EXHIBIT 4.9
EXECUTION COPY
GRANTORS PLEDGE AND SECURITY AGREEMENT
FOR CMS ENERGY CORPORATION
THIS PLEDGE AND SECURITY AGREEMENT (the "Security Agreement"), dated as
of July 12, 2002, is made by CMS ENTERPRISES COMPANY, CMS GENERATION CO., CMS
GAS TRANSMISSION COMPANY, CMS CAPITAL, L.L.C., CMS ELECTRIC AND GAS COMPANY, CMS
OIL AND GAS COMPANY, CMS MARKETING, SERVICES AND TRADING COMPANY, CMS
INTERNATIONAL VENTURES, L.L.C., CMS GENERATION MICHIGAN POWER L.L.C., DEARBORN
INDUSTRIAL ENERGY, L.L.C., DEARBORN INDUSTRIAL GENERATION, L.L.C., CMS FIELD
SERVICES, INC., CMS GAS PROCESSING, L.L.C. and CMS NATURAL GAS GATHERING, L.L.C.
(each a "Grantor" and collectively, the "Grantors"), to CITICORP USA, INC.
("CUSA"), as Collateral Agent (the "Collateral Agent") for the lenders (the
"Lenders") parties to the Credit Agreements (as hereinafter defined).
PRELIMINARY STATEMENTS
(1) Barclays Bank PLC, as Administrative Agent, CUSA, as Collateral
Agent, and the Lenders have entered into two Amended and Restated Credit
Agreements, each dated as of July 12, 2002, one (the "Short Term Credit
Agreement") maturing March 31, 2003 and the other (the "Long Term Credit
Agreement") maturing December 15, 2003 (the Short Term Credit Agreement and the
Long Term Credit Agreement, as they may hereafter be amended or otherwise
modified from time to time, being referred to herein collectively as the "Credit
Agreements", the terms defined therein and not otherwise defined herein being
used herein as therein defined), with CMS Energy Corporation (the "Borrower").
(2) Each Grantor is the owner of the Collateral described in Exhibit
"A" hereto and listed under such Grantor's name.
(3) It is a condition precedent to the effectiveness of the Credit
Agreements that the Grantors shall have made the pledge contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Extensions of Credit under the Credit Agreements,
each Grantor hereby agrees with the Collateral Agent for its benefit and the
ratable benefit of the Lenders, as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreements. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreements.
1.2. Terms Defined in New York Uniform Commercial Code. Terms defined
in the New York UCC which are not otherwise defined in this Security Agreement
are used herein as defined in the New York UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statements, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the New
York UCC.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Collateral" means all Accounts and Instruments payable to any Grantor
by the Borrower or Enterprises or any of Enterprises' Subsidiaries (including,
without limitation, the Instruments described on Exhibit "A"), the Investment
Property described on Exhibit "A" and General Intangibles constituting payment
obligations of the Borrower or Enterprises or any of Enterprises' Subsidiaries
to any Grantor and General Intangibles constituting the applicable Grantor's
right, title and interest in any limited liability company or partnership
described on Exhibit "A" in which such Grantor now has or hereafter acquires any
right or interest, and the proceeds (including Stock Rights) and products
thereof, together with records related thereto.
"Control" shall have the meaning set forth in Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York
UCC.
"Default" means an event which but for the lapse of time or the giving
of notice, or both, would constitute an Event of Default.
"Event of Default" means an event described in Section 5.1.
"Exhibit" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.
"General Intangibles" shall have the meaning set forth in Article 9 of
the New York UCC.
"Instruments" shall have the meaning set forth in Article 9 of the New
York UCC.
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"Investment Property" shall have the meaning set forth in Article 9 of
the New York UCC.
"Lenders" means the lenders party to either of the Credit Agreements
and their successors and assigns.
"New York UCC" means the New York Uniform Commercial Code as in effect
from time to time.
"Obligations" means any and all existing and future indebtedness,
obligations and liabilities of every kind, nature and character, direct or
indirect, absolute or contingent (including all renewals, extensions and
modifications thereof and all reasonable and reimbursable fees, costs and
expenses incurred by the Collateral Agent or the Lenders in connection with the
preparation, administration, collection or enforcement thereof), of the Grantors
to the Collateral Agent or any Lender, arising under or pursuant to this
Security Agreement, or of the Borrower under either of the Credit Agreements or
any other Loan Document.
"Permitted Liens" means the Liens permitted to be created, incurred or
assumed or otherwise to exist pursuant to Section 8.02(a) of each of the Credit
Agreements.
