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$150,000,000
CMS ENERGY CORPORATION
Pass-Through Certificates due , 2005
_____________________________________________
Underwriting Agreement
, 1998
To the Representatives named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
CMS Energy Corporation, a Michigan corporation (the "Company"), proposes
that the CMS Energy X-TRAS Pass-Through Trust I, a Delaware statutory business
trust (the "Pass-Through Trust"), subject to the terms and conditions stated
herein, issue and sell to the several Underwriters (as defined in Section 14
hereof) its pass-through certificates to be in the aggregate principal amount
and to mature in the year specified in Schedule III hereto (the "Certificates"),
and hereby confirms its agreement with the Underwriters as set forth herein.
The Certificates shall be issued pursuant to the Trust Agreement between
the Company and Willmington Trust Company (the "Trustee"), dated as of November
21, 1997 to be amended and restated as of ,
1998 (the "Trust Agreement"), relating to the creation and administration of
the Pass-Through Trust. The sole assets of the Pass-Through Trust from which
holders of the Certificates will receive any distributions on the Certificates
will be $150,000,000 in aggregate principal amount of the Company's __%
Extendible Tenor Rate-Adjusted Securities due , 2005 ("X-TRAS(SM)"
or the "Notes"). In addition, the Pass-Through Trust will be party to an ISDA
Master Agreement (the "ISDA Master Agreement") with Morgan Stanley Capital
Services Inc. ("MSCS"), a wholly owned subsidiary of Morgan Stanley, Dean
Witter, Discover & Co. The proceeds from the sale of the Certificates and the
amount payable by MSCS pursuant to the ISDA Master Agreement will be used by
the Pass-Through Trust to purchase the Notes at par value from the Company. The
Notes will be issued under an Indenture (the "Indenture") dated as of September
15, 1992, as supplemented by a Sixth Supplemental Indenture (the "Supplemental
Indenture") dated as of , 1998, between the Company and NBD Bank, as
Trustee (the "Indenture Trustee"). The Indenture and the Supplemental
Indenture are hereinafter referred to collectively as the "Senior Debt
Indenture." 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.
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Capitalized terms used but not defined herein have the meanings assigned to
them in the Trust Agreement or the Senior Debt Indenture.
The Company and the Pass-Through Trust have 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 "Securities Act"), a
combined registration statement on Form S-3 and S-1 (Registration Nos.
333-41395 and 333-41395-01) relating to the Certificates and the Notes. The
registration statement as amended at the time it became effective, including
the information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is
hereinafter referred to as the "Registration Statement"; the prospectus in the
form first used to confirm sales of Certificates (including the documents
incorporated by reference therein) is hereinafter referred to as the
"Prospectus." If the Company and the Pass-Through Trust have filed an
abbreviated registration statement to register additional Certificates and
Notes pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.
The Prospectus and the Registration Statement incorporate certain reports of
the Company filed pursuant to Section 13 or 14 or 15 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). 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 Certificates 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 cause the Pass-Through Trust to sell to the respective Underwriters,
severally and not jointly, and the respective Underwriters, severally and not
jointly, agree to purchase from the Pass-Through Trust, at the purchase price
specified in Schedule III hereto, the respective principal amounts of
Certificates set opposite their names in Schedule II hereto.
The Company is advised by the Representatives that the Underwriters propose
to make a public offering of their respective portions of the Certificates as
soon as practicable, in their judgment, after this Agreement has become
effective. The Company is further advised by the Representatives that the
Certificates are to be offered to the public initially at ____% of the
principal amount of the Certificates and to certain dealers selected by you at
a price that represents a concession not in excess of ____% of the principal
amount of the Certificates, and that any Underwriter may allow, and such
dealers may reallow, a concession not in excess of ____% of the principal
amount of the Certificates to certain other dealers.
