persons, officers and directors and their heirs
and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Notes shall be deemed to be a successor by reason
merely of such purchase.
15. GOVERNING LAW; FORUM.
--------------------
THIS AGREEMENT AND ALL THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY THE COMPANY AGAINST ANY AGENT IN CONNECTION WITH OR
ARISING UNDER THIS AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR FEDERAL
COURT OF APPROPRIATE JURISDICTION LOCATED IN THE BOROUGH OF MANHATTAN, THE CITY
OF NEW YORK.
16. Effect of Headings.
------------------
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
17. Counterparts.
------------
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.
36
If the foregoing is in accordance with the Agents' understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this Distribution Agreement, along with all counterparts, will become
a binding agreement among the Agents and the Company in accordance with its
terms.
Very truly yours,
PUGET SOUND ENERGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC
By: /s/ ▇▇▇▇▇▇▇▇ Blue
------------------------------
Authorized Signatory
37