"Required Secured Parties" means, Lenders holding in the aggregate at
least fifty-one percent (51%) of the aggregate of the Commitments under the
Credit Agreements, or if the Commitments have terminated the unpaid principal
amount of outstanding Debt under the Credit Agreements.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security" has the meaning set forth in Article 8 of the New York UCC.
"Stock Rights" means any securities, dividends or other distributions
and any other right or property which any Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which any Grantor now has or hereafter
acquires any right, issued by an issuer of such securities.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
2.1. Each of the Grantors hereby pledges, assigns and grants to the
Collateral Agent, on behalf of and for the ratable benefit of the Lenders, a
security interest in all of
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such Grantor's right, title and interest, whether now owned or hereafter
acquired, in and to the Collateral to secure the prompt and complete payment and
performance of the Obligations, which security interest shall be junior and
subordinate to the security interest granted by the Grantors in the Collateral
to secure payment of the indebtedness and obligations of Enterprises under the
Enterprises Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Grantors represents and warrants to the Collateral Agent
and the Lenders that:
3.1. Title, Authorization, Validity and Enforceability. Such Grantor
has good and valid rights in or the power to transfer the Collateral and title
to the Collateral with respect to which it has purported to grant a security
interest hereunder, free and clear of all Liens (other than Permitted Liens),
and has full power and authority to grant to the Collateral Agent the security
interest in such Collateral pursuant hereto. The execution and delivery by such
Grantor of this Security Agreement has been duly authorized by proper corporate
or other proceedings, and this Security Agreement constitutes a legal, valid and
binding obligation of such Grantor and creates a security interest which is
enforceable against such Grantor in all Collateral it now owns or hereafter
acquires. When financing statements have been filed in the appropriate offices
against such Grantor in the locations listed on Exhibit "B", the Collateral
Agent will have a fully perfected security interest in the Collateral owned by
such Grantor in which a security interest may be perfected by filing.
3.2. Conflicting Laws and Contracts. The execution, delivery and
performance by such Grantor of this Security Agreement (i) are within such
Grantor's powers, (ii) have been duly authorized by all necessary corporate or
other organizational action or proceedings and (iii) do not and will not (A)
require any consent or approval of the stockholders (or other applicable holder
of equity) of such Grantor (other than such consents and approvals which have
been obtained and are in full force and effect), (B) violate any provision of
the charter or by-laws (or other comparable constitutive documents) of such
Grantor or of law, (C) violate any legal restriction binding on or affecting
such Grantor, (D) result in a breach of, or constitute a default under, any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which such Grantor is a party or by which it or its properties may
be bound or affected, or (E) result in or require the creation of any Lien
(other than pursuant to the Loan Documents as defined in each of the Credit
Agreements and the Enterprises Credit Agreement) upon or with respect to any of
its properties.
3.3. Type and Jurisdiction of Organization. Each of CMS Enterprises
Company, CMS Generation Co., CMS Gas Transmission Company, CMS Electric and Gas
Company, CMS Oil and Gas Company, CMS Marketing, Services and Trading Company
and CMS Field Services, Inc. is a corporation organized under the laws of the
State of Michigan. Each of CMS Capital, L.L.C., CMS International Ventures,
L.L.C.,
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CMS Generation Michigan Power L.L.C., Dearborn Industrial Energy, L.L.C., and
Dearborn Industrial Generation, L.L.C. is a limited liability company organized
under the laws of the State of Michigan. Each of CMS Gas Processing, L.L.C. and
CMS Natural Gas Gathering, L.L.C. is a limited liability company organized under
the laws of the State of Oklahoma.
3.4. Pledged Securities and Other Investment Property. Exhibit "A" sets
forth a complete and accurate list of the Instruments, Securities and other
Investment Property delivered to the Collateral Agent. Each Grantor is the
direct and beneficial owner of each Instrument, Security and other type of
Investment Property listed on Exhibit "A" as being owned by it, free and clear
of any Liens, except for the security interest granted to the Collateral Agent
for the benefit of the Lenders hereunder, the Lien to secure payment of the
indebtedness under the Enterprises Credit Agreement and other Permitted Liens.