As compensation to the Underwriters for their commitments and obligations
hereunder in respect of the Certificates, including their undertakings
to distribute certificates, the Company will pay to the Underwriters
an amount equal to that percentage of the aggregate principal amount
of the Certificates purchased by the Underwriters as set forth in Schedule
III. Such payment will be made simultaneously with the payment by you
to the Trustee of the purchase price of the Certificates as specified in
Sections 1 and 2 hereof. Payment of such compensation shall be made by wire
transfer of Federal or other immediately available funds.
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 issue debt securities substantially similar to the Notes for a
period from the date of the execution of this Agreement to the day of the Time
of Purchase (as hereinafter defined).
2. Payment and Delivery: The Company will cause the Pass-Through Trust to
issue and deliver against payment of the purchase price the Certificates to be
purchased by each Underwriter hereunder and to be offered and sold by the
Underwriters in the form of one or more permanent global securities in
definitive form without interest coupons (the "Global
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Certificates") deposited with the Trustee as custodian for The Depository Trust
Company ("DTC") and registered in the name of Cede & Co., as nominee for DTC.
Each Global Certificate shall include the legend regarding restrictions on
transfer set forth under "Transfer Restrictions" in the Prospectus. Interests
in any permanent Global Certificates will be held only in book-entry form
through DTC, except in the limited circumstances described in the Prospectus.
The Company agrees to make the Certificates available for inspection by the
Underwriters at the offices of Morgan Stanley & Co. Incorporated at least 24
hours prior to the Time of Purchase (as hereinafter defined), in definitive,
fully registered form.
Payment for the Certificates issued by the Pass-Through Trust shall be made
to Pass-Through Trust in Federal or other immediately available funds in New
York City (or such other place or places of payment as shall be agreed upon by
the Company, the Pass Through Trust and the Representatives in writing), upon
the delivery to the Trustee as custodian for DTC of the Global Certificate
representing all of the Certificates (or such other place or places of delivery
as shall be agreed upon by the Company, the Pass-Through Trust and the
Representatives). Such payment and delivery shall be made at 10:00 A.M., New
York time on , 1998 (or on such later business day as shall be
agreed upon by the Company, the Pass-Through Trust 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 Certificates
are to be made is herein called the "Time of Purchase."
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 Certificates shall be reasonably satisfactory in form and
substance to Shearman & Sterling and Reid & Priest LLP, both of New York,
New York, counsel to the Underwriters.
(b) That, at the Time of Purchase, the Representatives shall be furnished
with the following opinions, dated the day of the Time of Purchase:
(1) Opinion of Michael D. VanHemert, Esq., counsel to the Company,
substantially to the effect set forth in Exhibit A to this Agreement;
(2) Opinion of Shearman & Sterling, of New York, New York, counsel to the
Underwriters, substantially to the effect set forth in Exhibit B to this
Agreement;
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(3) 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; and
(4) Opinion of Richards, Layton & Finger, of Wilmington, Delaware,
counsel to the Pass-Through Trust and Wilmington Trust Company,
substantially to the effect set forth in Exhibit D to this Agreement.
(c) That on the date of the Time of Purchase the Representatives shall
have received a letter from Arthur Andersen LLP in form and substance
satisfactory to the Representatives, dated as of such date, (i) confirming
that they are independent public accountants within the meaning of the
Securities 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 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 Time
of Purchase, no material and adverse change shall have occurred in the
business, properties or financial condition of the Company and its
subsidiaries (as defined in Rule 405 under the Securities Act, and hereafter
called the "Subsidiaries"), taken as a whole, which, in the judgment of the
Representatives, after reasonable inquiries on the part of the
Representatives, impairs the marketability of the Certificates (other than
changes referred to in or contemplated by the Registration Statement or the
Prospectus).
(e) That, prior to the Time of Purchase, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
Securities Act by the Commission or proceedings therefor initiated or
threatened.
