EXHIBIT 10
28,500,000 Shares
CMS ENERGY CORPORATION
Common Stock ($0.01 par value)
----------------------
Underwriting Agreement
October 7, 2004
To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Ladies and Gentlemen:
CMS Energy Corporation, a Michigan corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined in Section 12
hereof) the respective number of shares of Common Stock ($0.01 par value per
share) ("Common Stock") of the Company (the "Initial Securities") set forth in
Schedule II hereto, subject to the terms and conditions set forth herein. The
Underwriters have designated the Representatives (as defined in Section 12
hereof) to execute this Agreement on their behalf and to act for them in the
manner provided in this Agreement.
The Company has agreed to grant to the Underwriters, severally and not
jointly, an option (the "Option") to purchase all or any part of 4,275,000
additional shares of Common Stock (the "Option Securities"), at a price per
Option Security equal to the price per Initial Security. The Option shall expire
30 days after the Time of Purchase (as defined in Section 2 hereof), and may be
exercised in whole or in part from time to time. The Option may be exercised
upon notice by the Representatives to the Company setting forth the aggregate
number of Option Securities as to which the several Underwriters are then
exercising the option and the time, date and place of payment and delivery for
such Option Securities. Any such time and date of payment and delivery shall be
determined by the Representatives, but shall not be later than seven full
business days after the exercise of said option, nor, in any event, prior to the
Time of Purchase, unless otherwise agreed upon by the Representatives and the
Company. Any such time and date of payment and delivery which falls after the
Time of Purchase is referred to herein as a "Date of Option Delivery". If the
Option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, severally and not jointly, will purchase that proportion of
the aggregate number of Option Securities then being purchased which the
aggregate number of Initial Securities each such Underwriter has severally
agreed to purchase as set forth on Schedule II bears to the aggregate number of
Initial Securities. As used herein, the term "Securities" shall include the
Initial Securities and all or any portion of any Option Securities.
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. 333-51932) including a prospectus relating to the
Securities, and such registration statement has become effective under
the Act. The registration statement, at the time the most recent post-effective
amendment thereto 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 herein referred to as the "Registration Statement". If the
Company has filed, or will file, an abbreviated registration statement to
register additional Securities pursuant to Rule 462(b) under the Act (the "Rule
462(b) Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462(b)
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 herein referred to as the
"Basic Prospectus"; provided, that, in the event that the Basic Prospectus shall
have been amended or revised 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, 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 the Commission pursuant to Rule
424 under the Act, is hereinafter referred to as the "Prospectus". The Basic
Prospectus as supplemented by the Preliminary Prospectus Supplement dated
October 4, 2004 relating to the Securities, in the form filed with the
Commission pursuant to Rule 424 under the Act, is hereinafter referred to as the
"Preliminary 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 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.
1. Purchase and Sale. Upon the basis of the representations and
warranties and subject to the terms and 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 of $9.10 per share, the respective number of
shares of Initial Securities set opposite their names in Schedule II hereto and
the respective number of Option Securities determined as set forth above if and
to the extent the Option is exercised by the Representatives.
The Company is advised by the Representatives that the Securities may
be offered by the Underwriters from time to time in one or more transactions on
the New York Stock Exchange ("NYSE") or on other national securities exchanges
on which the Company's Common Stock is traded, in the over-the-counter market,
through negotiated transactions or otherwise at market prices prevailing at the
time of the sale or at prices otherwise negotiated.
2. Payment and Delivery. Payment for the Securities shall be made to
the Company 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 Pillsbury Winthrop LLP, 1540 Broadway, New York, New York (or such
other place or places of delivery as shall be agreed upon by the
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Company and the 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 Underwriters. Such
payment and delivery shall be made at 10:00 A.M., New York time on October 13,
2004 (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 8 hereof. The day and time at which payment and delivery
for the Securities (without regard to any Option Securities) are to be made is
herein called the "Time of Purchase".
In addition, in the event that the Underwriters have exercised their
Option to purchase any or all of the Option Securities, payment of the purchase
price for, and delivery of, such Option Securities shall be made at the above
mentioned offices, or at such other place as shall be agreed upon by the
Representatives and the Company on the relevant Date of Option Delivery as
specified in the notice from the Representatives to the Company.
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 number of shares
of Securities, set forth opposite the name of each Underwriter in Schedule II
hereto, in denominations selected by the Company. The certificates evidencing
the Securities shall be delivered at the Time of Purchase for the account of the
Underwriters, with any transfer taxes payable by the Company duly paid.
The Company agrees to make the Securities available for inspection by
the Underwriters at least 24 hours 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 date hereof and at and as of the Time of Purchase and any
Date of Option Delivery, 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 Pillsbury Winthrop LLP, counsel to the Underwriters.