Each Grantor further represents and warrants that (i) all such Securities or
other types of Investment Property which are shares of stock in a corporation or
ownership interests in a partnership or limited liability company and in which
such Grantor is granting a security interest pursuant to this Security Agreement
have been (to the extent such concepts are relevant with respect to such
Security or other type of Investment Property) duly and validly issued, are
fully paid and non-assessable and constitute the percentage of the issued and
outstanding shares of stock (or other equity interests) of the respective
issuers thereof indicated on Exhibit "A" hereto and (ii) with respect to any
certificates delivered to the Collateral Agent representing an ownership
interest in a partnership or limited liability company and in which such Grantor
is granting a security interest pursuant to this Security Agreement, either such
certificates are Securities as defined in Article 8 of the New York UCC of the
applicable jurisdiction as a result of actions by the issuer or otherwise, or,
if such certificates are not Securities, such Grantor has so informed the
Collateral Agent so that the Collateral Agent may take steps to perfect its
security interest therein as a General Intangible.
ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
4.1.1 Inspection. Each Grantor will permit the Collateral
Agent or any Lender, by its representatives and agents (i) to inspect the
Collateral, (ii) to examine and make copies of the records of such Grantor
relating to the Collateral and (iii) to discuss the Collateral and the related
records of such Grantor with, and to be advised as to the same by, such
Grantor's officers and employees all at such reasonable times and intervals as
the Collateral Agent or such Lender may determine.
4.1.2 Records and Reports. Each Grantor will maintain complete
and accurate books and records with respect to the Collateral owned by such
Grantor, and
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furnish to the Collateral Agent, with sufficient copies for each of the Lenders,
such reports relating to the Collateral as the Collateral Agent shall from time
to time reasonably request.
4.1.3 Financing Statements and Other Actions; Defense of
Title. Each Grantor hereby authorizes the Collateral Agent to file, and if
requested will execute and deliver to the Collateral Agent, all financing
statements describing the Collateral owned by such Grantor and other documents
and take such other actions as may from time to time be reasonably requested by
the Collateral Agent in order to maintain a perfected security interest in and,
if applicable, Control of, the Collateral owned by such Grantor. Each Grantor
will take any and all actions necessary to defend title to the Collateral owned
by such Grantor against all persons and to defend the security interest of the
Collateral Agent in such Collateral and the priority thereof against any Lien
not expressly permitted hereunder.
4.1.4 Change in Corporate Existence, Type or Jurisdiction of
Organization, Location, Name. Each Grantor will preserve its existence, not
change its state of organization, and not change its mailing address, unless, in
each such case, such Grantor shall have given the Collateral Agent not less than
10 days' prior written notice of such event or occurrence and the Collateral
Agent shall have either (x) determined that such event or occurrence will not
adversely affect the validity, perfection or priority of the Collateral Agent's
security interest in the Collateral owned by such Grantor, or (y) taken such
steps (with the cooperation of such Grantor to the extent necessary or
advisable) as are necessary or advisable to properly maintain the validity,
perfection and priority of the Collateral Agent's security interest in the
Collateral owned by such Grantor.
4.2. Instruments and Securities. Each Grantor will (i) deliver to the
Collateral Agent immediately upon execution of this Security Agreement the
originals of all Securities constituting Collateral owned by such Grantor (if
any then exist), (ii) deliver to the Collateral Agent within thirty days after
execution of this Security Agreement the originals of all Instruments
constituting Collateral owned by such Grantor (if any then exist) and (iii) hold
in trust for the Collateral Agent upon receipt and immediately thereafter
deliver to the Collateral Agent any additional Securities and Instruments
constituting Collateral owned by such Grantor.
4.3. Uncertificated Securities and Certain Other Investment Property.
Each Grantor will permit the Collateral Agent from time to time to cause the
appropriate issuers (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of
Investment Property not represented by certificates which are Collateral owned
by such Grantor to xxxx their books and records with the numbers and face
amounts of all such uncertificated securities or other types of Investment
Property not represented by certificates and all rollovers and replacements
therefor to reflect the Lien of the Collateral Agent granted pursuant to this
Security Agreement. Each Grantor will use all commercially reasonable efforts,
with respect to Investment Property constituting Collateral owned by such
Grantor held with a financial intermediary, to cause such financial intermediary
to enter into a control agreement with
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the Collateral Agent in form and substance reasonably satisfactory to the
Collateral Agent.
4.4. Stock and Other Ownership Interests. Each Grantor will permit any
registerable Collateral owned by such Grantor to be registered in the name of
the Collateral Agent or its nominee at any time at the option of the Required
Secured Parties following the occurrence and during the continuance of an Event
of Default.
