1
EXHIBIT (1)(b)
_,000,000 Shares
CMS ENERGY CORPORATION
Class G Common Stock (no par value)
________________________________
Underwriting Agreement
______________, 1995
To the Representatives named in
Schedule I hereto of the Under-
writers named in Schedule II
hereto
Dear Sirs:
CMS Energy Corporation, a Michigan corporation (the "Company"), proposes to
issue and sell to the several Underwriters (as defined in Section 14 hereof)
_,000,000 shares of its Class G Common Stock (no par value) (the "Firm
Securities") as indicated in Schedule II. The Company also proposes to issue
and sell to the several Underwriters not more than _______ shares of its Class
G Common Stock (no par value) (the "Additional Securities") if and to the
extent that the Representatives (as defined in Section 14 hereof) shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 1 hereof.
The Firm Securities and the Additional Securities are hereinafter collectively
referred to as the Securities. The Underwriters have designated the
Representatives to execute this Agreement on their behalf and to act for them
in the manner provided in this Agreement.
The Company has prepared and filed, with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), a registration statement on
Form S-3 (Registration No. 33-_____) including a prospectus relating to the
Securities and such registration statement has become effective under the Act.
The registration statement at the time it initially became effective and as it
may have been thereafter amended to the date of this Agreement (including the
documents then incorporated by reference therein) is hereinafter referred to as
the "Registration Statement." The prospectus forming a part of the Registration
Statement at the time the Registration Statement initially became effective
(including the documents then incorporated by reference therein) is hereinafter
referred to as the "Basic Prospectus" provided that in the event that the Basic
Prospectus shall have been amended, revised or supplemented prior to the date
of this
2
- 2 -
Agreement, or if the Company shall have supplemented the Basic Prospectus by
filing any documents pursuant to Section 13 or 14 or 15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the time the
Registration Statement initially 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 and in the form to be filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 under the Act, is hereinafter referred to as
the "Prospectus." Any reference herein to the terms "amend," amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to include only amendments or supplements to the Registration
Statement or Prospectus, as the case may be, and documents incorporated by
reference therein after the date of this Agreement and prior to the termination
of the offering of the Securities by the Underwriters.
1. Purchase and Sale: Upon the basis of the representations and warranties
and on the terms and subject to the conditions herein set forth, the Company
agrees to sell to the respective Underwriters, severally and not jointly, and
the respective Underwriters, severally and not jointly, agree to purchase from
the Company, at the purchase price of $______ a share (the "Purchase Price"),
the respective number of shares of Firm Securities set opposite their names in
Schedule II hereto.
In addition, on the basis of the representations and warranties and on the
terms and subject to the conditions herein set forth, the Company agrees to
sell to the Underwriters, and the Underwriters shall have a one-time right to
purchase, severally and not jointly, up to _______ Additional Securities at the
Purchase Price. Additional Securities may be purchased as provided in Section 2
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Securities. If any Additional Securities are to
be purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Securities (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Additional Securities to be purchased as the
number of Firm Securities set forth in Schedule II opposite the name of such
Underwriter bears to the total number of Firm Securities.
The Company hereby agrees that, without the prior written consent of
_________________________________, the Company will not offer, sell, contract
to sell or otherwise dispose of any shares of (a) Class G Common Stock of the
Company or any securities (other than Common Stock of the Company) convertible
into or exercisable or exchangeable for Class G Common Stock of the Company
other than the Securities for a period of 180 days after the date of this
Agreement or (b) Common Stock of the Company or any securities convertible into
or exercisable or exchangeable for Common Stock of the Company for a period of
90 days after the date of this Agreement; provided that the Company may, during
such period, issue
3
- 3 -
shares of Common Stock under its Dividend Reinvestment and Optional Cash
Payment Plan, Performance Incentive Stock Plan, Employee Stock Ownership Plan
and Employee Savings and Incentive Plan.
The Company is advised by the Representatives that the Underwriters propose
to make a public offering of their respective portions of the Securities as
soon as this Agreement has become effective. The Company is further advised by
the Representatives that the Securities are to be offered to the public
initially at $______ a share (the public offering price) and to certain dealers
selected by you at a price that represents a concession not in excess of $.__ a
share under the public offering price, and that any Underwriter may allow, and
such dealers may allow, a concession, not in excess of $.__ a share, to certain
other dealers.
