1
EXHIBIT (1)(B)
7,000,000 SHARES
CMS ENERGY CORPORATION
CLASS G COMMON STOCK (NO PAR VALUE)
---------------------------------
UNDERWRITING AGREEMENT
July , 1995
To the Representatives named in
Schedule I hereto of the Underwriters
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)
7,000,000 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 Nos. 33-57719 and 33-57719-01) including a prospectus relating
to the Securities and certain amendments to such registration statement, and
such registration statement, as so amended, has become effective under the Act.
The registration statement, as amended by post-effective amendment No. 3
thereto, at the time such registration statement, as so amended, became
effective and as it may have been thereafter amended to the date of this
Agreement (including the documents then incorporated by reference therein) is
hereinafter referred to as the "Registration Statement." The prospectus forming
a part of the Registration Statement at the time the Registration Statement
became effective (including the documents then incorporated by reference
therein) is hereinafter referred to as the "Basic Prospectus," provided that in
the event that the Basic Prospectus shall have been amended, revised or
supplemented prior to the date of this Agreement, or if the Company shall have
supplemented the Basic Prospectus by filing any documents pursuant to Section 13
or 14 or 15 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), after the time the Registration Statement became effective and prior to
the date of this Agreement, which documents are deemed to be incorporated in the
Basic Prospectus, the term "Basic Prospectus" shall also mean such prospectus as
so amended, revised or supplemented. The Basic Prospectus, as it shall be
revised or supplemented to reflect the final terms of the offering and sale of
the Securities 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
2
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 1,000,000 shares of 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 shares 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 shares of
Additional Securities to be purchased as the number of shares of Firm Securities
set forth in Schedule II opposite the name of such Underwriter bears to the
total number of shares of Firm Securities.
The Company hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated, 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, par value $.01 per share, of the
Company (the "CMS Energy Common Stock")) 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) CMS Energy
Common Stock or any securities convertible into or exercisable or exchangeable
for CMS Energy Common Stock for a period of 90 days after the date of this
Agreement; provided that the Company may, during such period, (i) in a manner
generally consistent with past practices regarding the numbers of shares issued
by the Company from time to time thereunder, issue shares of CMS Energy Common
Stock and Class G 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, as any of the same may be supplemented
or amended and (ii) issue up to 3,000,000 shares of CMS Energy Common Stock
solely for the purpose of effecting acquisitions of other businesses or
properties.
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 LLP,
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 Securities 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 LLP, 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) to the Representatives for the respective accounts
of the Underwriters against
2
3
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 shares of Additional Securities, 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 Additional Securities 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 two 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 Morgan Stanley & Co. Incorporated 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 Reid & Priest LLP, 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 Reid & Priest LLP, 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 dates 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 LLP 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 examined by them and included or incorporated by reference in
the Registration Statement, the unaudited pro forma condensed 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), and the unaudited
pro forma condensed balance sheet and the related notes thereto set forth
or included in the Registration Statement and the Prospectus with respect
to the Company 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.
3
4
(d) That, between the date of the execution of this Agreement and the
First Time of Purchase or 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, 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.
(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 Purchase in the case of
the Firm Securities, and at the Second Time of Purchase 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
4
5
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.
(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
of 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
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 LLP, 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
5
6
be terminated in accordance with the provisions of Section 11 hereof prior
to the First Time of Purchase, to pay the reasonable fees and disbursements
of Reid & Priest LLP, 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 $3,000, incurred in
connection with the financing contemplated by this Agreement.
(j) Prior to the termination of the offering of the Securities, not to
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 by law for the distribution of the
Securities by the Underwriters or by any dealers that participate in the
distribution thereof, the Company will comply with all requirements under
the Exchange Act relating to the timely filing with the Commission of its
reports pursuant to Section 13 of the Exchange Act and of its proxy
statements pursuant to Section 14 of the Exchange Act.
(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
Purchase, in the case of the Firm Securities, and on or prior to the Second
Time of Purchase, 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
6
7
furnished in writing to the Company by, or through the Representatives on
behalf of, any Underwriter expressly for use therein.
(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 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 nonassessable, and the issuance of such Securities
will not be subject to any preemptive or similar rights.
7
8
(h) The capital stock of the Company conforms in all material respects
to the description thereof in the Prospectus.
(i) Except for the outstanding shares of preferred stock of Consumers
Power Company, all of the outstanding capital stock of each of Consumers
Power Company, CMS Enterprises Company, CMS 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, CMS 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.
(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 its Subsidiaries, taken as a whole, or of the Consumers Gas
Group 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,
8
9
from that set forth in the Registration Statement (other than changes
referred to in or contemplated by the Registration Statement or the Basic
Prospectus).