4.5. Voting Rights and Dividends
4.5.1 Rights Prior to Default. So long as no Event of Default,
and no Default under Section 9.01(f) of the Credit Agreements, shall have
occurred and be continuing:
(i) Until the Collateral Agent shall have notified each
Grantor in writing to the contrary, such Grantor shall be entitled to
exercise or refrain from exercising any and all voting and other
consensual rights pertaining to the Collateral owned by such Grantor or
any part thereof for any purpose not inconsistent with the terms of
this Security Agreement or either of the Credit Agreements; provided,
however, that each Grantor shall not exercise or refrain from
exercising any such right if such action would have a material adverse
effect on the value of the Collateral.
(ii) Each Grantor shall be entitled to receive and retain any
and all dividends and interest paid in respect of the Collateral owned
by such Grantor, provided, however, that any and all (a) dividends and
interest paid or payable other than in cash in respect of, and
securities, instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any such
Collateral, and (b) dividends, interest and other distributions paid or
payable in cash in respect of any such Collateral in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, shall be, and
shall be forthwith delivered to the Collateral Agent to hold as,
Collateral and shall, if received by such Grantor, be received in trust
for the benefit of the Collateral Agent, be segregated from the other
property or funds of such Grantor, and be forthwith delivered to the
Collateral Agent as Collateral in the same form as so received (with
any necessary indorsement or assignment).
(iii) The Collateral Agent shall execute and deliver (or cause
to be executed and delivered) to each Grantor all such proxies and
other instruments as such Grantor may reasonably request for the
purpose of enabling such Grantor to exercise the voting and other
rights which it is entitled to exercise pursuant to paragraph (i),
above, and to receive the dividends and interest which it is authorized
to receive and retain pursuant to paragraph (ii), above.
4.5.2 Rights During Default. Upon the occurrence and during
the continuance of a Default under Section 9.01(f) of the Credit Agreements or
an Event of Default:
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(i) Upon written notice to such Grantor by the Collateral
Agent, all rights of such Grantor to exercise or refrain from
exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 4.5.1(i) and to
receive the dividends and interest which it would otherwise be
authorized to receive and retain pursuant to Section 4.5.1(ii) shall
cease, and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to
receive and hold as Collateral such dividends and interest.
(ii) All dividends and interest and other property which are
received by any Grantor contrary to the provisions of paragraph (i) of
this Section 4.5.2 shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Collateral Agent as Collateral
in the same form as so received (with any necessary indorsement).
ARTICLE V
DEFAULT
5.1. Default. The occurrence of any "Event of Default" under, and as
defined in, either of the Credit Agreements shall constitute an Event of Default
hereunder.
5.2. Acceleration and Remedies. Upon the acceleration of the
Obligations under either of the Credit Agreements pursuant to Section 9.02
thereof, the Collateral Agent may, with the concurrence or at the direction of
the Required Secured Parties, exercise any or all of the following rights and
remedies:
5.2.1 Those rights and remedies provided in this Security
Agreement, the Credit Agreements, or any other Loan Document, provided that this
Section 5.2.1 shall not be understood to limit any rights or remedies available
to the Collateral Agent and the Lenders prior to an Event of Default.
5.2.2 Those rights and remedies available to a secured party
under the New York UCC (whether or not the New York UCC applies to the affected
Collateral) or under any other applicable law (including, without limitation,
any law governing the exercise of a bank's right of setoff or bankers' lien)
when a debtor is in default under a security agreement.
5.2.3 Without notice except as specifically provided herein,
sell, lease, assign, grant an option or options to purchase or otherwise dispose
of the Collateral or any part thereof in one or more parcels at public or
private sale, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable.
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The Collateral Agent may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance
will not be considered to adversely affect the commercial reasonableness of any
sale of the Collateral.
5.3. Standstill. Notwithstanding the foregoing provisions of Sections
5.1 and 5.2, the Collateral Agent shall take no action to enforce the security
interests granted pursuant to this Security Agreement until the earlier of the
date on which (i) the Enterprises Credit Agreement has been repaid in full and
the commitments thereunder have expired or terminated and (ii) the Obligations
under the Enterprises Credit Agreement have been accelerated pursuant to Section
9.02 thereof.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
6.1. No delay or omission of the Collateral Agent or any Lender to
exercise any right or remedy granted under this Security Agreement shall impair
such right or remedy or be construed to be a waiver of any Event of Default or
an acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude any other or further exercise thereof or the exercise
of any other right or remedy. No waiver, amendment or other variation of the
terms, conditions or provisions of this Security Agreement whatsoever shall be
valid unless in writing signed by the Collateral Agent with the concurrence or
at the direction of the Lenders required under Section 11.01 of either of the
Credit Agreements and each Grantor, and then only to the extent in such writing
specifically set forth. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to
the Collateral Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE VII
RIGHTS OF CONTRIBUTION WITH RESPECT TO OBLIGATIONS
7.1. Rights of Contribution. To the extent that any payment is made on
the Obligations by or on behalf of any Guarantor or Grantor (each, an "Obligor")
under or pursuant to the Guaranty or this Security Agreement (an "Obligor
Payment") which, taking into account all other Obligor Payments then previously
or concurrently made by any other Obligor, exceeds the amount which otherwise
would have been paid by or attributable to such Obligor if each Obligor had paid
the aggregate Obligations satisfied by such Obligor Payment in the same
proportion as such Obligor's "Allocable Amount" (as defined below) (as
determined immediately prior to such Obligor Payment) bore to the aggregate
Allocable Amounts of each of the Obligors as determined immediately prior to the
making of such Obligor Payment, then, following payment in full in cash of the
Obligations and the termination or expiration of all Commitments, such Obligor
shall be entitled to receive contribution and indemnification payments from, and
be reimbursed by, each other Obligor for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Obligor Payment.
