EXHIBIT 4.11
EXECUTION COPY
CMS ENERGY
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Security Agreement"), dated as
of July 12, 2002, is made by CMS ENERGY CORPORATION, a corporation organized and
existing under the laws of the State of Michigan (the "Grantor"), 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 maturing March 31, 2003 and the
other maturing December 15, 2003 (said Agreements, as they may hereafter be
amended or otherwise modified from time to time, being the "Credit Agreements",
the terms defined therein and not otherwise defined herein being used herein as
therein defined), with the Grantor.
(2) The Grantor is the owner of the Collateral described in Exhibit "A"
hereto.
(3) It is a condition precedent to the effectiveness of the Credit
Agreements that the Grantor 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, the
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 the Grantor
by Enterprises or any of its Subsidiaries (including, without limitation, the
Instruments described on Exhibit "A"), the Investment Property described on
Exhibit "A" and General Intangibles constituting payment obligations of
Enterprises or any of its Subsidiaries to the Grantor and General Intangibles
constituting the Grantor's right, title and interest in any limited liability
company or partnership described on Exhibit "A" in which the 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.
"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 Grantor
to the Collateral Agent or any Lender, arising under or pursuant to this
Security Agreement, either of the Credit Agreements and any other Loan Document.
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"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 the 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 the 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. The Grantor 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 the 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, provided, however, that the
principal amount of the Obligations secured by the security interests granted
pursuant to this Security Agreement shall not exceed the lesser of (x) an amount
that would cause all secured Indebtedness of Grantor outstanding on the date
hereof to exceed 5% of the "Consolidated Net Tangible Assets" (as defined in the
Twelfth Supplemental Indenture dated as of July 2, 2001 between the Grantor and
Bank One Trust Company, N.A. (successor to NBD Bank) with respect to the
Grantor's original Indenture dated as of September 15, 1992) as of the date
hereof and (y) an amount that would cause all secured Indebtedness of Grantor
outstanding on the date hereof to exceed 10% of "Consolidated Assets" (as
defined in the Sixth Supplemental Indenture dated as of March 19, 1996 between
the Grantor and The Chase Manhattan Bank (National Association) with respect to
the Grantor's original Indenture dated as of January 15, 1994) of Grantor at
such date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Collateral Agent and the
Lenders that:
3.1. Title, Authorization, Validity and Enforceability. The 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 the
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 the Grantor and creates a security interest which is
enforceable against the Grantor in all now owned and hereafter acquired
Collateral. When financing statements have been filed in the appropriate offices
against the Grantor in the locations listed on Exhibit "B", the Collateral Agent
will have a fully perfected first priority security interest in the Collateral
in which a security interest may be perfected by filing.
3.2. Conflicting Laws and Contracts. The execution, delivery and
performance by the Grantor of this Security Agreement (i) are within the
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 the 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 the
Grantor or of law, (C) violate any legal restriction binding on or affecting the
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
the 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. The Grantor is a
corporation organized under the laws of the State of Michigan.
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. The 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 and other Permitted Liens. The 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 the Grantor
is granting a security
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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 the 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,
the 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. The 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 the Grantor relating to the
Collateral and (iii) to discuss the Collateral and the related records of the
Grantor with, and to be advised as to the same by, the 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. The Grantor will maintain complete
and accurate books and records with respect to the Collateral, and 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. The 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 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 first perfected security interest in and, if applicable,
Control of, the Collateral. The Grantor will take any and all actions necessary
to defend title to the Collateral against all persons and to defend the security
interest of the Collateral Agent in the 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. The Grantor will preserve its existence as a
corporation, not change its state of organization, and not change its mailing
address, unless, in each
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such case, the 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, or (y) taken such steps (with the
cooperation of the 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.
4.2. Instruments and Securities. The Grantor will (i) deliver to the
Collateral Agent immediately upon execution of this Security Agreement the
originals of all Securities constituting Collateral (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 the 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.
4.3. Uncertificated Securities and Certain Other Investment Property.
The 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 to ▇▇▇▇
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. The Grantor
will use all commercially reasonable efforts, with respect to Investment
Property constituting Collateral held with a financial intermediary, to cause
such financial intermediary to enter into a control agreement with the
Collateral Agent in form and substance reasonably satisfactory to the Collateral
Agent.