(o) Except as set forth in the Basic Prospectus, no event or condition
exists that constitutes, or with the giving of notice or lapse of time or
both would constitute, a default or any breach or failure to perform by the
Company 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 as of its issue date (if used prior to the date of
the Basic Prospectus), the Basic Prospectus (if used prior to the date of
the Prospectus), the Prospectus, or, if the Prospectus shall be amended or
supplemented, in the Prospectus as so amended or supplemented (if such
Prospectus or such Prospectus as amended or supplemented is used after the
period of time referred to in Section 5(e) hereof, it shall contain or be
used with such amendments or supplements as the Company deems necessary to
comply with Section 10(a) of the Act), or arise out of or are based upon
any omission or 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 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
9
10
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 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
10
11
fees and expenses shall be reimbursed by payment to the Indemnified Persons
of such reasonable fees and expenses of counsel promptly after payment
thereof by the Indemnified Persons.
In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the
Representatives and the Company agree that the Indemnifying Person's obligations
to pay such fees and expenses shall be conditioned upon the following:
(1) in case separate counsel is proposed to be retained by the
Indemnified Persons pursuant to clause (ii) of the preceding paragraph, the
Indemnified Persons shall in good faith fully consult with the Indemnifying
Person in advance as to the selection of such counsel; 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 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
11
12
take account of the equitable considerations referred to above in this Section
9. The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental proceedings) in respect thereof) referred to above in
this Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Person in connection with investigating or
defending any such action, suits or proceedings (including governmental
proceedings) or claim, provided that the provisions of Section 8 have been
complied with (in all material respects) in respect of any separate counsel for
such Indemnified Person. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount greater than the excess
of (i) the total price at which the Securities underwritten by it and
distributed to the public were offered to the public over (ii) the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 9 to contribute are several in proportion to their respective
underwriting obligations and not joint.
The agreement with respect to contribution contained in Section 9 hereof
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any Underwriter, and shall survive delivery of and
payment for the Securities hereunder and any termination of this Agreement.
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 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).
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
12
13
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 by the
Commission or the New York Stock Exchange, or there shall have been established
by the Commission or the New York Stock Exchange or by any federal or state
agency or by the decision of any court any general limitation on prices for such
trading or any general restrictions on the distribution of securities, (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 material adverse
disruption 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.
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
13
14
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.
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
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
A.G. Edwards & Sons, Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First of Michigan Corporation
As Representatives
By: Morgan Stanley & Co. Incorporated
By: ___________________________________
14
15
SCHEDULE I
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
A.G. Edwards & Sons, Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First of Michigan Corporation
c/o Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Attention: Office of General Counsel
Telecopy: (212) 703-4305
16
SCHEDULE II
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
- ----------------------------------------------------------------------- ---------------------
Morgan Stanley & Co. Incorporated......................................
---------------------
Donaldson, Lufkin & Jenrette Securities Corporation....................
---------------------
A.G. Edwards & Sons, Inc...............................................
---------------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated.....................
---------------------
First of Michigan Corporation..........................................
---------------------
Total........................................................
=====================
17
EXHIBIT A
[Form of opinion of Denise M. Sturdy, Esq.]
, 1995
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
A.G. Edwards & Sons, Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First of Michigan Corporation
as Representatives of the Underwriters
referred to below
c/o Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Re: CMS Energy Corporation
7,000,000 Shares of Class G Common Stock (no par value)
Ladies and Gentlemen:
I address this opinion to you individually and as Representatives of the
Underwriters (the "Underwriters"), named in Schedule II to the Underwriting
Agreement dated , 1995 (the "Underwriting Agreement"), between
you, as such Representatives, and CMS Energy Corporation, a Michigan corporation
(the "Company"), with respect to the issuance and sale of up to 7,000,000 shares
(the "Securities") of the Company's Class G Common Stock, (no par value) (the
"Securities"). Capitalized terms not defined herein have the meanings specified
in the Underwriting Agreement.
In rendering the opinions expressed below, I or attorneys acting under my
supervision have examined originals, or copies of originals certified to my
satisfaction, of such agreements, documents, certificates and other statements
of governmental officials and corporate officers and such other papers and
evidence as I or we have deemed relevant and necessary as a basis for such
opinions. We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons, and the conformity with the original documents of any copies thereof
submitted to us for our examination. We have further assumed, without
investigation, that each document submitted to us for review and relied upon for
this opinion is accurate and complete as of the date given to the date hereof.
We have also relied upon the representations and warranties as to factual
matters contained in and made pursuant to the Underwriting Agreement.
