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Exhibit (10)(a)
$ 480,000,000
CMS ENERGY CORPORATION
7.5% Senior Notes due 2009
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Underwriting Agreement
January 20, 1999
To the Representative named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Dear Sirs:
CMS Energy Corporation, a Michigan corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several Underwriters (as defined in Section 14 hereof) certain debt
securities, to be in the aggregate principal amount, to mature in the year and
to have the interest rate specified in Schedule III hereto (the "Securities"),
and hereby confirms its agreement with the Underwriters as set forth herein. The
Securities shall be issued pursuant to the Indenture dated as of September 15,
1992, between the Company and NBD Bank, as Trustee (the "Trustee"), as amended
and supplemented and to be supplemented by various supplemental indentures,
including the Seventh Supplemental Indenture dated as of the Time of Purchase
(as defined herein) relating to the Securities (such Indenture as so amended and
supplemented and to be supplemented, the "Indenture"). The Underwriters have
designated the Representative to execute this Agreement on their behalf and to
act for them in the manner provided in this Agreement.
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The Company has prepared and filed with the Securities and
Exchange Commis sion (the "Commission"), in accordance with the provisions of
the Securities Act of 1933, as amended (the "Act"), a registration statement on
Form S-3 (Registration No. 333-68933), including a prospectus relating to the
Securities and such registration statement has become effective under the Act.
The registration statement at the time such registration statement 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 Registra tion 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 by a prospectus supplement relating to 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," "amend ment" or "supplement" with respect
to the Registration Statement or the Prospectus shall be deemed to include only
amendments or supplements to the Registration Statement or Prospectus, as the
case may be, and documents incorporated by reference therein after the date of
this Agreement and prior to the termination of the offering of the Securities by
the Underwriters.
1. Purchase and Sale: Upon the basis of the representations and
warranties and on the terms and subject to the conditions herein set forth, the
Company agrees to sell to the respective Underwriters, severally and not
jointly, and the respective Underwriters, severally and not jointly, agree to
purchase from the Company, at the purchase price specified in Schedule III
hereto, the respective principal amounts of Securities set opposite their names
in Schedule II hereto.
The Company is advised by the Representative that the Underwriters
propose to make a public offering of their respective portions of the Securities
as soon as practicable, in their judgment, after this Agreement has become
effective.
2. Payment and Delivery: Payment for the Securities shall be made to
the Company or its order in Federal or other immediately available funds in New
York City (or such other
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place or places of payment as shall be agreed upon by the Company and the
Representative in writing), upon the delivery of the Securities at the offices
of Skadden, Arps, Slate, Meagher and Flom LLP ("Skadden, Arps"), at 919 Third
Avenue, New York, New York 10022 (or such other place or places of delivery as
shall be agreed upon by the Company and the Representative) to the
Representative for the respective accounts of the Underwriters against receipt
therefor signed by the Representative 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 January 25, 1999 (or on such later business day as shall be
agreed upon by the Company and the Representative in writing), unless postponed
in accordance with the provisions of Section 10 hereof. The day and time at
which payment and delivery for the Securities are to be made is herein called
the "Time of Purchase."
Delivery of the Securities shall be made in definitive, fully
registered form in authorized denominations registered in such names as the
Representative may request in writing to the Company not later than two full
business days prior to the Time of Purchase, or if no such request is received,
in the names of the respective Underwriters for the respective principal amounts
of Securities set forth opposite the name of each Underwriter in Schedule II, in
denominations selected by the Company.
The Company agrees to make the Securities available for inspection
by the Underwriters at the offices of Skadden, Arps, at least 24 hours prior to
the Time of Purchase, in definitive, fully registered form, and as requested
pursuant to the preceding paragraph.
3. Conditions of Underwriters' Obligations: The several obligations
of the Under writers 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 Skadden, Arps, counsel to the
Underwriters.