2. Payment and Delivery: Payment for the Firm Securities shall be made to
the Company or its order by bank check or checks, as requested by the Company,
payable in New York Clearing House funds, at the offices of Reid & Priest, 40
West 57th Street, New York, New York, 10019 (or such other place or places of
payment as shall be agreed upon by the Company and the Underwriters in
writing), upon the delivery of the Firm Securities at said offices (or such
other place or places of delivery as shall be agreed upon by the Company and
the Representatives in writing) to the Representatives for the respective
accounts of the Underwriters against receipt therefor signed by the
Representatives on behalf of themselves and as agent for the other
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
time on _________, 1995 (or on such later business day as shall be agreed upon
by the Company and the Representatives in writing), unless postponed in
accordance with the provisions of Section 10 hereof. The day and time at which
payment and delivery for the Firm Securities are to be made is herein called
the "First Time of Purchase".
Payment for any Additional Shares shall also be made to the Company or its
order by bank check or checks, as requested by the Company, payable in New York
Clearing House funds, at the offices of Reid & Priest, 40 West 57th Street, New
York, New York 10019 (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 Additional Securities at said offices (or such other place or
places of delivery as shall be agreed upon by the Company and the
Representatives in writing) against receipt therefor as aforesaid at 10:00
A.M., New York time, on such date (which may be the same as the First Time of
Purchase but shall in no event be earlier than the First Time of Purchase nor
later than ten business days after the giving of the notice hereinafter
referred to) as shall be designated in a written notice to the Company from the
Representatives of their determination, on behalf of the Underwriters, to
purchase a number, specified in said notice, of Additional Shares, or on such
other date, in any event not later than ___________, 1995, as shall be
designated in writing by them. The day and time at which payment and delivery
for the Additional Securities are to be made is hereinafter called the "Second
Time of Purchase." The notice of the determination to exercise the option to
purchase
4
- 4 -
Additional Shares and of the Second Time of Purchase may be given at any time
within 30 days after the date of this Agreement.
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 three full
business days prior to the First Time of Purchase or Second Time of Purchase,
as the case may be, or if no such request is received, in the names of the
respective Underwriters for the respective number of shares of Firm Securities,
set forth opposite the name of each Underwriter in Schedule II, and in the case
of Additional Securities, for the respective number of shares determined in
accordance with Section 1 hereof, in each case in denominations selected by the
Company.
The Company agrees to make the Securities available for inspection by the
Underwriters at the offices of _________________________________ at least 24
hours prior to the First Time of Purchase, or the Second Time of Purchase, as
the case may be, in definitive, fully registered form, and as requested
pursuant to the preceding paragraph.
3. Conditions of Underwriters' Obligations: The several obligations of the
Underwriters hereunder are subject to the accuracy of the warranties and
representations on the part of the Company and to the following other
conditions:
(a) That all legal proceedings to be taken in connection with the issue and
sale of the Securities shall be reasonably satisfactory in form and substance
to Messrs. Reid & Priest, of New York, New York, counsel to the Underwriters.
(b) That, at the First Time of Purchase and the Second Time of Purchase,
the Representatives shall be furnished with the following opinions, dated the
day of the First Time of Purchase or Second Time of Purchase, as the case may
be:
(1) Opinions of Denise M. Sturdy, Esq., and Messrs. Sidley & Austin, of
Chicago, Illinois, counsel to the Company, substantially to the effect set
forth in Exhibits A and B to this Agreement; and
(2) Opinion of Messrs. Reid & Priest, of New York, New York, counsel to
the Underwriters, substantially to the effect set forth in Exhibit C to this
Agreement.
(c) That, on each of the date hereof, the date of the First Time of
Purchase and the date of the Second Time of Purchase, the Representatives
shall have received a letter from Arthur Andersen & Co. in form and substance
satisfactory to the Representatives, on and dated as of such date, (i)
confirming that they are independent public accountants within the meaning of
the Act and the applicable published rules and regulations of the Commission
thereunder, (ii) stating that in their opinion the financial statements
5
- 5 -
examined by them and included or incorporated by reference in the
Registration Statement, including, without limitation, the pro forma
consolidated condensed balance sheets and statements of income and the
related notes thereto set forth or included in the Registration Statement and
the Prospectus with respect to the Company and the Consumers Gas Group (as
defined in the Prospectus), complied as to form in all material respects with
the applicable accounting requirements of the Commission, including
applicable published rules and regulations of the Commission, and (iii)
covering, as of a date not more than five business days prior to the date of
such letter, such other matters as the Representatives reasonably request.