Whenever the opinion herein with respect to the existence or absence of
facts is indicated to be based on my knowledge or current conscious awareness,
it is intended to signify that during the course of my representation of the
Company or that of the attorneys acting under my direct supervision who have had
an active involvement in the transactions contemplated by the Underwriting
Agreement, no information has come to our attention which would give us actual
knowledge of the existence or absence of such facts contrary to such opinion or
statement.
18
Pursuant to the requirements of Section 3(b)(1) of the Underwriting
Agreement, this will advise you that in the opinion of the undersigned:
1. The Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Michigan.
2. Consumers Power Company is a duly organized and validly existing
corporation in good standing under the laws of the State of Michigan.
3. The Company's Restated Articles of Incorporation establishing the
Class G Common Stock, no par value, as a new class of the Company's common
stock, have been duly filed in the Office of the Michigan Department of
Commerce, all necessary corporate and shareholder actions in connection
therewith have been duly taken, and said Restated Articles of Incorporation
are valid and in full force and effect in accordance with their terms on
the date hereof.
4. The Securities have been duly authorized by all necessary corporate
action on the part of the Company and validly issued and are fully paid and
non-assessable, and the issuance of the Securities will not be subject to
any preemptive or similar rights.
5. 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, and the capital stock of the Company
conforms in all material respects to the description thereof in the
Prospectus.
6. 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 other order of
any Michigan governmental regulatory body is required with respect to the
issuance and sale of the Securities as contemplated in the Underwriting
Agreement (other than in connection with or in compliance with the
provisions of the Michigan securities or Blue Sky laws, as to which I
express no opinion).
7. I do not know of any legal or governmental proceedings required to
be described in the Prospectus that are not described as required, nor of
any contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
8. The statements made in the Prospectus under the caption
"Description of Capital Stock" accurately summarize the provisions of the
Company's Articles of Incorporation, as amended, and the Securities conform
as to legal matters in all material respects to the description thereof and
to the statements in regard thereto contained in the Registration Statement
and the Prospectus.
9. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
The opinions expressed herein are limited to the laws of the State of
Michigan.
I consent to the reliance on this opinion by Sidley & Austin and Reid &
Priest LLP in their opinions to you of even date herewith pursuant to the
Underwriting Agreement. Subject to the foregoing, this opinion is being
delivered solely for the benefit of the Underwriters and it may not be quoted,
filed with any governmental authority or other regulatory agency or otherwise
circulated or utilized for any other purpose without my prior written consent.
Very truly yours,
19
EXHIBIT B
[Form of Opinion of Sidley & Austin]
, 1995
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
A.G. Edwards & Sons, Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First of Michigan Corporation
as Representatives of the Underwriters
referred to below
c/o Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Re: CMS Energy Corporation
7,000,000 Shares of Class G Common Stock (no par value)
Ladies and Gentlemen:
We address this opinion to you individually and as Representatives of the
Underwriters (the "Underwriters") named in Schedule II to the Underwriting
Agreement dated , 1995 (the "Underwriting Agreement") between
you, as such Representatives, and CMS Energy Corporation, a Michigan corporation
(the "Company"), with respect to the issuance and sale of up to 7,000,000 shares
of the Company's Class G Common Stock, no par value (the "Securities").
Capitalized terms not defined herein have the meanings specified in the
Underwriting Agreement.
In rendering the opinions expressed below, we have examined originals, or
copies of originals certified to our satisfaction, of such agreements,
documents, certificates and other statements of governmental officials and
corporate officers, including, without limitation, a certificate of the transfer
agent and registrar as to the execution of the Securities and the cross-receipt
with regard to the delivery thereof and the payment therefor, and such other
papers and evidence as we have deemed relevant and necessary as a basis for such
opinions. We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons and the conformity with the original documents of any copies thereof
submitted to us for our examination. We have also relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Underwriting Agreement.
Pursuant to the requirements of Section 3(b)(1) of the Underwriting
Agreement, this will advise you that in the opinion of the undersigned, as
counsel for the Company:
1. The Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Michigan.
2. Consumers Power Company is a duly organized and validly existing
corporation in good standing under the laws of the State of Michigan.
20
3. The Company's Restated Articles of Incorporation, establishing the
Class G Common Stock, no par value, as a new class of the Company's common
stock, have been duly filed in the Office of the Michigan Department of
Commerce, all necessary corporate and shareholder actions in connection
therewith have been duly taken, and said Restated Articles of Incorporation
are valid and in full force and effect in accordance with their terms on
the date hereof.
