Exhibit 4(l)
EXECUTION COPY
CASH COLLATERAL AGREEMENT
THIS CASH COLLATERAL AGREEMENT, dated as of August 3, 2004 (this
"AGREEMENT"), made by CMS ENERGY CORPORATION, a Michigan corporation (the
"PLEDGOR"), to CITICORP USA, INC. ("CUSA"), as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the lenders (the "LENDERS") parties to
the Credit Agreement (as hereinafter defined) and as collateral agent (in such
capacity, the "COLLATERAL AGENT") for the Lenders.
PRELIMINARY STATEMENTS
(1) The Administrative Agent, the Collateral Agent and the Lenders
have entered into that certain Fifth Amended and Restated Credit Agreement,
dated as of August 3, 2004 (said Agreement, as it may hereafter be amended or
otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms
defined therein and not otherwise defined herein being used herein as therein
defined), with the Pledgor and CMS Enterprises Company, a Michigan corporation
("ENTERPRISES" and, collectively with the Pledgor, the "BORROWERS").
(2) Pursuant to Section 5.03(b) of the Credit Agreement, any
prepayments by the Borrowers required by such subsection are to be applied,
first, to outstanding ABR Loans, second, to outstanding Eurodollar Rate Loans,
and, third, as cash collateral, pursuant to this Agreement, to secure LC
Outstandings.
(3) The cash collateral referenced in preliminary statement (2),
above, shall be deposited by the Administrative Agent in a special
non-interest-bearing cash collateral account (the "ACCOUNT") with the Collateral
Agent at its office at 388 Greenwich Street, New York, New York 10013, Account
No. 30579578 (or at such other office of the Collateral Agent as the Collateral
Agent may, from time to time, notify the Pledgor and the Administrative Agent),
in the name of the Pledgor but under the sole control and dominion of the
Collateral Agent and subject to the terms of this Agreement and the Credit
Agreement.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor hereby agrees with the Collateral Agent and the
Administrative Agent, for their benefit and the ratable benefit of the Lenders
and the LC Issuer, as follows:
SECTION 1. PLEDGE AND ASSIGNMENT. The Pledgor hereby pledges and
assigns to the Collateral Agent, for its benefit and the ratable benefit of the
Administrative Agent, the Lenders and the LC Issuer, and grants to the
Collateral Agent, for its benefit and the ratable benefit of the Administrative
Agent, the Lenders and the LC Issuer, a security interest in, the following
collateral (collectively, the "COLLATERAL"):
(i) the Account, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing the
Account;
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(ii) all Investments (as hereinafter defined) from time to time, and
all certificates and instruments, if any, from time to time representing or
evidencing the Investments;
(iii) all notes, certificates of deposit, deposit accounts, checks and
other instruments from time to time hereafter delivered to or otherwise
possessed by the Collateral Agent for or on behalf of the Pledgor in
substitution for or in addition to any or all of the then existing
Collateral;
(iv) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Collateral; and
(v) all proceeds of any and all of the foregoing Collateral.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the
payment of all reimbursement obligations of the Borrowers now or hereafter
existing with respect to LC Outstandings and all obligations of the Pledgor now
or hereafter existing under this Agreement (all such obligations of the
Borrowers being the "SECURED OBLIGATIONS"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Secured Obligations and which remain outstanding after
the Commitment Termination Date or otherwise would be owed by the Borrowers to
the Administrative Agent, the Collateral Agent or the Lenders under the Credit
Agreement and the Promissory Notes (if any) but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Borrower.
SECTION 3. DELIVERY OF COLLATERAL. All certificates or instruments, if
any, representing or evidencing the Collateral shall be delivered to and held by
or on behalf of the Collateral Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent. The Collateral Agent shall have the right,
at any time upon the occurrence and during the continuance of an Event of
Default, in its discretion and without notice to the Pledgor, to transfer to or
to register in the name of the Collateral Agent or any of its nominees any or
all of the Collateral. In addition, the Collateral Agent shall have the right at
any time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
SECTION 4. MAINTAINING THE ACCOUNT. So long as any LC Obligation shall
remain unpaid, any Letter of Credit shall remain outstanding or any Lender shall
have any Commitment:
(a) The Pledgor will maintain the Account with the Collateral Agent.
(b) It shall be a term and condition of the Account, notwithstanding
any term or condition to the contrary in any other agreement relating to
the Account and except as otherwise provided by the provisions of Sections
6, 13 and 17, that no amount (including interest on the Account, if any)
shall be paid or released to or for the account of, or
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withdrawn by or for the account of, the Pledgor or any other Person (other
than the Administrative Agent or the Collateral Agent) from the Account.
The Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.
SECTION 5. INVESTING OF AMOUNTS IN THE ACCOUNT. If requested by the
Pledgor, the Collateral Agent will, subject to the provisions of Section 6 and
Section 13, from time to time (a) invest amounts on deposit in the Account in
such Permitted Investments as the Pledgor may select and the Administrative
Agent may approve and (b) invest interest paid on the Permitted Investments
referred to in clause (a) above, and reinvest other proceeds of any such
Permitted Investments which may mature or be sold, in each case in such
Permitted Investments as the Pledgor may select and the Administrative Agent may
approve (the Permitted Investments referred to in clauses (a) and (b) above,
being collectively "INVESTMENTS"). Interest and proceeds that are not invested
or reinvested in Investments as provided above shall be deposited and held in
the Account.