(f) That, at the Time of Purchase, the Company shall have delivered to the
Representatives a certificate of an executive officer of the Company to the
effect that, to the best of his knowledge, information and belief there shall
have been no material adverse change in the business, properties or financial
condition of the Company and its Subsidiaries, taken as a whole, from that
set forth in the Registration Statement or the Prospectus (other than changes
referred to in or contemplated by the Registration Statement or the
Prospectus).
(g) That the Company shall have performed such of its obligations under
this Agreement as are to be performed at or before the Time of Purchase by
the terms hereof.
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(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 Time of Purchase there has been no downgrading of the investment
ratings of any of the Company's securities or of Consumers Energy Company's
first mortgage bonds by Standard & Poor's Corporation, Moody's Investors
Service, Inc. or Duff & Phelps Credit Rating Co., and neither the Company nor
Consumers Energy Company shall have been placed on "credit watch" or "credit
review" with negative implications by any of such statistical rating
organizations if any of such occurrences shall, in the reasonable judgment of
the Representatives, after reasonable inquiries on the part of the
Representatives, impair the marketability of the Certificates.
(j) That any filing of the Prospectus and any supplements thereto required
pursuant to Rule 424 under the Securities Act have been made in compliance
with Rule 424 in the time periods provided by Rule 424.
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 Securities
Act, the Company will comply so far as it is able with all requirements
imposed upon it by the Securities Act and the rules and regulations of the
Commission to the extent necessary to permit the continuance of sales of or
dealings in the Certificates 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 and any amendments thereto (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 any amendments thereto, and to furnish to the Representatives, for each
of the Underwriters, conformed copies of the Registration Statement and any
amendments thereto, without exhibits.
(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
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amendments to the Registration Statement or Prospectus or for additional
information with respect thereto, (iii) the suspension of qualification of
the Certificates 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 Securities 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 Certificates, 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 Securities Act and Rule
158 under the Securities Act.
(g) To use its best efforts to qualify the Certificates 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
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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, including but not limited to the
fees and disbursements of the Trustee and the Indenture Trustee (other than
transfer taxes on sales by the respective Underwriters), in connection with
the issuance and delivery of the Certificates, 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 Shearman & Sterling and
Reid & Priest LLP, both 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 5(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 Certificates 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 Time of Purchase, to
pay the reasonable fees and disbursements of Shearman & Sterling and Reid &
Priest LLP, counsel to the Underwriters, and, if the Underwriters shall not
take up and pay for the Certificates 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 Certificates, to not
file any amendment to the Registration Statement or supplement to the
Prospectus (including the 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 Certificates.
(l) So long as may be required by law for the distribution of the
Certificates 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
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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.
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 Securities
Act; 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.
(b) (i) Each part of the Registration Statement, when such part became
effective, did not contain and each such part, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the Prospectus
does not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this Section 6(b) do not apply (A) to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein or (B) to that part
of the Registration Statement that constitutes the Statement of Eligibility
and Qualification (Form T-1) under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), of the Indenture Trustee.
(c) The documents incorporated by reference in the Registration Statement,
any preliminary 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
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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.
(d) 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 Securities 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.
(e) The Certificates are in the form contemplated by the Trust Agreement
and the Certificates and the Trust Agreement have been duly authorized by the
Trustee. At the Time of Purchase, the Certificates and the Trust Agreement
will have been duly executed and delivered by the Trustee and, when the
Certificates are authenticated by the Trustee in the manner provided for in
the Trust Agreement and delivered against payment therefor as provided in
this Agreement, the Certificates and the Trust Agreement will constitute
valid and binding obligations of the Trustee, enforceable against the Trustee
in accordance with their terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity). The Certificates conform in all material respects to the
descriptions thereof in the Prospectus.
(f) Each of the Trust Agreement and the Senior Debt Indenture has been
duly authorized by the Company. At the Time of Purchase, each of the Trust
Agreement and the Senior Debt Indenture will have been duly executed and
delivered by the Company and will constitute a valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof
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may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity); each of the Trust Agreement and the Senior Debt Indenture
conforms in all material respects to the description thereof in the
Prospectus; and the Senior Debt Indenture has been duly qualified under the
Trust Indenture Act.