4. The Securities have been duly authorized by all necessary corporate
action on the part of the Company and are validly issued, fully paid and
non-assessable, and the issuance of the Securities will not be subject to
any preemptive or similar rights.
5. 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, and the capital stock of the Company
conforms in all material respects to the description thereof in the
Prospectus.
6. 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, except for the order of the Commission which is
required under the Act and has been obtained, no approval, authorization,
consent or other 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 we have not been asked to express
an opinion).
7. We do not know of any legal or governmental proceedings required to
be described in the Prospectus that are not described as required, nor of
any contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
8. The statements made in the Prospectus under the caption
"Description of Capital Stock" accurately summarize the provisions of the
Company's Articles of Incorporation, as amended, and the Securities conform
as to legal matters in all material respects to the description thereof and
to the statements in regard thereto contained in the Registration Statement
and the Prospectus.
9. The Registration Statement has become effective under the Act and,
to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the Act.
10. The Registration Statement, as of its effective date, and the
Prospectus, as of the date thereof (except in each case for (i) the
operating statistics, financial statements and schedules contained or
incorporated by reference therein (including the notes thereto and
auditors' reports thereon), (ii) the other financial or statistical
information contained or incorporated by reference therein and (iii) the
exhibits thereto, as to all of which we express no opinion), complied as to
form in all material respects with the requirements of Form S-3 under the
Act and the applicable rules and regulations of the Commission thereunder,
and each document incorporated therein as originally filed pursuant to the
Exchange Act (except for (i) the operating statistics, financial statements
and schedules contained or incorporated by reference therein (including the
notes thereto and the auditors' reports thereon), (ii) the other financial
or statistical information contained or incorporated by reference therein
and (iii) the exhibits thereto, as to which we 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.
11. Based upon the timely filing by the Company with the Commission of
an exemption statement pursuant to Rule 2 under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act") which, to the best of our
knowledge is not the subject of any notification provided for in Rule 6
under the 1935 Act, the Company is exempt from the provisions of the 1935
Act except for Section 9(a)(2) thereof relating to the acquisition of
securities of other public utility companies or public utility holding
companies.
21
12. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
We have participated in discussions with certain officers and other
representatives of the Company, representatives of the independent public
accountants of the Company, your representatives and counsel for the
Underwriters, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed. Although we are not passing upon
and do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus
(except to the extent stated in paragraph 8 above), we advise you that, on the
basis of the foregoing (relying as to materiality to a large extent upon
statements and other representations of officers and other representatives of
the Company), no facts have come to our attention that lead us to believe that
the Registration Statement (except for the operating statistics, financial
statements and schedules and other financial and statistical data included or
incorporated by reference therein, as to which we do not comment) on its
effective 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, or that the Prospectus (except for the
operating statistics, financial statements and schedules and other financial and
statistical data contained or incorporated by reference therein, as to which we
do not comment) as of its date contained, or as of the date hereof contains, any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
The opinions expressed herein are limited to the laws of the States of New
York and Michigan and the Federal laws of the United States of America. Insofar
as the foregoing opinions involve the laws of the State of Michigan, we have
relied exclusively, with your consent, upon the opinion of even date of Denise
M. Sturdy, Esq., Assistant General Counsel of the Company, addressed to you
pursuant to Section 3(b)(1) of the Underwriting Agreement. We believe that you
and we are justified in relying on Ms. Sturdy's opinion for such purposes.
Any opinion or statement herein which is expressed to be "to our knowledge"
or is otherwise qualified by words of like import means that the attorneys in
this Firm who have had an active involvement in the transaction contemplated by
the Underwriting Agreement have no current conscious awareness of any facts or
information contrary to such opinion or statement.
We consent to the reliance on paragraph 11 of this opinion by Reid & Priest
LLP, counsel for the Underwriters, in their opinion to you of even date herewith
pursuant to the Underwriting Agreement. Subject to the foregoing, this opinion
is being delivered solely for the benefit of the Underwriters. Accordingly, it
may not be quoted, filed with any governmental authority or other regulatory
agency or otherwise circulated or utilized for any other purpose without our
prior written consent.
Very truly yours,
22
EXHIBIT C
[Form of Opinion of Reid & Priest LLP]
, 1995
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette
Securities Corporation
A.G. Edwards & Sons, Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First of Michigan Corporation
as Representatives of the Underwriters
named in Schedule II to the Underwriting Agreement
referred to below
c/o Morgan Stanley & Co. Incorporated
1251 Avenue of the Americas
New York, New York 10020
Re: CMS Energy Corporation
7,000,000 Shares of Class G Common Stock (no par value)
Ladies and Gentlemen:
We have acted as your counsel in connection with the purchase by you of
7,000,000 Shares of Class G Common Stock (no par value) (the "Securities") of
CMS Energy Corporation (the "Company"), pursuant to the Underwriting Agreement
dated , 1995 between the Company and you (the "Underwriting
Agreement").