(b) That, at the Time of Purchase, the Representatives shall
be furnished with the following opinions or letter, as the case may be, dated
the day of the Time of Purchase:
(1) opinion of Robert C. Shrosbree, Esq., Assistant
General Counsel of the Company, substantially to the effect set forth in Exhibit
A attached hereto;
(2) letter of Skadden, Arps, Slate, Meagher & Flom
LLP, special counsel to the Company, substantially to the effect set forth in
Exhibit B attached hereto; and
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(3) opinion of Pillsbury Winthrop LLP, counsel to the
Underwriters, as to such matters relating to the Securities and the transactions
contemplated hereby as the Underwriters may reasonably request.
(c) (i) That, on the date hereof and on the date of the Time
of Purchase, the Representatives shall have received a letter from Ernst & Young
LLP ("E&Y") in form and substance satisfactory to the Underwriters, dated as of
such date, (A) confirming that they are an independent registered public
accounting firm with respect to the Company within the meaning of the Act and
the applicable published rules and regulations of the Commission thereunder, (B)
stating that in their opinion the financial statements examined by them and
incorporated by reference in the Prospectus complied as to form in all material
respects with the applicable accounting requirements of the Commission and (C)
covering, as of a date not more than five days prior to the date of such letter,
such other matters as the Underwriters reasonably request.
(ii) That, on the date hereof and, with respect to
PricewaterhouseCoopers LLP only, on the date of the Time of Purchase, the
Representatives shall have received a letter from each of PricewaterhouseCoopers
LLP and Price Waterhouse, each in form and substance satisfactory to the
Underwriters, dated as of such date, confirming that (A)(i) in the case of
PricewaterhouseCoopers LLP, they are an independent registered public accounting
firm with respect to the Company and the Midland Cogeneration Venture Limited
Partnership and (ii) in the case of Price Waterhouse, they are independent
public accountants with respect to the Company and Jorf Lasfar Energy Company
S.C.A., each within the meaning of the Act and the applicable published rules
and regulations of the Commission thereunder, (B) stating that in each of their
opinions the financial statements examined by them and incorporated by reference
in the Prospectus complied as to form in all material respects with the
applicable accounting requirements of the Commission, including the applicable
published rules and regulations of the Commission, and (C) covering, as of a
date not more than five days prior to the date of such letter, such other
matters as the Underwriters reasonably request.
(d) That, subsequent to the date hereof or, if earlier, the
dates as of which information is given in the Prospectus (exclusive of any
amendment or supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in Section 3(c) hereof
or (ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries taken as a whole, except as
set forth in or contemplated in the Prospectus (exclusive of any amendment or
supplement thereto), the effect of which, in any case referred to in clause (i)
or (ii) above, is, in the judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated in the Prospectus (exclusive of any
amendment or supplement thereto).
(e) That no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission.
(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
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of his knowledge, information and belief, (i) there shall have been no material
adverse change in the condition (financial or otherwise), earnings, business,
properties or prospects of the Company from that set forth in the Prospectus
(other than changes referred to in or contemplated by the Prospectus) and (ii)
the representations and warranties of the Company in this Agreement are true and
correct on and as of the Time of Purchase with the same effect as if made at the
Time of Purchase, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied hereunder
at or prior to the Time of Purchase.
(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 Underwriters 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 the Company shall have complied with the provisions
of Section 4(e) hereof with respect to the furnishing of the Prospectus.
(j) That between the date hereof and the day of the Time of
Purchase there has been no downgrading of the investment ratings of any of the
Company's securities or of Consumers Energy Company's first mortgage bonds by
Standard & Poor's Ratings Group, a division of The McGraw Hill Companies, Inc.,
Moody's Investors Service, Inc. or Fitch, Inc., and neither the Company nor
Consumers Energy Company shall 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.
(k) 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 under the Act in the time periods provided by Rule 424 under the
Act.
(l) That the Securities, at the Time of Purchase, shall have
been duly listed, subject to notice of issuance, on the NYSE.
(m) That, at the Time of Purchase, the Company shall have
furnished to the Representatives a letter substantially in the form of Exhibit C
hereto addressed to the Representatives from each person listed in Schedule III
hereto.