4.4. Stock and Other Ownership Interests. The Grantor will permit any
registerable Collateral 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 the Grantor
in writing to the contrary, the Grantor shall be entitled to exercise
or refrain from exercising any and all voting and other consensual
rights pertaining to the Collateral 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 the 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.
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(ii) The Grantor shall be entitled to receive and retain any
and all dividends and interest paid in respect of the Collateral,
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 Collateral, and (b) dividends,
interest and other distributions paid or payable in cash in respect of
any 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 the Grantor, be received in trust for the benefit of the Collateral
Agent, be segregated from the other property or funds of the 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 the Grantor all such proxies and other
instruments as the Grantor may reasonably request for the purpose of
enabling the 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:
(iv) Upon written notice to the Grantor by the Collateral
Agent, all rights of the 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.
(v) All dividends and interest and other property which are
received by the 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 the 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.
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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.
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.
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 the 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.
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ARTICLE VII
SUBORDINATION OF INTERCOMPANY INDEBTEDNESS
7.1. The Grantor agrees that any and all claims of the 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. 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 the Grantor ("Intercompany Indebtedness")
shall be paid or delivered directly to the Collateral Agent for application on
any of the Obligations, due or to become due, until such Obligations shall have
first been fully paid and satisfied in cash. Should any payment, distribution,
security or instrument or proceeds thereof be received by the 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, the 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 any of the
Obligations, due or not due, and, until so delivered, the same shall be held in
trust by the Grantor as the property of the Lenders.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Secured Party Performance of Grantor's Obligations. Without having
any obligation to do so, the Collateral Agent may perform or pay any obligation
which the Grantor has agreed to perform or pay in this Security Agreement and
the Grantor shall reimburse the Collateral Agent for any reasonable amounts paid
by the Collateral Agent pursuant to this Section 8.1. The Grantor's obligation
to reimburse the Collateral Agent pursuant to the preceding sentence shall be an
Obligation payable on demand.
8.2. Authorization for Secured Party to Take Certain Action. The
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
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(i) to contact and enter into one or more agreements with the issuers of
uncertificated securities which are Collateral 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 the
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 the
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 the
Grantor of any of its obligations under this Security Agreement or under the
Credit Agreements.
8.3. Benefit of Agreement. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantor, 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 Grantor shall not have the right to assign its rights or
delegate its obligations under this Security Agreement or any interest herein,
without the prior written consent of the Collateral Agent.
8.4. Survival of Representations. All representations and warranties of
the Grantor contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement.
8.5. 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 Grantor, together with interest and penalties, if any. The Grantor 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
Grantor in the performance of actions required pursuant to the terms hereof
shall be borne solely by the Grantor.
8.6. 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.
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8.7. 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 GRANTOR 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. THE GRANTOR
AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST THE
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. THE 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. THE 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.
8.8. Indemnity. The Grantor hereby agrees 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 wilful misconduct of such indemnified party.
8.9. 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 the
Grantor, at its address at Fairlane Plaza South, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: S. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., General
Counsel, and if to the Collateral Agent, at its
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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.
8.10. Continuing Security Interest; Assignments under Credit
Agreements. This 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 Grantor, its 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 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 Grantor. 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 Grantor's expense, return to the
Grantor such of the Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof and execute and deliver to the Grantor such
documents as the Grantor shall reasonably request to evidence such termination.
8.11. WAIVER OF JURY TRIAL. THE GRANTOR 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.
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IN WITNESS WHEREOF, the Grantor and the Collateral Agent have executed
this Security Agreement as of the date first above written.
CMS ENERGY CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President,
Chief Financial Officer and
Chief Administrative Officer
AGREED AND ACKNOWLEDGED:
CITICORP USA, INC., as Collateral Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
EXHIBIT "A"
List of Pledged Securities
(See Section 3.4 of Security Agreement)
STOCK OWNED BY CMS ENERGY CORPORATION:
Issuer Certificate Number Number of Shares Percentage Ownership Interest
------ ------------------ ---------------- -----------------------------
CMS Enterprises 01 100 100%
Company
INSTRUMENTS OWNED BY CMS ENERGY CORPORATION
Obligor Amount Interest Rate Maturity
------- ------ ------------- --------
None
GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED):
Issuer Description of Collateral Percentage Ownership Interest
------ ------------------------- -----------------------------
None
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EXHIBIT "B"
(See Section 3.1 of Security Agreement)
OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED
Secretary of State of Michigan
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