(b) That, at the Time of Purchase, the Representative shall be
furnished with the following opinions, dated the day of the Time
of Purchase:
(i) Opinion of Michael D. VanHemert, Esq., counsel to the
Company, sub stantially to the effect set forth in Exhibit A
to this Agreement; and
(ii) Opinion of Skadden, Arps, counsel to the Underwriters,
substantially to the effect set forth in Exhibit B to this
Agreement.
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(c) That on the date hereof and on the date of the Time of Purchase,
the Representative shall have received a letter from Arthur
Andersen LLP ("Arthur Andersen") in form and substance
satisfactory to the Representa tive, 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 incor porated 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
Representa tive 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 which, in the judgment of the Representative, after
reasonable inquiries on the part of the Representative, 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 Time of Purchase, no stop order suspending the
effec tiveness of the Registration Statement shall have been
issued under the Act by the Commission or proceedings therefor
initiated or threatened.
(f) That, at the Time of Purchase, the Company shall have delivered to
the Representative 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 finan cial condition of the
Company 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 Time
of Purchase by the terms hereof.
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(h) That any additional documents or agreements reasonably requested
by the Representative 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 by Standard
& Poor's Corpora tion, Moody's Investors Service, Inc. or Duff &
Phelps Credit Rating Co., and the Company shall not have been
placed on "credit watch" or "credit review" with negative
implications by any of such statistical rating organi zations if
any of such occurrences shall, in the reasonable judgment of the
Representative, after reasonable inquiries on the part of the
Representative, 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.
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 Commis sion to the extent necessary
to permit the continuance of sales of or deal ings in the
Securities in accordance with the provisions hereof and of the
Prospectus.
(b) To deliver to the Representative 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 Representative, for each of the
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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 Representative and confirm the advice in writing of: (i) the
effectiveness of any amendment to the Registration Statement, (ii)
any request made by the Commission for amendments to the
Registration Statement or Prospectus or for additional information
with respect thereto, (iii) the suspension of qualification of the
Securities for sale under Blue Sky or state securities laws, and
(iv) the entry of a stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat or any
proceedings for that purpose and, if such a stop order should be
entered by the Commis sion, 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
after the date of the Prospec tus 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 Representative 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 Pro spectus, to furnish to the Representative, 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 after the date of the Prospectus as the
Underwrit ers 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 supple ment
the Prospectus to comply with law, to forthwith prepare and file
with the Commission an appropriate amendment or supplement to the
Prospec tus and deliver to the Underwriters, without charge, such
number of copies thereof as may be reasonably requested.
(f) 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 Representative may
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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
require ments deemed by the Company to be unduly burdensome.
(g) 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 (f) of this Section 5) of
Skadden, Arps, counsel to the Underwriters, only in the events
provided in paragraph (h) 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 (h), the Company
shall not be responsible for any out-of-pocket expenses of the
Underwriters in connection with their services hereunder.
(h) If the Underwriters shall not take up and pay for the Securities
due to the failure of the Company to comply with any of the
conditions specified in Section 3 hereof, or, if this Agreement
shall be terminated in accordance with the provisions of Section
11 hereof prior to the Time of Purchase, to pay the reasonable
fees and disbursements of Skadden, Arps, counsel to the
Underwriters, and, if the Underwriters shall not take up and pay
for the 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.
(i) Prior to the termination of the offering of the Securities, to not
file any amendment to the Registration Statement or supplement to
the Prospectus (including the Basic Prospectus) unless the Company
has furnished the Representative 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
Representative, or any such amendment
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or supplement to which such counsel shall reasonably object on
legal grounds in writing, after consultation with the
Representative.
(j) To furnish the Representative 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.
(k) 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 Ex change 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.
(l) To make generally available to the Company's security holders, as
soon as practicable, an "earning statement" (which need not be
audited by inde pendent 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.
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
Representative and to the Representative 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) has 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
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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, the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act") and the published rules and
regulations of the Commission, none of the Registra tion 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 mislead ing, and the Prospectus, as of its
issue date and, as amended or supple mented, if applicable, as of
the Time of Purchase, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in 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 state ments or omissions made therein in reliance
upon and in conformity with information furnished in writing to
the Company by, or through the Repre sentative on behalf of, any
Underwriter expressly for use therein, or to 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 Trustee under the Indenture.