(n) That, in the event that the Underwriters exercise their
Option to purchase all or any portion of the Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be true
and correct as of each Date of Option Delivery, and, at the relevant Date of
Option Delivery, the Representatives shall receive:
(1) a certificate, dated such Date of Option
Delivery, of an executive officer of the Company confirming that the certificate
delivered at the Time of Purchase pursuant to Section 3(f) hereof remains true
and correct as of such Date of Option Delivery;
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(2) opinions or a letter, as the case may be, of
Robert C. Shrosbree, Esq., Assistant General Counsel of the Company, Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Company, and Pillsbury Winthrop
LLP, counsel to the Underwriters, dated such Date of Option Delivery, relating
to the Option Securities and otherwise to the same effect as the opinions and
letter required by Section 3(b) hereof; and
(3) letters from E&Y, PricewaterhouseCoopers LLP and
Price Waterhouse, each dated such Date of Option Delivery, substantially in the
same form and substance as the letters furnished to the Representatives pursuant
to Section 3(c) hereof, except that the date specified in Section 3(c)(i)(C) and
3(c)(ii)(C) hereof shall be a date not more than five days prior to such Date of
Option Delivery.
4. Certain Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows.
(a) To promptly transmit copies of the Prospectus, and any
amendments or supplements thereto, to the Commission for filing pursuant to Rule
424 under the Act.
(b) During the period when a prospectus relating to any of the
Securities is required to be delivered under the Act by any Underwriter or any
dealer, the Company will file promptly all documents required to be filed with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act; and the Company will promptly notify the Underwriters of any written notice
given to the Company by any of the rating organizations referred to in Section
3(j) hereof of any intended decrease in any rating of any securities of the
Company or of any intended change in any such rating that does not indicate the
direction of the possible change of any such rating, in each case by any such
rating organization.
(c) 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, if any, 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 copies of the Registration Statement and any
amendments thereto without exhibits.
(d) 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 (and the Company
agrees to use its best efforts to cause any post-effective amendments to the
Registration Statement to become effective as promptly as possible); (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 the Company will use every reasonable effort to prevent the
issuance of any such stop order and, if such a stop order should be entered by
the Commission, to make every reasonable effort to obtain the lifting or removal
thereof.
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(e) To deliver to the Underwriters, without charge, as soon as
practicable, and from time to time during such period of time 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.
(f) For such period of time as the Underwriters are required
by law or customary practice 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
(subject to Section 4(l) hereof) 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) During the period when a prospectus relating to any of the
Securities is required to be delivered under the Act by any Underwriter or any
dealer, the Company will comply, at its own expense, with all requirements
imposed on the Company by the Act, as now and hereafter amended, and by the
rules and regulations of the Commission thereunder, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealing in
the Securities during such period in accordance with the provisions hereof and
as contemplated by the Prospectus.
(h) To make generally available to the Company's security
holders, as soon as practicable, an "earning statement" (which need not be
audited by independent public accountants) covering a twelve-month period
commencing after the effective date of the Registration Statement and ending not
later than 15 months thereafter, which shall comply in all material respects
with and satisfy the provisions of Section 11(a) of the Act and Rule 158 under
the Act.
(i) 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.
(j) To pay all expenses, fees and taxes (other than transfer
taxes on sales by the respective Underwriters and the expenses referred to in
Section 5 hereof), in connection with the issuance and delivery of the
Securities, including, without limitation, (i) the fees and expenses of the
Company's counsel and independent accountants, (ii) the cost of preparing stock
certificates,
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(iii) the costs and charges of any transfer agent and any registrar, (iv) all
expenses incurred by the Company in connection with any "road show" presentation
to potential investors and (v) all expenses and application fees related to the
listing of the Securities on the NYSE, except that the Company shall be required
to pay the fees and disbursements (other than disbursements referred to in
Section 4(i) hereof) of Pillsbury Winthrop LLP, counsel to the Underwriters only
in the events provided in Section 4(k) hereof, the Underwriters hereby agreeing
to pay such fees and disbursements in any other event, and that except as
provided in Section 4(k) hereof, the Company shall not be responsible for any
out-of-pocket expenses of the Underwriters in connection with their services
hereunder.
(k) If the Underwriters shall not take up and pay for the
Securities (i) due to the failure of the Company to comply with any of the
conditions specified in Section 3 hereof, to pay the reasonable fees and
disbursements of Pillsbury Winthrop LLP, counsel to the Underwriters and to
reimburse the Underwriters for their other reasonable out-of-pocket expenses not
to exceed a total of $75,000, incurred in connection with the financing
contemplated by this Agreement, such amounts including all amounts incurred in
connection with any roadshow, provided that such amounts are documented in
writing to the Company, or (ii) due to termination in accordance with the
provisions of Section 9 hereof prior to the Time of Purchase, to pay the
reasonable fees and disbursements of Pillsbury Winthrop LLP, counsel to the
Underwriters.
(l) Prior to the termination of the offering of the
Securities, to not amend or supplement the Registration Statement or 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, and not to make any such amendment or
supplement to which such counsel shall reasonably object on legal grounds in
writing after consultation with the Representatives.