(d) That, between the date of the execution of this Agreement and the First
Time of Purchase and the Second Time of Purchase, as the case may be, no
material and adverse change shall have occurred in the business, properties
or financial condition of (i) the Company and its subsidiaries (as defined in
Rule 405 under the Act, and hereafter called the "Subsidiaries"), taken as a
whole, or (ii) the Consumers Gas Group (as defined in the Prospectus), which,
in either case, in the judgment of the Representatives, after reasonable
inquiries on the part of the Representatives, impairs the marketability of
the Securities (other than changes referred to in or contemplated by the
Registration Statement or Prospectus).
(e) That, prior to the First Time of Purchase and Second Time of Purchase,
no stop order suspending the effectiveness of the Registration Statement
shall have been issued under the Act by the Commission or proceedings
therefor initiated or threatened.
(f) That, at the First Time of Purchase and Second Time of Purchase, the
Company shall have delivered to the Representatives a certificate of an
executive officer of the Company to the effect that, to the best of his
knowledge, information and belief there shall have been no material adverse
change in the business, properties or financial condition of (i) the Company
and its Subsidiaries, taken as a whole, or (ii) the Consumers Gas Group, from
that set forth in the Registration Statement or Prospectus (other than
changes referred to in or contemplated by the Registration Statement or
Prospectus).
(g) That the Company shall have performed such of its obligations under
this Agreement as are to be performed at or before the First Time of Purchase
and Second Time of Purchase by the terms hereof.
(h) That any additional documents or agreements reasonably requested by the
Representatives or their counsel to permit the Underwriters to perform their
obligations or permit their counsel to deliver opinions hereunder shall have
been provided to them.
6
- 6 -
(i) That between the date of the execution of this Agreement and the day of
the First Time of Purchase or the Second Time of Purchase, as the case may
be, there has been no downgrading of the investment ratings of any of the
Company's securities or of Consumers Power Company's first mortgage bonds by
Standard & Poor's Corporation, Moody's Investors Service, Inc. or Duff &
Phelps Credit Rating Co., and neither the Company nor Consumers Power 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.
(j) That any filing of the Prospectus and any supplements thereto required
pursuant to Rule 424 under the Act have been made in compliance with Rule 424
in the time periods provided by Rule 424, or at such later time as may be
acceptable to the Representatives.
(k) That the Securities, at the First Time of Closing in the case of the
Firm Securities, and at the Second Time of Closing in the case of the
Additional Securities, shall have been duly listed, subject to notice of
issuance, on the New York Stock Exchange.
4. Conditions of the Company's Obligations: The obligations of the Company
hereunder are subject to the satisfaction of the condition set forth in Section
3(e).
5. Certain Covenants of the Company: In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To use its best efforts to cause any post-effective amendments to the
Registration Statement to become effective as promptly as possible. During
the time when a Prospectus is required to be delivered under the Act, the
Company will comply so far as it is able with all requirements imposed upon
it by the Act and the rules and regulations of the Commission to the extent
necessary to permit the continuance of sales of or dealings in the Securities
in accordance with the provisions hereof and of the Prospectus.
(b) To deliver to each of the Representatives a conformed copy of the
Registration Statement (including all exhibits thereto) and full and complete
sets of all comments of the Commission or its staff and all responses thereto
with respect to the Registration Statement and to furnish to the
Representatives, for each of the Underwriters, conformed copies of the
Registration Statement without exhibits.
7
- 7 -
(c) As soon as the Company is advised thereof, the Company will advise the
Representatives and confirm the advice in writing of: (i) the effectiveness
of any amendment to the Registration Statement, (ii) any request made by the
Commission for amendments to the Registration Statement or Prospectus or for
additional information with respect thereto, (iii) the suspension of
qualification of the Securities for sale under Blue Sky or state securities
laws, and (iv) the entry of a stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat or any proceedings for
that purpose and, if such a stop order should be entered by the Commission,
to make every reasonable effort to obtain the lifting or removal thereof.