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7.2. Allocable Amount. As of any date of determination, the "Allocable
Amount" of any Obligor shall be equal to the maximum amount of the claim which
could then be recovered from such Obligor with respect to the Obligations
without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.
7.3. Rights Among Obligors. This Section 7.3 is intended only to define
the relative rights of the Obligors, and nothing set forth in this Section 7.3
is intended to or shall impair the obligations of the Obligors to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of the Guaranty or this Security Agreement.
7.4. Rights as Assets. The parties hereto acknowledge that the rights
of contribution and indemnification hereunder shall constitute assets of the
Obligors to which such contribution and indemnification is owing.
7.5. Rights Deferred. The rights of the indemnifying Obligors against
other Obligors with respect to any payments on the Obligations shall be
exercisable upon the full payment of the Obligations in cash and the termination
or expiry of the Commitments.
ARTICLE VIII
SUBORDINATION OF INTERCOMPANY INDEBTEDNESS
8.1. Each Grantor agrees that any and all claims of such Grantor
against any other Loan Party with respect to any "Intercompany Indebtedness" (as
hereinafter defined), any endorser, obligor or any other guarantor of all or any
part of the Obligations, or against any of its properties shall be subordinate
and subject in right of payment to the prior payment, in full and in cash, of
all Obligations and to the obligations of Enterprises under the Enterprises
Credit Agreement. If all or any part of the assets of any Loan Party, or the
proceeds thereof, are subject to any distribution, division or application to
the creditors of such Loan Party, whether partial or complete, voluntary or
involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding, or if the business of any such Loan Party is dissolved or if
substantially all of the assets of any such Loan Party are sold, then, and in
any such event (such events being herein referred to as an "Insolvency Event"),
any payment or distribution of any kind or character, either in cash, securities
or other property, which shall be payable or deliverable upon or with respect to
any indebtedness of any Loan Party to any Grantor ("Intercompany Indebtedness")
shall be paid or delivered directly to the Collateral Agent for application to
the obligations of Enterprises under the Enterprises Credit Agreement, whether
matured or unmatured, and, after the Enterprises Credit Agreement is repaid in
full, to the Obligations,
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whether matured or unmatured, under the Short Term Credit Agreement, and, after
the Short Term Credit Agreement has been repaid in full, to the Obligations,
whether matured or unmatured, under the Long Term Credit Agreement. Should any
payment, distribution, security or instrument or proceeds thereof be received by
any Grantor upon or with respect to the Intercompany Indebtedness after any
Insolvency Event and prior to the satisfaction of all of the Obligations and the
termination or expiration of all Commitments of the Lenders, such Grantor shall
receive and hold the same in trust, as trustee, for the benefit of the Lenders
and shall forthwith deliver the same to the Collateral Agent, for the benefit of
the Lenders, in precisely the form received (except for the endorsement or
assignment of the Obligor where necessary), for application to the obligations
of Enterprises under the Enterprises Credit Agreement, whether matured or
unmatured, and, after the Enterprises Credit Agreement is repaid in full, to the
Obligations, whether matured or unmatured, under the Short Term Credit
Agreement, and, after the Short Term Credit Agreement has been repaid in full,
to the Obligations, whether matured or unmatured, under the Long Term Credit
Agreement, and, until so delivered, the same shall be held in trust by such
Grantor as the property of the Lenders.
ARTICLE IX
GENERAL PROVISIONS
9.1. Secured Party Performance of Grantor's Obligations. Without having
any obligation to do so, the Collateral Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay in this Security Agreement and
such Grantor shall reimburse the Collateral Agent for any reasonable amounts
paid by the Collateral Agent pursuant to this Section 9.1. Each Grantor's
obligation to reimburse the Collateral Agent pursuant to the preceding sentence
shall be an Obligation payable on demand.