(m) 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.
(n) So long as may be required by law for 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.
(o) The Company will use its best efforts to effect the
listing of the Securities prior to the Time of Purchase, on the NYSE subject
only to official notice of issuance.
(p) The Company will not for a period of 60 days following the
date hereof, without the prior written consent of the Representatives: offer,
pledge, sell or contract to sell any Common Stock; sell any option or contract
to purchase any Common Stock; purchase any option or contract to sell any Common
Stock; grant any option, right or warrant to sell any Common
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Stock; lend or otherwise dispose of or transfer any Common Stock; file a
registration statement related to the Common Stock; or enter into any swap or
other agreement or transaction that transfers, in whole or in part, the economic
consequence of ownership of Common Stock whether any such swap or transaction is
to be settled by delivery of common stock, in cash or otherwise; provided,
however, that the Company may issue shares of Common Stock upon conversion or
settlement of any warrants outstanding, the Company's 7 3/4% Convertible Trust
Preferred Securities, 3.375% Convertible Senior Notes Due 2023 or 4.50%
Cumulative Convertible Preferred Stock in accordance with their respective
terms, and under any continuous equity program, stock purchase plan, performance
incentive stock plan, employee stock ownership plan and employee savings and
incentive plan.
(q) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(r) The Company will cause the proceeds of the issuance and
sale of the Securities to be applied for the purposes described in the
Prospectus.
5. Covenant of the Underwriters. The Underwriters agree that they will
file in a timely manner all necessary reports of sales of securities made to
Canadian purchasers with the securities regulatory authorities of the relevant
Canadian provinces. The Underwriters also agree that they will pay any fees and
expenses associated with the preparation and filing of the Canadian sales
reports.
6. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as
follows.
(a) The Company meets the requirements for the use of Form S-3
under the Act; the Registration Statement has been declared effective by the
Commission under the Act and meets the requirements set forth in paragraph
(a)(1)(ix) or (a)(1)(x) of Rule 415 under the Act and complies in all other
respects with such Rule 415; a true and correct copy of the Registration
Statement as amended to the date hereof 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 Preliminary Prospectus pursuant to
Rule 424 has been made, and any filing of the Prospectus and any supplements
thereto required pursuant to Rule 424 will be made in the manner required by
Rule 424 and within the time period required by Rule 424; and no stop order
suspending the effectiveness of the Registration Statement or any part thereof
has been issued under the Act and no proceedings for such purposes have been
instituted or threatened or are pending before the Commission, and any request
on the part of the Commission for additional information has been complied with
by the Company. On the effective date of the Registration Statement, the
Registration Statement and the Basic Prospectus complied, on its issue date the
Preliminary Prospectus complied, and on its issue date the Prospectus will
comply, in all material respects with the applicable provisions of the Act and
the related rules and regulations of the Commission; the Registration Statement
on its effective date did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
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necessary to make the statements therein not misleading, and the Basic
Prospectus on its issue date, and the Preliminary Prospectus on its issue date,
did not, 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 of a material fact or omit to state a material fact necessary
to make the statements therein, in 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 (as set forth in Section 7(b) hereof).
(b) The documents incorporated by reference in the
Registration Statement, the 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 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 and
its subsidiaries taken as a whole (a "Material Adverse Effect").
(d) Each significant subsidiary (as defined in Rule 405 under
the Act, and hereinafter called a "Significant Subsidiary") of the Company has
been duly organized and is validly existing and in good standing under the laws
of the jurisdiction of its organization, has all requisite authority to own or
lease its properties and conduct its business as described in the Prospectus 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.
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(e) The shares of capital stock of the Company outstanding
prior to the issuance of the Securities have been duly authorized and are
validly issued, fully paid and non-assessable.
(f) The Securities have been duly authorized by the Company
for issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth herein, will be duly and validly issued, fully
paid and non-assessable; the Securities conform in all material respects to all
statements relating thereto contained in the Prospectus and such description
conforms to the rights set forth in the instruments defining the same; the
Company knows of no reason that any holder of the Securities would be subject to
personal liability solely by reason of being such a holder; and the issuance of
the Securities is not subject to any preemptive or other similar rights of any
securityholder of the Company or any of its subsidiaries.
(g) 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.