(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, con formed 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 docu ment, 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.
(c) The Company has been duly organized and is validly existing as a
corpora tion 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 contem plated hereby, and is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business as de
scribed 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.
(d) The Securities are in the form contemplated by the Indenture and
have been duly authorized by the Company. At the Time of Purchase,
the Securities will have been duly executed and delivered by the
Company and, when authenticated by the Trustee in the manner
provided for in the 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, insol vency,
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 Securi ties conform in all material
respects to the descriptions thereof in the Prospectus. 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 stand ing under the laws of the jurisdiction of its
incorporation, has all requisite authority to own or lease its
properties and conduct its business as de scribed 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.
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(e) This Agreement has been duly authorized, executed and delivered by
the Company, and the Company has full corporate power and
authority to enter into this Agreement.
(f) The Indenture has been duly authorized by the Company. At the Time
of Purchase, the Indenture will have been duly executed and
delivered by the Company and will constitute a valid and binding
obligation of the Com pany, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by bank ruptcy, 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 Indenture conforms in all material respects to the
description thereof in the Prospectus; and the Indenture conforms
to the requirements of the Trust Indenture Act.
(g) 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 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 limita tion, preemptive
rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock
or other equity interest in any of Consumers Energy Company and
CMS Enterprises Company or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance
of any such capital stock, any such convertible or exchangeable
securities or any such rights, war rants or options.
(h) The Company has all necessary consents, authorizations, approvals,
orders, certificates and permits of and from, and has made all
declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and
all courts and other tribunals, to own, lease, license and use its
properties and assets and to conduct its business in the manner
described in the Prospectus, except to the extent
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that the failure to obtain or file would not have a material
adverse effect on the Company.
(i) An appropriate order has been entered by the Federal Energy
Regulatory Commission under the Federal Power Act authorizing the
issuance and sale of the Securities, and such order is in full
force and effect. No other 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.
(j) None of the issuance and sale of the Securities, or the execution
or delivery by the Company of, or the performance by the Company
of its obligations under, this Agreement 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 appli
cable 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.
(k) Except as disclosed in the Basic Prospectus, there is no action,
suit, pro ceeding, inquiry or investigation (at law or in equity
or otherwise) pending or, to the knowledge of the Company,
threatened against the Company, 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, or materially adversely affect
the ability of the Company to perform its obligations hereunder or
the consum mation of the transactions contemplated by this
Agreement.
(l) There has not been any material and adverse change in the
business, properties or financial condition of the Company from
that set forth in the
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Registration Statement (other than changes referred to in or
contemplated by the Registration Statement or the Basic
Prospectus).
(m) 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 in any material respect under any
indenture, mortgage, loan agreement, lease or other material
agreement or instrument to which the Company is a party or by
which it or any of its 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 Represen tative 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 proceed ing (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
Basic Prospectus), the Basic Prospectus (if used prior to the date
of the Prospectus), the Prospec tus, or, if the Prospectus shall
be amended or supplemented, in the Pro spectus as so amended or
supplemented (if such Prospectus or such Prospectus as amended or
supplemented is used after the period of time
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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
prelimi nary 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 Representative on behalf
of, any Underwriter expressly for use therein or with any
statements in or omissions from that part of the Regis tration
Statement that shall constitute the Statement of Eligibility and
Qualification under the Trust Indenture Act of the 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 Securities to any person if a copy of the Pro spectus, 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
Prospec tus as supplemented or amended at such time.
The Company's indemnity agreement contained in this Section 8(a),
and the covenants, representations and warranties of the Company
contained in this Agreement, shall remain in full force and effect
regardless of any investigation made by or on behalf of any
person, and shall survive the delivery of and payment for the
Securities hereunder, and the indemnity agreement contained in
this Section 8 shall survive any termination of this Agreement.