9.2. Authorization for Secured Party to Take Certain Action. Each
Grantor irrevocably authorizes the Collateral Agent at any time and from time to
time in the sole discretion of the Collateral Agent and appoints the Collateral
Agent as its attorney in fact (i) to contact and enter into one or more
agreements with the issuers of uncertificated securities which are Collateral
owned by such Grantor and which are Securities or with financial intermediaries
holding other Investment Property as may be necessary or advisable solely to
give the Collateral Agent Control over such Securities or other Investment
Property, (ii) following the occurrence and during the continuance of an Event
of Default, to enforce payment of the Instruments and Accounts which are
Collateral in the name of the Collateral Agent or such Grantor, (iii) following
the occurrence and during the continuance of an Event of Default, to apply the
proceeds of any Collateral received by the Collateral Agent to the Obligations
and (iv) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically permitted hereunder or
under any other Loan Document), and each Grantor agrees to reimburse the
Collateral Agent on demand for any reasonable payment made or any reasonable
expense incurred by the Collateral Agent in connection therewith, provided that
this authorization shall not relieve any Grantor of any of its obligations under
this Security Agreement or under the Credit Agreements.
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9.3. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Collateral Agent and the Lenders and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that the Grantors shall not have the right to assign their rights or
delegate their obligations under this Security Agreement or any interest herein,
without the prior written consent of the Collateral Agent.
9.4. Survival of Representations. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
9.5. Taxes and Expenses. Any stamp, documentary or (to the extent
provided in the Credit Agreements) withholding taxes payable or ruled payable by
Federal or State authority in respect of this Security Agreement shall be paid
by the Grantors, together with interest and penalties, if any. The Grantors
shall reimburse the Collateral Agent for any and all reasonable out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Collateral Agent) paid or incurred
by the Collateral Agent in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Security Agreement and in the
audit, analysis, administration, collection, preservation or sale of the
Collateral (including the expenses and charges associated with any periodic or
special audit of the Collateral). Any and all costs and expenses incurred by the
Grantors in the performance of actions required pursuant to the terms hereof
shall be borne solely by the Grantors.
9.6. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
9.7. CHOICE OF LAW. SUBMISSION TO JURISDICTION. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE
OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES). EACH
OF THE GRANTORS AND THE COLLATERAL AGENT (I) IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK
CITY IN ANY ACTION ARISING OUT OF ANY LOAN DOCUMENT, (II) AGREES THAT ALL CLAIMS
IN SUCH ACTION MAY BE DECIDED IN SUCH COURT, (III) WAIVES, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM AND (IV) CONSENTS
TO THE SERVICE OF PROCESS BY MAIL. A FINAL JUDGMENT IN ANY SUCH ACTION SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY
LAW OR AFFECT ITS RIGHT TO BRING ANY ACTION IN ANY OTHER COURT. EACH OF THE
GRANTORS
12
AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST SUCH
GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE LENDERS TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT
OR THE LENDERS. EACH GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE COLLATERAL AGENT TO REALIZE ON
THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT. EACH GRANTOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
COLLATERAL AGENT MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
9.8. Indemnity. Each Grantor hereby agrees, jointly with the other
Grantors and severally, to indemnify the Collateral Agent and its successors,
assigns, agents and employees (each, an "indemnified party"), from and against
any and all liabilities, damages, penalties, suits, costs, and expenses of any
kind and nature (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Collateral Agent is a party thereto)
imposed on, incurred by or asserted against the Collateral Agent, or its
successors, assigns, agents and employees, in any way relating to or arising out
of this Security Agreement, or the ownership, delivery, possession, or other
disposition of any Collateral except to the extent that such liabilities,
damages, penalties, costs or expenses were caused by the gross negligence or
willful misconduct of such indemnified party.
9.9. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including facsimile communication)
and mailed, telegraphed, telecopied, telexed, cabled or delivered, if to any
Grantors, c/o CMS Enterprises Company at its address at Fairlane Plaza South,
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxx 00000, Attention: General
Counsel, and if to the Collateral Agent, at its address specified in the Credit
Agreement, or, as to either party, at such other address as shall be designated
by such party in a written notice to the other party. All such notices and other
communications shall, when mailed or telecopied, be effective five days after
when deposited in the mails, or when telecopied.