(h) Except for the outstanding shares of preferred stock of
Consumers Energy Company, the 8.36% Trust Originated Preferred Securities of
Consumers Power Company Financing I, the 8.20% Trust Originated Preferred
Securities of Consumers Energy Company Financing II, the 9.25% Trust Originated
Preferred Securities of Consumers Energy Company Financing III, the 9.00% Trust
Preferred Securities of Consumers Energy Company Financing IV and the 7.75%
Convertible Quarterly Income Preferred Securities of CMS Energy Trust I, all of
the outstanding capital stock of each of Consumers Energy Company and CMS
Enterprises Company is owned directly or indirectly by the Company, free and
clear of any security interest, claim, lien or other encumbrance (except as
disclosed in the Prospectus) or preemptive rights, and there are no outstanding
rights (including, without limitation, preemptive rights), warrants or options
to acquire, or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in any of Consumers Energy Company and
CMS Enterprises Company or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any such capital stock, any
such convertible or exchangeable securities or any such rights, warrants or
options.
(i) Each of the Company and Consumers Energy 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,
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.
(j) No order, license, consent, authorization or approval of,
or exemption by, or the giving of notice to, or the registration with, any
federal, state, local 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 Prospectus.
11
(k) None of the issuance or sale of the Securities, or the
execution or delivery by the Company of, or the performance by the Company of
its obligations under, this Agreement or the Securities, 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 Restated
Articles of Incorporation or Amended and Restated Bylaws, 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.
(l) The Company has an authorized capitalization as set forth
in the Prospectus.
(m) Except as disclosed in the 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 or
any subsidiary, 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 or materially
adversely affect the ability of the Company to perform its obligations hereunder
or the consummation of the transactions contemplated by this Agreement.
(n) There has not been any material and adverse change, or any
development involving a prospective change, in or affecting the condition
(financial or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, from that set forth or
incorporated by reference in the Prospectus (other than changes referred to in
or contemplated by the Prospectus).
(o) Except as set forth in the 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 or any of its Significant Subsidiaries, taken as a whole, in any
material respect under any indenture, mortgage, loan agreement, lease or other
material agreement or instrument to which the Company or any of its Significant
Subsidiaries is a party or by which it or any of their respective properties may
be bound.
(p) The Company, after giving effect to the offering and sale
of the Securities, will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(q) The Company's chief executive officer and chief financial
officer are responsible for establishing and maintaining the Company's
disclosure controls and procedures. The Company's management, under the
direction of the Company's principal executive and financial officers, has
evaluated the effectiveness of the Company's disclosure controls and procedures
as of a date within 90 days of the filing of the Company's most recent annual
report on Form 10-K/A. Based on such evaluation, the Company's chief executive
officer and chief financial officer have concluded that the Company's disclosure
controls and procedures are effective to ensure that material information was
presented to them and properly disclosed.
12
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
such evaluation.
(r) The Company (i) is a "holding company", as such term is
defined in the Public Utility Holding Company Act of 1935, as amended, and (ii)
is currently exempt from all provisions of the Public Utility Holding Company
Act of 1935, as amended, except Section 9(a)(2) thereof.
(s) Except as described in 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, asbestos-containing materials or mold
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
its subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D) there
are no events or circumstances that would 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.
(t) The financial statements and the related notes thereto of
the Company and its consolidated subsidiaries incorporated by reference in the
Registration Statement and the Prospectus comply in all material respects with
the applicable requirements of the Act and the Exchange Act and the rules and
regulations of the Commission thereunder, as applicable, and present fairly the
financial position of the Company and its subsidiaries as of the dates indicated
and the results of their operations and the changes in their cash flows for the
periods specified; such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a basis substantially
consistent throughout the periods covered thereby, except where an exception
thereto has been adequately described therein, and the supporting schedules
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein; and the other financial information
incorporated by reference in the Registration Statement and the Prospectus has
been derived from the accounting records of the Company and its subsidiaries,
or, in the case of data not derivable from the accounting records of the Company
and its subsidiaries, other data in the possession of the Company and its
subsidiaries, and presents fairly the information shown thereby; and the pro
forma financial information and the related notes thereto incorporated by
reference in the Registration Statement and the Prospectus have been prepared in
accordance with the applicable requirements of the Act
13
and the Exchange Act, as applicable, and the assumptions underlying such pro
forma financial information are reasonable and are set forth in the Registration
Statement and the Prospectus.
7. 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 7(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 4(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 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, and except that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability or action, suit or proceeding arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in the Preliminary Prospectus if copies of the Prospectus were
timely delivered to the Underwriters pursuant to Section 4 hereof and a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of the Underwriters to the person asserting such loss, claim, damage or
liability or action, suit or proceeding and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability or action, suit or proceeding.
The Company's indemnity agreement contained in this Section 7(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 7 shall survive any termination of this Agreement. The liabilities
of the Company in this Section 7(a) are in addition to any other liabilities of
the Company under this Agreement or otherwise.