(d) To deliver to the Underwriters, without charge, as soon as practicable,
and from time to time during such period of time (not exceeding nine months)
after the date of the Prospectus as they are required by law to deliver a
prospectus, as many copies of the Prospectus (as supplemented or amended if
the Company shall have made any supplements or amendments thereto) as the
Representatives may reasonably request; and in case any Underwriter is
required to deliver a prospectus after the expiration of nine months after
the date of the Prospectus, to furnish to the Representatives, upon request,
at the expense of such Underwriter, a reasonable quantity of a supplemental
prospectus or of supplements to the Prospectus complying with Section
10(a)(3) of the Act.
(e) For such period of time (not exceeding nine months) after the date of
the Prospectus as the Underwriters are required by law to deliver a
prospectus in respect of the Securities, if any event shall have occurred as
a result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it becomes
necessary to amend or supplement the Prospectus to comply with law, to
forthwith prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus and deliver to the Underwriters, without charge,
such number of copies thereof as may be reasonably requested.
(f) 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.
(g) To use its best efforts to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Representatives may designate and to pay (or cause to be paid), or reimburse
(or cause to be reimbursed) the Underwriters and their counsel for,
reasonable filing fees and expenses in connection therewith (including the
reasonable fees and disbursements of counsel to the Underwriters and
8
- 8 -
filing fees and expenses paid and incurred prior to the date hereof),
provided, however, that the Company shall not be required to qualify to do
business as a foreign corporation or as a securities dealer or to file a
general consent to service of process or to file annual reports or to comply
with any other requirements deemed by the Company to be unduly burdensome.
(h) To pay all expenses, fees and taxes (other than transfer taxes on sales
by the respective Underwriters) in connection with the issuance and delivery
of the Securities, except that the Company shall be required to pay the fees
and disbursements (other than disbursements referred to in paragraph (g) of
this Section 5) of Reid & Priest, of New York, New York, counsel to the
Underwriters, only in the events provided in paragraph (i) of this Section 5,
the Underwriters hereby agreeing to pay such fees and disbursements in any
other event, and that except as provided in Section (i), the Company shall
not be responsible for any out-of-pocket expenses of the Underwriters in
connection with their services hereunder.
(i) If the Underwriters shall not take up and pay for the Firm Securities
due to the failure of the Company to comply with any of the conditions
specified in Section 3 hereof, or, if this Agreement shall be terminated in
accordance with the provisions of Section 11 hereof prior to the First Time
of Purchase, to pay the fees and disbursements of Reid & Priest, counsel to
the Underwriters, and, if the Underwriters shall not take up and pay for the
Firm Securities due to the failure of the Company to comply with any of the
conditions specified in Section 3 hereof, to reimburse the Underwriters for
their reasonable out-of-pocket expenses, in an aggregate amount not exceeding
a total of $_____, incurred in connection with the financing contemplated by
this Agreement.
(j) Prior to the termination of the offering of the Securities, to not file
any amendment to the Registration Statement or supplement to the Prospectus
(including the Basic Prospectus) unless the Company has furnished the
Representatives and counsel to the Underwriters with a copy for their review
and comment a reasonable time prior to filing and has reasonably considered
any comments of the Representatives, or any such amendment or supplement to
which such counsel shall reasonably object on legal grounds in writing, after
consultation with the Representatives.
(k) To furnish the Representatives with copies of all documents required to
be filed with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act subsequent to the time the Registration Statement becomes
effective and prior to the termination of the offering of the Securities.
(l) So long as may be required for the distribution of the Securities by
the Underwriters or by any dealers that participate in the distribution
thereof the Company will comply with all requirements under the Exchange Act
relating to the timely filing
9
- 9 -
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.
(m) To use its best efforts to cause the Securities to be listed on
the New York Stock Exchange, subject only to official notice of
issuance and evidence of satisfactory distribution on or prior to the
First Time of Closing, in the case of the Firm Securities, and on or
prior to the Second Time of Closing, in the case of the Additional
Securities.
(n) To pay all expenses in connection with any review of the
offering of the Securities by the National Association of Securities
Dealers, Inc.