9.10. Continuing Security Interest; Assignments under Credit
Agreements. This Security Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
earlier to occur of (x) the payment in full of all Obligations of the Borrower
now or hereafter existing under the Credit Agreements, whether for principal,
interest, fees, expenses or otherwise, and all other amounts payable under this
Security Agreement, and the expiration or termination of the Commitments and (y)
the release by the Lenders of their Lien on all of the Collateral, (ii) be
binding upon the Grantors, their respective successors and assigns, and (iii)
inure, together with the rights and remedies of the Collateral Agent hereunder,
to the benefit of, and be enforceable by, the Collateral Agent and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Lender may assign or otherwise
13
transfer all or any portion of its rights and obligations under either of the
Credit Agreements (including, without limitation, all or any portion of its
Commitment, the Loans owing to it and any Promissory Note held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise, subject,
however to the provisions of Sections 10.03 and 11.07 of the applicable Credit
Agreement. Upon the earlier to occur of (A) the payment in full of all
Obligations of the Borrower now or hereafter existing under the Credit
Agreements, whether for principal, interest, fees, expenses or otherwise, and
all other amounts payable under this Security Agreement, and the expiration or
termination of the Commitments and (B) the release by the Lenders of their Lien
on all of the Collateral, the security interest granted hereby shall terminate
and all rights to the Collateral shall revert to the Grantors. In addition, the
Collateral Agent shall release any Collateral as permitted or required pursuant
to Section 10.03 of the Credit Agreements. Upon any such termination, the
Collateral Agent will, at the Grantors' expense, return to the Grantors such of
the Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to the Grantors such documents as any
Grantor shall reasonably request to evidence such termination.
9.11. WAIVER OF JURY TRIAL. THE GRANTORS AND THE COLLATERAL AGENT EACH
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.
14
IN WITNESS WHEREOF, each of the Grantors and the Collateral Agent have
executed this Security Agreement as of the date first above written.
CMS ENTERPRISES COMPANY CMS GENERATION CO.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. XxxXxxxxx
------------------------------ -----------------------------
Xxxx X. Xxxxxx Xxxxxxx X. XxxXxxxxx
Its: Executive Vice President, Its: Vice President and
Chief Financial Officer & Secretary
Chief Administrative Officer
CMS GAS TRANSMISSION COMPANY CMS CAPITAL, L.L.C.
By: /s/ Xxxxx Isles By: /s/ Xxxx X. Xxxxxx
------------------------------ -----------------------------
Xxxxx Isles Xxxx X. Xxxxxx
Its: Vice President and Its: President and
Controller Chief Executive Officer
CMS ELECTRIC AND GAS COMPANY CMS OIL AND GAS COMPANY
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxx X. XxxXxxxxx
------------------------------ -----------------------------
Xxxx X. Xxxxxx Xxxxxxx X. XxxXxxxxx
Its: Vice President Its: Vice President and
Secretary
CMS MARKETING, SERVICES AND TRADING COMPANY CMS INTERNATIONAL VENTURES, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxxxx X. XxxXxxxxx
------------------------------ -----------------------------
Xxxxx X. Xxxxxxxxxxx Xxxxxxx X. XxxXxxxxx
Its: Vice President and Treasurer Its: Vice President and Secretary
CMS GENERATION MICHIGAN POWER L.L.C. DEARBORN INDUSTRIAL ENERGY, LLC
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ -----------------------------
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx
Its: President Its: President
15
DEARBORN INDUSTRIAL GENERATION, L.L.C. CMS FIELD SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. XxxXxxxxx
------------------------------ -----------------------------
Xxxxxx X. Xxxxxx Xxxxxxx X. XxxXxxxxx
Its: President Its: Vice President and Secretary
CMS GAS PROCESSING, L.L.C. CMS NATURAL GAS GATHERING, L.L.C.
By: /s/ Xxxxxxx X. XxxXxxxxx By: /s/ Xxxxxxx X. XxxXxxxxx
------------------------------ -----------------------------
Xxxxxxx X. XxxXxxxxx Xxxxxxx X. XxxXxxxxx
Its: Vice President and Secretary of Its: Vice President and Secretary of
CMS Field Services, Inc. CMS Field Services, Inc.