14
(b) Each Underwriter agrees, severally and not jointly, to the
extent permitted by law, to indemnify, hold harmless and 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 7(a)
hereof, but only with respect to alleged untrue statements or omissions made in
the Registration Statement, the Basic Prospectus, any Preliminary 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 7(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 7(b) shall survive any termination
of this Agreement. The liabilities of each Underwriter in this Section 7(b) are
in addition to any other liabilities of such Underwriter under this Agreement or
otherwise. The Company acknowledges that (i) the statements set forth in the
last paragraph of the cover page of each of the Preliminary Prospectus and the
Prospectus regarding delivery of the Securities, (ii) the list of Underwriters
and their respective participation in the sale of the Securities set forth under
the heading "Underwriting" in the Preliminary Prospectus and Prospectus, (iii)
the sentences related to concessions and reallowances set forth under the
heading "Underwriting" in the Preliminary Prospectus and Prospectus and (iv) the
paragraph related to stabilization, over-allotment, syndicate covering
transactions and penalty bids set forth under the heading "Underwriting" in the
Preliminary Prospectus and Prospectus constitute the only information furnished
in writing by or on behalf of the several Underwriters for inclusion in the
Preliminary Prospectus or the Prospectus.
(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 7(a) or 7(b) hereof,
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 7(a) or 7(b) hereof 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 7(b)
hereof and by the Company in the case of parties indemnified pursuant to Section
7(a) hereof. 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
15
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 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
Underwriters 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
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 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,
16
subject to the provisions of this Section 7, 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 and 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 Person.
(d) If the indemnification provided for in Section 7 above is
unavailable to or insufficient to hold harmless an Indemnified Person under such
Section 7 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 this Section 7 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 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 7 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 7. The 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 7 shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Person in connection with investigating or
defending any such actions, suits or proceedings (including governmental
proceedings) or claims, provided that the provisions of this Section 7 have been
complied with (in all material respects) in respect of any separate counsel for
such Indemnified Person. Notwithstanding the provisions of this Section 7, no
Underwriter shall be required to contribute any amount in excess of the purchase
discount or commission
17
applicable to the Securities purchased by the such Underwriter hereunder. 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 7 to contribute are several in proportion to their respective
underwriting obligations and not joint.
The agreement with respect to contribution contained in this Section
7(d) 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.
8. 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 or any applicable Date of Option Delivery, 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
number of shares 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 or Date
of Option Delivery, as the case may be, 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 number of shares of Securities which they had
severally agreed to purchase hereunder, as herein above provided, and, in
addition, the number of shares of Securities which the defaulting Underwriter
shall have so failed to purchase up to a number of shares thereof equal to
one-ninth (1/9) of the respective number of shares 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 number of shares of Securities which such defaulting Underwriter had agreed
to purchase, or that portion thereof which the remaining Underwriters shall not
be obligated to purchase pursuant to Section 8(a) hereof.
18
In the event the Company shall exercise its rights under Section 8(a)
and/or Section 8(b) hereof, the Company shall give written notice thereof to the
Representatives within such further period of 36 hours, and thereupon the Time
of Purchase or the Date of Option Delivery, as the case may be, 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 Section 8(a) and/or Section 8(b) hereof, the
Company shall be deemed to have elected to terminate this Agreement.
Any action taken by the Company under this Section 8 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
8 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 8, 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.
9. Termination of Agreement. This Agreement shall become effective upon
the execution and delivery of this Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the Time of
Purchase or any applicable Date of Option Delivery by the Representatives if,
prior to such time, any of the following events shall have occurred: (i) trading
in the Company's Common Stock shall have been suspended by the Commission or the
NYSE or trading in securities generally on the NYSE shall have been suspended or
limited or minimum prices shall have been established on such exchange; (ii) a
banking moratorium shall have been declared either by U.S. federal or New York
State authorities; (iii) any material disruption of securities settlement or
clearance services; or (iv) there shall have occurred any outbreak or escalation
of hostilities, declaration by the United States of a national emergency or war
or other calamity, crisis or disruption in financial markets, the effect of
which on the financial markets of the United States is such as to impair, in the
judgment of the Representatives, the marketability of the Securities.
If the Representatives elect to terminate this Agreement, as provided
in this Section 9, 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 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 Section 4(i), 4(k), 7
and 8 shall survive termination of this Agreement.
10. 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
19
follows: (i) if to the Underwriters or the Representatives, to the
Representatives at the address or number, as appropriate, designated in Schedule
I hereto; and (ii) if to the Company, to CMS Energy Corporation, One Energy
Plaza, Jackson, Michigan 49201, Attention: Executive Vice President and Chief
Financial Officer (Telecopy 517-788-2186).
11. 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 7 hereof, and their respective successors, assigns, executors and
administrators, and, except as expressly otherwise provided in Section 8 hereof,
no other person shall acquire or have any right under or by virtue of this
Agreement.