The liabilities of the Company in this Section 8(a) are in
addition to any other liabilities of the Company under this
Agreement or otherwise.
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(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 Com pany 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 termina
tion 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 Indemni fying 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 Representative in
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the case of parties indemnified pursuant to Section 8(b) and by
the Company in the case of parties indem nified 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 Indem nified 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 (includ ing 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 partici pated
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 pro
ceedings 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 Representative 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
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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 Representative 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 Indemnify ing 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,
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then each Indemnifying Person shall contribute to such amount paid or payable by
such Indemnified Person in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of each Indemnifying Person,
if any, on the one hand and the Indemnified Person on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions, suits or proceedings (including governmental
investigations) in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the total underwriting discounts and commission received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus, bear to the aggregate public offering price of the Securities.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 9. The amount paid or payable by an Indemnified Person as a result
of the losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental proceedings) in respect thereof) referred to above in
this Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Person in connection with investigating or
defending any such action, suits or proceedings (including governmental
proceedings) or claim, provided that the provisions of Section 8 have been
complied with (in all material respects) in respect of any separate counsel for
such Indemnified Person. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount greater than the excess
of (i) the total price at which the Securities underwritten by it and
distributed to the public were offered to the public over (ii) the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepre sentation. 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.
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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
Time of Purchase, the Representative shall immediately notify the Company and
the Representative 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 Securities which the
defaulting Underwriter had agreed to purchase. If any non-defaulting Underwriter
or Underwriters shall determine to exercise such right, the Representative shall
give written notice to the Company of such determi nation 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 Representative 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 Agree ment may be
terminated by the Company, upon like notice given to the Representative within a
further period of 36 hours. If in such case the Company shall not elect to
terminate this Agree ment, it shall have the right, irrespective of such
default:
(a) to require such non-defaulting Underwriters to purchase and pay
for the respective principal amounts of Securities which they had
severally agreed to purchase hereunder, as herein above provided,
and, in addition, the principal amount of Securities 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 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 principal amount
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).
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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
Representative 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 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 Time of Purchase by the Representative, 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 Representative's
reasonable judgment, after having made due inquiry, the marketability of the
Securities.
If the Representative elect to terminate this Agreement, as
provided in this Section 11, the Representative 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 Underwrit ers 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.
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Notwithstanding the foregoing, the provisions of Sections 5(f),
5(h), 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 Representative,
to the Representative at the address or number, as appropriate, designated in
Schedule I hereto, and, if to the Company, to CMS Energy Corpora tion, Fairlane
Plaza South, Suite 1100, 330 Town Center Drive, Dearborn, Michigan 48126,
attention: Alan M. Wright, Senior Vice President and Chief Financial Officer.
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 (includ ing the Representative herein mentioned, if
so named), and the term "Representative," as used herein, shall be deemed to
mean the representative or Representative 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 "Representative," 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 "Representative," 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 accor dance 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: /s/ Alan M. Wright
-------------------------------------
Name: Alan M. Wright
Title: Senior Vice President and
Chief Financial Officer
Confirmed and accepted as
of the date first written above:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Gavin H. Wolfe
------------------------------------
Name: Gavin H. Wolfe
Title: Vice President
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Schedule I: Representative
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Attention: George Fan
Telecopy: (212) 892-2689
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Schedule II: Underwriters
Principal Amount
of Securities
Underwriters to be Purchased
------------ ---------------
Donaldson, Lufkin & Jenrette Securities Corporation............. $ 240,000,000
Chase Securities Inc............................................ $ 84,000,000
NationsBanc Montgomery Securities LLC........................... $ 84,000,000
Barclays Capital Inc............................................ $ 72,000,000
--------------
Total........................ $ 480,000,000
==============
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Schedule III
Information Regarding the Securities
1. Aggregate Principal Amount: $480,000,000
2. Maturity Date: January 15, 2009
3. Interest Rate: 7.5%
4. Price to be paid to the Company: 1.625% of the principal amount
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