Its Sole Member Its Sole Member
AGREED AND ACKNOWLEDGED:
CITICORP USA, INC., as Collateral Agent
By: /s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
Title: Director
16
EXHIBIT "A"
List of Pledged Securities
(See Section 3.4 of Security Agreement)
STOCK OWNED BY CMS ENTERPRISES COMPANY:
Certificate Number Percentage
Issuer Number of Shares Ownership Interest
------------------------------------------------ ------------- ------------------ ----------------------
CMS Generation Co. 21 10 100%
CMS Gas Transmission Company (f/k/a CMS Gas 1 170 100%
Transmission and Storage Company)
CMS Electric and Gas Company 1 10 100%
CMS Oil and Gas Company (f/k/a Northern Michigan 36 20,000,000 100%
Exploration Company)
CMS Marketing, Services and Trading Company 1 10 100%
INSTRUMENTS OWNED BY CMS ENTERPRISES COMPANY:
Obligor Amount Interest Rate Maturity
------- ------ ------------- --------
None
GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED) OWNED BY CMS ENTERPRISES COMPANY:
Percentage
Ownership
Issuer Description of Collateral Interest
------ ------------------------- ----------
CMS Capital LLC Limited liability company interests 100%
CMS International Ventures, Limited liability company interests 66.7%
L.L.C.
17
EXHIBIT "A" (continued)
List of Pledged Securities
(See Section 3.4 of Security Agreement)
STOCK OWNED BY CMS GENERATION CO.:
Issuer Certificate Number Number of Shares Percentage Ownership Interest
------ ------------------ ---------------- -----------------------------
None
INSTRUMENTS OWNED BY CMS GENERATION CO.:
Obligor Amount Interest Rate Maturity
------- ------ ------------- --------
None
GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED) OWNED BY CMS GENERATION CO.:
Percentage
Ownership
Issuer Description of Collateral Interest
------ ------------------------- --------
CMS International Ventures, L.L.C. Limited liability company interests 33.3%
Dearborn Industrial Energy, LLC Limited liability company interests 100%
CMS General Michigan Power L.L.C. Limited liability company interests 100%
18
EXHIBIT "A" (continued)
List of Pledged Securities
(See Section 3.4 of Security Agreement)
STOCK OWNED BY DEARBORN INDUSTRIAL ENERGY, LLC:
Issuer Certificate Number Number of Shares Percentage Ownership Interest
------ ------------------ ---------------- -----------------------------
None
INSTRUMENTS OWNED BY DEARBORN INDUSTRIAL ENERGY, LLC:
Obligor Amount Interest Rate Maturity
------- ------ ------------- --------
None
GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED) OWNED BY DEARBORN INDUSTRIAL ENERGY, LLC:
Percentage
Ownership
Issuer Description of Collateral Interest
------ ------------------------- ---------
Dearborn Industrial Generation, L.L.C. Limited liability company interests 100%
19
EXHIBIT "A" (continued)
List of Pledged Securities
(See Section 3.4 of Security Agreement)
STOCK OWNED BY CMS GAS TRANSMISSION COMPANY:
Percentage
Certificate Number of Ownership
Issuer Number Shares Interest
------ ----------- --------- ----------
CMS Field Services Inc. (f/k/a CMS continental natural 1 10 100%
Gas, Inc.)
Panhandle Eastern Pipeline Company 4 1,000 100%
INSTRUMENTS OWNED BY CMS GAS TRANSMISSION COMPANY:
Obligor Amount Interest Rate Maturity
------- ------ ------------- --------
None
GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED) OWNED BY CMS GAS TRANSMISSION COMPANY:
Issuer Description of Collateral Percentage Ownership Interest
------ ------------------------- -----------------------------
None
20
EXHIBIT "A" (continued)
List of Pledged Securities
(See Section 3.4 of Security Agreement)
STOCK OWNED BY CMS FIELD SERVICES, INC.:
Issuer Certificate Number Number of Shares Percentage Ownership Interest
------ ------------------ ---------------- -----------------------------
None
INSTRUMENTS OWNED BY CMS FIELD SERVICES, INC.:
Obligor Amount Interest Rate Maturity
------- ------ ------------- --------
None
GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED) OWNED BY CMS FIELD SERVICES, INC.:
Percentage
Ownership
Issuer Description of Collateral Interest
------ ------------------------- ----------
CMS Gas Processing, L.L.C. Limited liability company interests 100%
CMS Natural Gas Gathering, L.L.C. Limited liability company interests 100%
21
EXHIBIT "B"
(See Section 3.1 of Security Agreement)
OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED
A. FOR ALL GRANTORS OTHER THAN CMS GAS PROCESSING, L.L.C. AND CMS NATURAL GAS
GATHERING, L.L.C.
Secretary of State of Michigan
B. FOR CMS GAS PROCESSING, L.L.C. AND CMS NATURAL GAS GATHERING, L.L.C.
Clerk of Oklahoma County, Oklahoma
22