12. 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. 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.
13. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
14. 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.
20
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,
CMS ENERGY CORPORATION
By: /s/ Thomas J. Webb
----------------------------------------
Name: Thomas J. Webb
Title: Executive Vice President and CFO
Confirmed and accepted as of the date first written above:
CITIGROUP GLOBAL MARKETS INC.
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEUTSCHE BANK SECURITIES INC.
GOLDMAN, SACHS & CO.
WACHOVIA CAPITAL MARKETS, LLC
BNP PARIBAS SECURITIES CORP.
COMERICA SECURITIES, INC.
DAIWA SECURITIES AMERICA INC.
KEYBANC CAPITAL MARKETS, A DIVISION OF MCDONALD INVESTMENTS INC.
WELLS FARGO SECURITIES, LLC
By: CITIGROUP GLOBAL MARKETS INC.
By: /s/ Jane Sadowsky
-----------------------------
Name: Jane Sadowsky
Title: Managing Director
By: J.P. MORGAN SECURITIES INC.
By: /s/ Yaw Asamoah-Duodu
-----------------------------
Name: Yaw Asamoah-Duodu
Title: Vice President
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Jeffrey Kulik
-----------------------------
Name: Jeffrey Kulik
Title: Vice President
SCHEDULE I
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Attention: General Counsel
Telecopy: 212-816-7912
J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Henry Wilson
Telecopy: 212-622-8358
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Attention: Equity Capital Markets
Telecopy: 212-449-2784
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SCHEDULE II
Number of Shares of
Underwriters Initial Securities
------------ ------------------
Citigroup Global Markets Inc.......................................................... 7,125,000
J.P. Morgan Securities Inc............................................................ 7,125,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................................. 7,125,000
Deutsche Bank Securities Inc.......................................................... 1,425,000
Goldman, Sachs & Co................................................................... 1,425,000
Wachovia Capital Markets, LLC......................................................... 1,425,000
BNP Paribas Securities Corp........................................................... 570,000
Comerica Securities, Inc.............................................................. 570,000
Daiwa Securities America Inc.......................................................... 570,000
KeyBanc Capital Markets, a division of McDonald Investments Inc....................... 570,000
Wells Fargo Securities, LLC........................................................... 570,000
----------
Total.............................................................................. 28,500,000
==========
II-1
SCHEDULE III
1. Merribel S. Ayres
2. John F. Drake
3. Thomas W. Elward
4. Earl D. Holton
5. David W. Joos
6. David G. Mengebier
7. Michael T. Monahan
8. Joseph F. Paquette Jr.
9. William U. Parfet
10. Percy A. Pierre
11. John G. Russell
12. S. Kinnie Smith, Jr.
13. Kenneth L. Way
14. Thomas J. Webb
15. Ken Whipple
16. John B. Yasinsky
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EXHIBIT A
[FORM OF OPINION OF ROBERT C. SHROSBREE, ESQ.]
1. The Company is a duly organized, validly existing corporation in good
standing under the laws of the State of Michigan.
2. All legally required corporate proceedings in connection with the
authorization, issuance and validity of the Securities and the sale of
the Securities by the Company in accordance with the Underwriting
Agreement have been taken; and no approval, authorization, consent or
order of any governmental regulatory body is required with respect to
the issuance and sale of the Securities (other than in connection with
or in compliance with the provisions of the securities or blue sky laws
of any state, as to which I express no opinion).
3. The statements made in the Prospectus under the caption "Description of
Securities", "Plan of Distribution" and "Underwriting" constitute
summaries of legal matters or documents referred to therein and are
accurate in all material respects; the Securities conform in all
material respects to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same.
4. The Registration Statement was declared effective by the Commission;
the Registration Statement, at the date it was declared effective by
the Commission and at the date of the most recent amendment to the
Registration Statement, and the Prospectus, at the time it was filed
with the Commission pursuant to Rule 424 under the Act, and each
document incorporated in the Prospectus as such document was originally
filed pursuant to the Exchange Act (except for (i) the financial
statements and schedules contained or incorporated by reference therein
(including the notes thereto and the auditors' reports thereon) and
(ii) the other financial information contained or incorporated by
reference therein, as to which I express no opinion), complied as to
form when so filed in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder; and
the Registration Statement has become, and at the Time of Purchase is,
effective under the Act and, to the best of my knowledge after due
inquiry, no proceedings for a stop order with respect thereto are
threatened or pending under the Act.
5. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
6. The Securities have been duly authorized by the Company for issuance
and sale to the Underwriters pursuant to the Underwriting Agreement
and, when issued and delivered by the Company pursuant to the
Underwriting Agreement against payment of the consideration set forth
in the Underwriting Agreement, will be duly and validly issued, fully
paid and non-assessable; the issuance of the Securities is not subject
to the preemptive or other similar rights of any securityholder of the
Company or any of its subsidiaries.