6. Representations and Warranties of the Company: The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) The Registration Statement has become effective under the Act; a
true and correct copy of the Registration Statement in the form in
which it became effective has been delivered to each of the
Representatives and to the Representatives for each of the Underwriters
(except that copies delivered for the Underwriters excluded exhibits to
such Registration Statement); any filing of the Prospectus and
any supplements thereto required pursuant to Rule 424(b) have been or
will be made in the manner required by Rule 424(b) and within the time
period required by Section 3(j) hereof; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purposes are pending before or, to the knowledge
of the Company, threatened by the Commission. On the effective date of
the Registration Statement, the Registration Statement and the Basic
Prospectus complied, or were deemed to have complied, and on its
respective issue date, each preliminary prospectus filed pursuant to
Rule 424(b) complied, and the Basic Prospectus complied, and on its
issue date, the Prospectus will comply, or will be deemed to comply, in
all material respects with the applicable provisions of the Act and the
published rules and regulations of the Commission; none of the
Registration Statement on its effective date, the Basic Prospectus on
its issue date, or any other preliminary prospectus, on its issue date,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as of its issue
date and, as amended or supplemented, if applicable, as of the First
Time of Purchase and Second 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 the light of the
circumstances under which they were made, not misleading, except that
the Company makes no warranty or representation to any Underwriter with
respect to any statements or omissions made therein in reliance upon
and in conformity with information furnished in writing to the Company
by, or through the Representatives on behalf of, any Underwriter
expressly for use therein.
10
- 10 -
(b) The documents incorporated by reference in the Registration Statement,
any preliminary prospectus, the Basic Prospectus and the Prospectus, when
they were filed (or, if an amendment with respect to any such document was
filed, when such amendment was filed) with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and any further
documents so filed and incorporated by reference will, when they are filed
with the Commission, conform in all material respects to the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder; none of such documents, when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and no such further document, when it is filed, will contain
an untrue statement 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. 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
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, 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 on the Company and its Subsidiaries, taken as a
whole.
(d) The pro forma consolidated condensed balance sheets and consolidated and
condensed statements of income and the related notes thereto set forth or
included or incorporated by reference in the Registration Statement and the
Prospectus with respect to the Company and the Consumers Gas Group have been
prepared in accordance with the applicable requirements of Regulation S-X
promulgated under the Exchange Act, have been compiled on the pro forma basis
described therein and, in the opinion of the Company, the assumptions used in
the preparations thereof were reasonable at the time
11
- 11 -
made and the adjustments used therein are based upon good faith estimates and
assumptions believed by the Company to be reasonable at the time made.
(e) The shares of common 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 Company's Articles of Incorporation and all amendments thereto to
date, including, without limitation, the amendments necessary to create the
Class G Common Stock (no par value) of the Company as described in the
Registration Statement, have been duly authorized and all necessary corporate
and shareholder action and all necessary filings pursuant to the laws of the
State of Michigan in connection therewith have been taken, obtained or made.
(g) The Securities have been duly authorized and, when issued and delivered
in accordance with the terms of this Agreement, will be validly issued, fully
paid and non-assessable, and the issuance of such Securities will not be
subject to any preemptive or similar rights.
(h) The capital stock of the Company conforms in all material respects to
the description thereof in the Prospectus.
(i) (i) Except for __________, all of the outstanding capital stock of
each of Consumers Power Company, CMS Enterprises Company, Nomeco Oil & Gas
Co., and Michigan Gas Storage Company is owned directly or indirectly by the
Company, free and clear of any security interest, claim, lien, or other
encumbrance or preemptive rights, and (ii) 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 Power Company, CMS
Enterprises Company, Nomeco Oil & Gas Co., and Michigan Gas Storage 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.
(j) Each of the Company and its Significant Subsidiaries 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 on the Company and its Subsidiaries, taken
as a whole.
12
- 12 -
(k) No order, license, consent, authorization or approval of, or exemption
by, or the giving of notice to, or the registration with any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, and no filing, recording, publication or registration in
any public office or any other place, was or is now required to be obtained
by the Company to authorize its execution or delivery of, or the performance
of its obligations under, this Agreement or the Securities, except such as
have been obtained or may be required under state securities or Blue Sky laws
or as referred to in the Basic Prospectus. Each of the Company and its
Significant Subsidiaries 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 Basic Prospectus,
except to the extent that the failure to obtain or file would not have a
material adverse effect on the Company and its Subsidiaries, taken as a
whole.
(l) Neither the execution or delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement did or
will conflict with, result in a breach of any of the terms or provisions of,
or constitute a default or require the consent of any party under the
Company's Articles of Incorporation or by-laws, any material agreement or
instrument to which it is a party, any existing applicable law, rule or
regulation or any judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its properties or assets, or did or will result in the
creation or imposition of any lien on the Company's properties or assets.