(g) The Notes are in the form contemplated by the Senior Debt Indenture
and have been duly authorized by the Company. At the Time of Purchase, the
Notes will have been duly executed and delivered by the Company and, when
authenticated by the Trustee in the manner provided for in the Senior Debt
Indenture and delivered against payment therefor as provided in this
Agreement, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or by general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity). The Notes
conform in all material respects to the descriptions thereof in the
Prospectus.
(h) This Agreement has been duly authorized, executed and delivered by the
Company.
(i) The ISDA Master Agreement has been duly authorized, executed and
delivered by the Trust, and assuming due authorization, execution and
delivery of the Agreement by MSCS, the ISDA Master Agreement constitutes the
valid and legally binding obligation of the Pass-Through Trust, enforceable
against the Trust in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
(j) Except for the outstanding shares of preferred stock of Consumers
Energy Company, the 8.36% Trust Originated Preferred Securities of
Consumers Power Company Financing I and the 8.20% Trust Originated Preferred
Securities of Consumers Energy Company Financing II, all of the outstanding
capital stock of each of Consumers Energy Company and CMS Enterprises Company
is owned directly or indirectly by the Company, free and clear of any
security interest, claim, lien, or other encumbrance 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 Energy Company and CMS Enterprises
Company or any contract, commitment, agreement, understanding or arrangement
of any kind relating to the issuance of any such
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capital stock, any such convertible or exchangeable securities or any such
rights, warrants or options.
(k) 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.
(l) 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, the Senior Debt Indenture, the
Certificates or the Notes, except such as have been obtained or may be
required under state securities or Blue Sky laws, under the Securities Act or
as referred to in the Prospectus.
(m) None of the issuance and sale of the Notes, or the execution or
delivery by the Company of, or the performance by the Company of its
obligations under, this Agreement, the Trust Agreement or the Senior Debt
Indenture 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.
(n) Except as disclosed in the Prospectus, there is no action, suit,
proceeding, inquiry or investigation (at law or in equity or otherwise)
pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary by any governmental
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authority that (i) questions the validity, enforceability or performance of
the Notes, the Senior Debt Indenture, the Trust Agreement or this Agreement
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 materially adversely affect the ability of the Company
to perform its obligations hereunder or the consummation of the transactions
contemplated by this Agreement.
(o) There has not been any material and adverse change in the business,
properties or financial condition of the Company and its Subsidiaries, taken
as a whole, from that set forth in the Registration Statement (other than
changes referred to in or contemplated by the Registration Statement or the
Prospectus).
(p) 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.
(q) Neither the Pass-Through Trust nor the Company is an "investment
company" or an entity "controlled" by an "investment company," as such terms
are defined in the Investment Company Act of 1940, as amended.
7. Representation and Warranties of Underwriters: Each Underwriter,
severally and not jointly, warrants and represents that:
(a) The information, if any, furnished in writing to the Company through
Morgan Stanley & Co. Incorporated 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
furnished 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.
(b) It is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB").
(c) It will offer such Certificates only to, persons that it reasonably
believes to be (x) QIBs or (y) other institutional accredited investors (as
defined in Rule 501(a) (1), (2), (3) or (7) under the Securities Act).
(d) It will only sell Certificates in minimum denominations of $250,000.
8. Indemnification:
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(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 Securities 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 Securities 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(c) hereof,
insofar as such losses, claims, damages, liabilities or actions, suits or
proceedings (including governmental investigations) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus as of its
issue date (if used prior to the date of the 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 Securities 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, Prospectus or Registration Statement, 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 or with
any statements in or omissions from that part of the Registration Statement
that shall constitute the Statement of Eligibility and Qualification under the
Trust Indenture Act of the Indenture Trustee under the Indenture, 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
Certificates 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 Certificates 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 Certificates hereunder, and the indemnity
agreement contained in this Section 8 shall survive any termination of this
Agreement.