SECTION 6. RELEASE OF AMOUNTS. So long as no Event of Default or
Default shall have occurred and be continuing, the Collateral Agent will pay and
release to the Pledgor or at its order, upon the request of the Pledgor, (a)
amounts of credit balance of the Account and of principal of any other
Collateral when matured or sold to the extent that (i) the sum of the credit
balance of the Account plus the aggregate outstanding principal amount of all
other Collateral exceeds (ii) the aggregate Dollar Equivalent of the LC
Outstandings in respect of all Letters of Credit and all other amounts owing by
the Pledgor hereunder, (b) all amounts in the Account if (i) the aggregate of
all of the Commitments shall exceed the Total Outstandings, (ii) the aggregate
Dollar Equivalent of the LC Outstandings in respect of all Letters of Credit
denominated in euro and all other amounts owing by the Pledgor hereunder are
less than $40,000,000 and (iii) the aggregate Dollar Equivalent of the LC
Outstandings in respect of all Letters of Credit denominated in Indian Rupees
and all other amounts owing by the Pledgor hereunder are less than $3,000,000
and (c) all interest and earnings on the Investments deposited and held in the
Account.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the legal and beneficial owner of the Collateral
free and clear of any lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement.
(b) The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
(c) No consent of any other Person and no authorization, approval, or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the pledge and assignment
by the Pledgor of the Collateral pursuant to
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this Agreement or for the execution, delivery or performance of this
Agreement by the Pledgor, (ii) for the perfection or maintenance of the
security interest created hereby (including the first priority nature of
such security interest) or (iii) for the exercise by the Collateral Agent
of its rights and remedies hereunder.
(d) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(e) The Pledgor has, independently and without reliance upon the
Administrative Agent, the Collateral Agent or any Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.
SECTION 8. FURTHER ASSURANCES. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 9. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will
not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Collateral, or (ii) create or
permit to exist any lien, security interest, option or other charge or
encumbrance upon or with respect to any of the Collateral, except for the
security interest under this Agreement.
SECTION 10. COLLATERAL AGENT APPOINTED ATTORNEY-IN -FACT. The Pledgor
hereby appoints the Collateral Agent the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time upon the occurrence and during the continuance
of an Event of Default or Default or otherwise to the extent that the Collateral
Agent shall reasonably deem any action to be necessary in order to maintain its
security interest in the Collateral, in the Collateral Agent's discretion, to
take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any interest payment, dividend or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
SECTION 11. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Pledgor under
Section 14.
SECTION 12. THE COLLATERAL AGENT'S DUTIES. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Agent
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shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Administrative Agent, the
Collateral Agent or any Lender has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Collateral. The Collateral
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Collateral Agent accords its own
property.
SECTION 13. REMEDIES UPON DEFAULT. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may, and shall at the direction of the
Administrative Agent, without notice to the Pledgor except as required by
law and at any time or from time to time, charge, set-off and otherwise
apply all or any part of the Account against the Secured Obligations or any
part thereof.
(b) The Collateral Agent may also exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the Uniform Commercial Code in effect in the State of New
York at that time (the "CODE") (whether or not the Code applies to the
affected Collateral), and may also, without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable. The Pledgor
agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to the Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(c) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held by
the Collateral Agent as collateral for, and/or then or at any time
thereafter be applied (after payment of any amounts payable to the
Collateral Agent pursuant to Section 14) in whole or in part by the
Administrative Agent for its benefit and the ratable benefit of the
Collateral Agent, the Lenders and the LC Issuer against, all or any part of
the Secured Obligations in such order as the Administrative Agent shall
elect. Any surplus of such cash or cash proceeds held by the Collateral
Agent and remaining after payment in full of all the Secured Obligations
shall be paid over to the Pledgor or to whomsoever may be lawfully entitled
to receive such surplus.
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SECTION 14. EXPENSES. The Pledgor will upon demand pay to the
Collateral Agent and the Administrative Agent the amount of any and all
reasonable expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, which the Collateral Agent or the Administrative
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Administrative Agent, the Collateral Agent or the
Lenders hereunder or (iv) the failure by the Pledgor to perform or observe any
of the provisions hereof.
SECTION 15. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Pledgor herefrom shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent and the Collateral Agent and, in the case of any amendment
hereof, the Pledgor, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 16. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be made and delivered in accordance
with Section 11.02 of the Credit Agreement.
SECTION 17. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER CREDIT
AGREEMENT. This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the later of (x)
the payment in full of the Secured Obligations and the expiration or termination
of each Letter of Credit and (y) the expiration or termination of the
Commitments under the Credit Agreement, (ii) be binding upon the Pledgor, its
successors and assigns, and (iii) inure to the benefit of, and be enforceable
by, the Administrative Agent, the Collateral Agent, the Lenders, the LC Issuer
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), any Lender may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its Commitment,
the Loans owing to it and any Promissory Notes held by it) to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to such Lender herein or otherwise, subject, however, to
the provisions of Article X (concerning the Agents) and Section 11.07 of the
Credit Agreement. Upon the later to occur of (x) the payment in full of the
Secured Obligations and the expiration or termination of each Letter of Credit
and (y) the expiration or termination of the Commitments under the Credit
Agreement, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Pledgor. Upon any such termination, the
Collateral Agent will, at the Pledgor's expense, return to the Pledgor such of
the Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence such termination.
SECTION 18. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
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JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms defined in Article 9 of the Code are used
herein as therein defined.
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IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
CMS ENERGY CORPORATION
By: /s/ Laura L. Mountcastle
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Name: Laura L. Mountcastle
Title: Vice President and Treasurer
ACCEPTED AND AGREED:
CITICORP USA, INC., as Administrative
Agent and as Collateral Agent
By: /s/ Dale R. Goncher
---------------------------------
Name: Dale R. Goncher
Title: Director
Signature Page to
Cash Collateral Agreement