(m) Except as disclosed in the Basic Prospectus, there is no action, suit,
proceeding, inquiry or investigation (at law or in equity or otherwise)
pending or, to the knowledge of the Company, threatened against the Company
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
on the business or financial condition of the Company and the Subsidiaries,
taken as a whole, or of the Consumers 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 in the business,
properties or financial condition of (i) the Company and its Subsidiaries,
taken as a whole, or (ii) the Consumers Gas Group, from that set forth in the
Registration Statement (other than changes referred to or contemplated by the
Registration Statement or the Basic Prospectus).
13
- 13 -
(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 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 its Significant Subsidiaries, or any of their
respective properties, may be bound.
7. Representation and Warranties of Underwriters:
Each Underwriter warrants and represents that the information, if any,
furnished in writing to the Company through the Representatives expressly for
use in the Registration Statement and Prospectus is correct in all material
respects as to such Underwriter. Each Underwriter, in addition to other
information furnished to the Company for use in the Registration Statement and
Prospectus, herewith furnishes to the Company for use in the Registration
Statement and Prospectus, the information stated herein with regard to the
public offering, if any, by such Underwriter and represents and warrants that
such information is correct in all material respects as to such Underwriter.
8. Indemnification:
(a) The Company agrees, to the extent permitted by law, to indemnify and
hold harmless each of the Underwriters and each person, if any, who controls
any such Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act or otherwise, and to reimburse the Underwriters and
such controlling person or persons, if any, for any legal or other expenses
incurred by them in connection with defending any action, suit or proceeding
(including governmental investigations) as provided in Section 8(b) 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 (if used
prior to the date of the Basic Prospectus), the Basic Prospectus (if used
prior to the date of the Prospectus), the Prospectus, or, if the Prospectus
shall be amended or supplemented, in the Prospectus as so amended or
supplemented (if such Prospectus or such Prospectus as amended or
supplemented is used after the period of time referred to in Section 5(e)
hereof, it shall contain or be used with such amendments or supplements as
the Company deems necessary to comply with Section 10(a) of the Act), or
arise out of or are based upon any omission or 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
14
- 14 -
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 this indemnity shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) on
account of any losses, claims, damages, liabilities or actions, suits or
proceedings arising from the sale of the Securities to any person if a copy
of the Prospectus, as the same may then be supplemented or amended
(excluding, however, any document then incorporated or deemed incorporated
therein by reference), was not sent or given by or on behalf of such
Underwriter to such person (i) with or prior to the written confirmation of
sale involved or (ii) as soon as available after such written confirmation,
relating to an event occurring prior to the payment for and delivery to such
person of the Securities involved in such sale, and the omission or alleged
omission or untrue statement or alleged untrue statement was corrected in the
Prospectus as supplemented or amended at such time.
The Company's indemnity agreement contained in this Section 8(a), and the
covenants, representations and warranties of the Company contained in this
Agreement, shall remain in full force and effect regardless of any
investigation made by or on behalf of any person, and shall survive the
delivery of and payment for the Securities hereunder, and the indemnity
agreement contained in this Section 8 shall survive any termination of this
Agreement. The liabilities of the Company in this Section 8(a) are in
addition to any other liabilities of the Company under this Agreement or
otherwise.
(b) Each Underwriter agrees, severally and not jointly, to the extent
permitted by law, to indemnify, hold harmless and reimburse the Company, its
directors and such of its officers as shall have signed the Registration
Statement, each other Underwriter and each person if any, who controls the
Company or any such other Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, to the same extent and upon the same
terms as the indemnity agreement of the Company set forth in Section 8(a)
hereof, but only with respect to alleged untrue statements or omissions made
in the Registration Statement, the Basic Prospectus or in the Prospectus, as
amended or supplemented, (if applicable) in reliance upon and in conformity
with information furnished in writing to the Company by such Underwriter
expressly for use therein.
The indemnity agreement on the part of each Underwriter contained in this
Section 8(b) and the representations and warranties of such Underwriter
contained in this Agreement shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or any other person,
and shall survive the delivery of and payment for the Securities hereunder,
and the indemnity agreement contained in this Section 8(b) shall survive any
termination of this Agreement. The liabilities of each
15
- 15 -
Underwriter in Section 8(b) are in addition to any other liabilities of such
Underwriter under this Agreement or otherwise.