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7. The form of certificate used to evidence the Securities complies in all
material respects with all applicable statutory requirements, with any
applicable requirements of the Restated Articles of Incorporation and
the Amended and Restated Bylaws of the Company and the requirements of
the NYSE.
8. The issuance and sale of the Securities in accordance with the terms of
the Underwriting Agreement do not violate the provisions of the
Restated Articles of Incorporation or the Amended and Restated Bylaws
of the Company, and will not result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument
to which the Company is a party.
9. The Company is not an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
10. The Company (i) is a "holding company", as such term is defined in the
Public Utility Holding Company Act of 1935, as amended, and (ii) is
currently exempt from all provisions of the Public Utility Holding
Company Act of 1935, as amended, except Section 9(a)(2) thereof.
11. Except for the outstanding shares of preferred stock of Consumers
Energy Company, the 8.36% Trust Originated Preferred Securities of
Consumers Power Company Financing I, the 8.20% Trust Originated
Preferred Securities of Consumers Energy Company Financing II, the 9
1/4% Trust Originated Preferred Securities of Consumers Energy Company
Financing III, the 9.00% Trust Preferred Securities of Consumers Energy
Company Financing IV and the 7 3/4% Convertible Quarterly Income
Preferred Securities of CMS Energy Trust I, all of the outstanding
capital stock of each of Consumers Energy Company and CMS Enterprises
Company is owned directly or indirectly by the Company, free and clear
of any security interest, claim, lien or other encumbrance (except as
disclosed in the Prospectus) or preemptive rights, and there are no
outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest
in any of Consumers Energy Company and CMS Enterprises Company or any
contract, commitment, agreement, understanding or arrangement of any
kind relating to the issuance of any such capital stock, any such
convertible or exchangeable securities or any such rights, warrants or
options.
12. The Company has an authorized capitalization as set forth in the
Prospectus and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable.
13. Nothing has come to my attention that would lead me to believe that the
Prospectus (other than (i) the operating statistics, financial
statements and schedules contained or incorporated by reference therein
(including the notes thereto and the auditors' reports thereon) and
(ii) the other financial or statistical information contained or
incorporated by reference therein, as to which I express no opinion),
as of its date or at the date hereof,
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contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
A-3
EXHIBIT B
[FORM OF LETTER OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
No facts have come to our attention that have caused us to believe that the
Prospectus, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (except that in each case we do not
express any view as to the financial statements, schedules and other financial
data included therein or excluded therefrom).
B-1
EXHIBIT C
[Letterhead of Officer or Director of the Company]
October __, 2004
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
Wachovia Capital Markets, LLC
BNP Paribas Securities Corp.
Comerica Securities, Inc.
Daiwa Securities America Inc.
KeyBanc Capital Markets, a division of McDonald Investments Inc.
Wells Fargo Securities, LLC
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
This letter is being delivered to you in connection with a proposed
Underwriting Agreement (the "Underwriting Agreement") between CMS Energy
Corporation, a Michigan corporation (the "Company"), and you as representative
of a group of Underwriters named therein, whereby the Underwriters have agreed
to purchase shares of its Common Stock ($0.01 par value) (the "Securities") of
the Company pursuant to the Underwriting Agreement. Terms used but not defined
in this letter shall have the meanings ascribed to such terms in the
Underwriting Agreement.
In order to induce you and the other Underwriters to purchase the
Securities pursuant to the Underwriting Agreement, the undersigned will not,
without the prior written consent of the Representatives: offer, pledge, sell or
contract to sell any Common Stock; sell any option or contract to purchase any
Common Stock; purchase any option or contract to sell any Common Stock; grant
any option, right or warrant to sell any Common Stock; lend or otherwise dispose
of or transfer any Common Stock; file a registration statement related to the
Common Stock; or
C-1
enter into any swap or other agreement or transaction that transfers, in whole
or in part, the economic consequence of ownership of Common Stock whether any
such swap or transaction is to be settled by delivery of Common Stock, in cash
or otherwise, for a period of 60 days after the date of the Underwriting
Agreement, other than shares of Common Stock disposed of as bona fide gifts
approved by the Representatives, and up to 10,000 shares of Common Stock for any
one executive officer or director of the Company with an aggregate limit of
100,000 shares of Common Stock for all executive officers and directors of the
Company.
If for any reason the Underwriting Agreement shall be terminated prior
to the Time of Purchase, the agreement set forth above shall likewise be
terminated.
Very truly yours,
By:___________________________________
Name:
Title:
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