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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
Securities 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 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 Certificates 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. Subject to the
immediately succeeding sentence, the Indemnifying Person shall assume the
defense of any such litigation or proceeding, including the employment of
counsel and the payment of all expenses, with such counsel being designated,
subject to the immediately succeeding sentence, in writing by the
Representatives in the case of parties indemnified pursuant to Section 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
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of counsel to such Indemnified Person, representation of both parties by the
same counsel would be inappropriate due to actual or likely conflicts of
interest between them, in either of which cases the reasonable fees and
expenses of counsel (including disbursements) for such Indemnified Person shall
be reimbursed by the Indemnifying Person to the Indemnified Person. If there
is a conflict as described in clause (ii) above, and the Indemnified Persons
have participated in the litigation or proceeding utilizing separate counsel
whose fees and expenses have been reimbursed by the Indemnifying Person and the
Indemnified Persons, or any of them, are found to be solely liable, such
Indemnified Persons shall repay to the Indemnifying Person such fees and
expenses of such separate counsel as the Indemnifying Person shall have
reimbursed. It is understood that the Indemnifying Person shall not, in
connection with any litigation or proceeding or related litigation or
proceedings in the same jurisdiction as to which the Indemnified Persons are
entitled to such separate representation, be liable under this Agreement for
the reasonable fees and out-of-pocket expenses of more than one separate firm
(together with not more than one appropriate local counsel) for all such
Indemnified Persons. Subject to the next paragraph, all such fees and expenses
shall be reimbursed by payment to the Indemnified Persons of such reasonable
fees and expenses of counsel promptly after payment thereof by the Indemnified
Persons.
In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the
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;
(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.
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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 Certificates. 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 offering price of the Certificates. 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
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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 Certificates underwritten
by it and distributed to investors were offered to investors 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 Securities 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 Certificates 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 Certificates which it had agreed to purchase on the
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 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 principal amount of Certificates which the
defaulting Underwriter had agreed to purchase. If any non-defaulting
Underwriter or Underwriters shall determine to exercise such right, the
Representatives shall give written notice to the Company of such determination
within 36 hours after the Company shall have received notice of any such
default, and thereupon the Time of Purchase 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:
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(a) to require such non-defaulting Underwriters to
purchase and pay for the respective principal amounts of Certificates
which they had severally agreed to purchase hereunder, as hereinabove
provided, and, in addition, the principal amount of Certificates which
the defaulting Underwriter shall have so failed to purchase up to a
principal amount thereof equal to one-ninth (1/9) of the respective
principal amounts of Certificates 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 principal amount of
Certificates 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
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 9, 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 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,
(ii) trading of any securities of the 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 other calamity or crisis, the effect of which on the financial
markets of the United States is such as to impair, in the
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Representatives' reasonable judgment, after having made due inquiry, the
marketability of the Certificates.
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 Certificates 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 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
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any purchaser, as such purchaser, of any of the Certificates 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.
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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:___________________________________
Name:
Title:
Accepted: , 1998
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
Salomon Brothers Inc
As Representatives
By Morgan Stanley & Co. Incorporated
By:_________________________________
Name:
Title:
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SCHEDULE I
Morgan Stanley & Co. Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Goldman, Sachs & Co.
Salomon Brothers Inc
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036-8293
Attention: Syndicate Desk
Telecopy: (212) 761-4305
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SCHEDULE II
Underwriters
Principal Amount
of Certificates
to Be Purchased
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . . $
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . .
Goldman, Sachs & Co.. . . . . . . . . . . . . . . . . . . . . . . .
Salomon Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . $150,000,000
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SCHEDULE III
Information Regarding the Certificates
1. Aggregate Principal Amount: $150,000,000
2. Final Distribution Date: , 2005
3. Purchase Price: [____]% of the Aggregate
Principal Amount
4. Underwriting discounts and commissions: 0.____%