We have examined the Registration Statement, as amended, on Form S-3 (File
Nos. 33-57719 and 33-57719-01) filed by the Company under the Securities Act of
1933, as amended (the "Act"), as it became effective under the Act; the
prospectus of the Company dated , 1995 (the "Prospectus"), filed
pursuant to Rule 424 of the rules and regulations of the Securities and Exchange
Commission (the "Commission") under the Act, which pursuant to Form S-3
incorporates by reference (i) the Annual Report of the Company on Form 10-K for
the fiscal year ended December 31, 1994, (ii) the Quarterly Report of the
Company on Form 10-Q for the quarter ended March 31, 1995 and (iii) the Current
Reports of the Company on Form 8-K dated January 10, 1995, February 2, 1995 [and
, 1995] (the "Exchange Act Documents"), filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and the Company's
Restated Articles of Incorporation as filed with the Department of Commerce of
the State of Michigan on June 6, 1995 (the "Articles"). In addition, we have
examined, and have relied as to matters of fact upon, the documents delivered to
you by the Company at the closing, including, without limitation, a certificate
of the transfer agent and registrar as to the execution of the Securities, and
the cross-receipt with regard to the delivery thereof and the payment therefor
and we have made such other and further investigations as we deemed necessary to
enable us to express the opinions hereinafter set forth. With respect to such
documents, we have assumed the genuineness of signatures on documents, the legal
capacity of all persons, the authenticity of documents submitted as originals
and the conformity to originals of documents
23
submitted as copies thereof. We have not examined the certificates for the
Securities except a specimen thereof.
We are of the opinion that:
1. The Company is a duly organized and validly existing corporation
under the laws of the State of Michigan.
2. Consumers Power Company is a duly organized and validly existing
corporation under the laws of the State of Michigan.
3. The Securities have been duly authorized by all necessary corporate
action on the part of the Company and validly issued and are fully paid and
non-assessable.
4. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
5. The Registration Statement, as of its effective date, and the
Prospectus, as of the date thereof (except in each case for (i) the
operating statistics, financial statements and schedules contained or
incorporated by reference therein (including the notes thereto and the
auditors' reports thereon), (ii) the other financial and statistical
information contained or incorporated by reference therein and (iii) the
exhibits thereto, (as to which we do not express an opinion), complied, or
were deemed to have complied, as to form in all material respects with the
requirements of Form S-3 under the Act and to the applicable rules and
regulations of the Commission thereunder.
6. The statements made in the Prospectus under the caption
"Description of Capital Stock" accurately summarize in all material
respects the provisions of the Articles, and the Securities conform as to
legal matters in all material respects to the description thereof contained
therein and to the statements in regard thereto contained in the
Registration Statement and the Prospectus.
We have participated in discussions with certain officers and other
representatives of the Company, counsel for the Company, representatives of the
independent certified public accountants for the Company and representatives of
the Underwriters, at which the contents of the Registration Statement and the
Prospectus and related matters were discussed. Although we are not passing upon
and do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus
(except to the extent set forth in paragraph 6 above), we advise you that, on
the basis of the foregoing (relying as to materiality to a large extent upon
statements and other representations of officers and other representatives of
the Company), no facts have come to our attention which lead us to believe that
the Registration Statement (except for the operating statistics, financial
statements and schedules and other financial or statistical data included or
incorporated by reference therein, as to which we do not comment) contained, on
its effective date, 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, or that the Prospectus (except for the
operating statistics, financial statements and schedules and other financial or
statistical data included or incorporated by reference therein, as to which we
do not comment), as of its date contained, or as of the date hereof contains,
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
We are members of the Bar of the State of New York and we do not express
any opinion herein concerning any law other than the federal law of the United
States and the laws of the States of New York and Michigan. Insofar as the
opinions expressed herein relate to or are dependent upon matters governed by
the laws of the State of Michigan or the exemption of the Company under the
Public Utility Holding Company Act of 1935, we have relied upon the opinions,
dated the date hereof, rendered to you by Denise M. Sturdy, Esq. and Sidley &
Austin, respectively, which opinions are in form satisfactory to us.
24
This opinion is rendered to you in connection with the above-described
transaction. This opinion may not be relied upon by you for any other purpose,
or relied upon or furnished to any other person, firm or corporation without our
prior written consent.
Very truly yours,
REID & PRIEST LLP