(c) If a claim is made or an action, suit or proceeding (including
governmental investigations) is commenced or threatened against any person as
to which indemnity may be sought under Section 8(a) or 8(b), such person (the
"Indemnified Person") shall notify the person against whom such indemnity may
be sought (the "Indemnifying Person") promptly after any assertion of such
claim threatening to institute an action, suit or proceeding or if such an
action, suit or proceeding, is commenced against such Indemnified Person
promptly after such Indemnified Person shall have been served with a summons
or other first legal process, giving information as to the nature and basis
of the claim. Failure to so notify the Indemnifying Person shall not,
however, relieve the Indemnifying Person from any liability which it may have
on account of the indemnity under Section 8(a) or 8(b) if the Indemnifying
Person has not been prejudiced in any material respect by such failure. The
Indemnifying Person shall assume the defense of any such litigation or
proceeding, including the employment of counsel and the payment of all
expenses. Such counsel shall be designated in writing by the Representatives
in the case of parties indemnified pursuant to Section 8(b) and by the
Company in the case of parties indemnified pursuant to Section 8(a). Any
Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include (x) the Indemnifying
Person and (y) the Indemnified Person and, in the written opinion of counsel
to such Indemnified Person, representation of both parties by the same
counsel would be inappropriate due to actual or likely conflicts of interest
between them, in either of which cases the reasonable fees and expenses of
counsel (including disbursements) for such Indemnified Person shall 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
16
- 16 -
reasonable fees and expenses of counsel promptly after payment thereof
by the Indemnified Persons.
In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the
Representatives and the Company agree that the Indemnifying Person's
obligations to pay such fees and expenses shall be conditioned upon the
following:
(1) in case separate counsel is proposed to be retained by
the Indemnified Persons pursuant to clause (ii) of the preceding
paragraph, the Indemnified Persons shall in good faith fully consult
with the Indemnifying Person in advance as to the selection of such
counsel; and
(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 every
reasonable effort to cause such separate counsel to minimize the
duplication of activities as between themselves and counsel to the
Indemnifying Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 8, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
9. Contribution: If the indemnification provided for in Section 8 above is
unavailable to or insufficient to hold harmless an Indemnified Person under
such Section in respect of any losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in
respect thereof) referred to therein, then each Indemnifying Person under
17
- 17 -
Section 8 shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (or actions
in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Indemnifying Person on the one hand and the
Indemnified Person on the other from the offering of the Securities. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each Indemnifying Person shall contribute to
such amount paid or payable by such Indemnified Person in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of each Indemnifying Person, if any, on the one hand and the Indemnified
Person on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions, suits or
proceedings (including governmental investigations) in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the total
underwriting discounts and commission received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus, bear to the
aggregate public offering price of the Securities. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the one
hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
9. The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental proceedings) in respect thereof) referred to above in
this Section 9 shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Person in connection with investigating
or defending any such action, suits or proceedings (including governmental
proceedings) or claim, provided that the provisions of Section 8 have been
complied with (in all material respects) in respect of any separate counsel for
such Indemnified Person. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount greater than the excess
of (i) the total price at which the Securities underwritten by it and
distributed to the public were offered to the public over (ii) the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 9 to contribute are several in proportion to their respective
underwriting obligations and not joint.
18
- 18 -
The agreement with respect to contribution contained in Section 9 hereof
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any Underwriter, and shall survive delivery of
and payment for the Securities hereunder and any termination of this Agreement.
10. Substitution of Underwriters: If any Underwriter under this agreement
shall fail or refuse (otherwise than for some reason sufficient to justify in
accordance with the terms hereof, the termination of its obligations hereunder)
to purchase the Securities which it had agreed to purchase on the First Time of
Purchase or Second Time of Purchase, the Representatives shall immediately
notify the Company and the Representatives and the other Underwriters may,
within 36 hours of the giving of such notice, determine to purchase, or to
procure one or more other members of the National Association of Securities
Dealers, Inc. ("NASD") (or, if not members of the NASD, who are foreign banks,
dealers or institutions not registered under the Securities 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 First Time of Purchase
or Second Time of Purchase, 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 which they had severally agreed to purchase
hereunder, as hereinabove 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 the foregoing clause (a).
19
- 19 -
In the event the Company shall exercise its rights under clause (a) and/or
(b) above, the Company shall give written notice thereof to the Representatives
within such further period of 36 hours, and thereupon the First Time of
Purchase or the Second Time of Purchase shall be postponed for such period, not
exceeding five business days, as the Company shall determine. In the event the
Company shall be entitled to but shall not elect to exercise its rights under
clause (a) and/or (b), the Company shall be deemed to have elected to terminate
this Agreement.
Any action taken by the Company under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement. Termination by the Company under this
Section 10 shall be without any liability on the part of the Company or any
non-defaulting Underwriter.
In the computation of any period of 36 hours referred to in this Section 10,
there shall be excluded a period of 24 hours in respect of each Saturday,
Sunday or legal holiday which would otherwise be included in such period of
time.
11. Termination of Agreement: This Agreement may be terminated at any time
prior to the First Time of Purchase, and the option referred to in Section 1
hereof, if exercised, may be canceled at any time prior to the Second Time of
Purchase, by the Representatives, if prior to such time (i) trading generally
in securities on the New York Stock Exchange shall have been suspended or
materially limited by the Commission or the New York Stock Exchange, (ii)
trading of any securities of the Company or Consumers Power Company shall have
been suspended on any exchange or over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been
declared by federal or New York State authorities or (iv) there shall have
occurred any outbreak or material escalation of hostilities or any significant
change in financial markets or any calamity or crisis, the effect of which on
the financial markets of the United States is such as to impair, in the
Representatives' reasonable judgment, after having made due inquiry, the
marketability of the Securities.
If the Representatives elect to terminate this Agreement, as provided in
this Section 11, the Representatives will promptly notify the Company and each
other Underwriter by telephone or telecopy, confirmed by letter. If this
Agreement shall not be carried out by any Underwriter for any reason permitted
hereunder, or if the sale of the Securities to the Underwriters as herein
contemplated shall not be carried out because the Company is not able to comply
with the terms hereof, the Company shall not be under any obligation 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.
20
- 20 -
Notwithstanding the foregoing, the provisions of Sections 5(g), 5(i), 8 and
9 shall survive any termination of this Agreement.
12. Notices: All notices hereunder shall, unless otherwise expressly
provided, be in writing and be delivered at or mailed to the following
addresses or be sent by telecopy as follows: if to the Underwriters or the
Representatives, to the Representatives at the address or number, as
appropriate, designated in Schedule I hereto, and, if to the Company, to CMS
Energy Corporation, Attention: Senior Vice President - Finance, Fairlane Plaza
South, Suite 1100, 330 Town Center Drive, Dearborn, Michigan 48126 (Telecopy:
313-436-9548).
13. Parties in Interest: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company (including the
directors thereof and such of the officers thereof as shall have signed the
Registration Statement), and the controlling persons, if any, referred to in
Section 8 hereof, and their respective successors, assigns, executors and
administrators, and, except as expressly otherwise provided in Section 10
hereof, no other person shall acquire or have any right under or by virtue of
this Agreement.
14. Definition of Certain Terms: The term "Underwriters", as used herein,
shall be deemed to mean the several persons, firms or corporations, named in
Schedule II hereto (including the Representatives herein mentioned, if so
named), and the term "Representatives", as used herein, shall be deemed to mean
the representative or representatives designated by, or in the manner
authorized by, the Underwriters in Schedule I hereto. All obligations of the
Underwriters hereunder are several and not joint. If there shall be only one
person, firm or corporation named in Schedule I and Schedule II hereto, the
term "Underwriters" and the term "Representatives", as used herein, shall mean
such person, firm or corporation. If the firm or firms listed in Schedule I
hereto are the same as the firm or firms listed in Schedule II hereto, then the
terms "Underwriters" and "Representatives", as used herein, shall each be
deemed to refer to such firm or firms. The term "successors" as used in this
Agreement shall not include any purchaser, as such purchaser, of any of the
Securities from any of the respective Underwriters.
15. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
16. Counterparts: This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
21
- 21 -
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:_________________________________
Accepted: ____________, 1995
As Representatives
By: _________________________________
By:________________________________________
22
Schedule I
23
Schedule II
NUMBER OF FIRM SHARES
Underwriter TO BE PURCHASED
----------- ---------------
Total . . . . . . . . . . . . . . . . . . . . . .
===========
24
Exhibit A
[Form of opinion of Denise M. Sturdy, Esq.]
25
Exhibit B
[Form of Opinion of Sidley & Austin]
26
Exhibit C
[Form of Opinion of Reid & Priest]