Exhibit 10.3
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
     THIS PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”), dated as of
March 31, 2011, is made by CMS ENERGY CORPORATION, a corporation organized and
existing under the laws of the State of Michigan (the “Grantor”), to BARCLAYS
BANK PLC, as Administrative Agent (the “Administrative Agent”) for the financial
institutions (the “Banks”) from time to time parties to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
     (1) The Grantor, the Banks and the Administrative Agent have entered into
that certain Credit Agreement, dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”).
     (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
Agreement 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
Banks to make Credit Extensions under the Credit Agreement, the Grantor hereby
agrees with the Administrative Agent, for its benefit and the ratable benefit of
the other Secured Parties, as follows:
ARTICLE I
DEFINITIONS
     1.1. Terms Defined in Credit Agreement. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
     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 the Investment Property described on Exhibit “A” and the
proceeds (including Stock Rights) and products thereof, together with records
related thereto.

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     “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.
     “Investment Property” shall have the meaning set forth in Article 9 of the
New York UCC.
     “New York UCC” means the New York Uniform Commercial Code as in effect from
time to time.
     “Permitted Liens” means the Liens permitted to be created, incurred or
assumed or otherwise to exist pursuant to Sections 7.1(c), (d), (e), (f) or
(n) of the Credit Agreement.
     “Section” means a numbered section of this Security Agreement, unless
another document is specifically referenced.
     “Secured Obligations” means any and all Obligations, including, without
limitation, 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 any Secured Party in
connection with the preparation, administration, collection or enforcement
thereof), of the Grantor to any Secured Party, arising under or pursuant to this
Security Agreement, the Credit Agreement and any other Credit Document.
     “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.

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ARTICLE II
GRANT OF SECURITY INTEREST
     The Grantor hereby pledges, assigns and grants to the Administrative Agent,
on behalf of and for the ratable benefit of the Secured Parties, 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 Secured Obligations, provided, however, that the
principal amount of the Secured Obligations secured by the security interests
granted pursuant to this Security Agreement shall not exceed an amount that
would cause all secured Debt of Grantor outstanding on the date hereof to exceed
5% of the “Consolidated Net Tangible Assets” (as defined in the Nineteenth
Supplemental Indenture dated as of December 13, 2005 between the Grantor and
Bank of New York Mellon (successor trustee to JPMorgan Chase Bank, N.A.) with
respect to the Grantor’s original Indenture dated as of September 15, 1992) as
of the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
     The Grantor represents and warrants to the Administrative Agent and the
other Secured Parties 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 Administrative 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 (or appropriate amendments to existing
filings) have been filed in the appropriate offices against the Grantor in the
locations listed on Exhibit “B”, the Administrative 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 Credit Documents as defined in the Credit Agreement) upon or
with respect to any of its properties.

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     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. Exhibit “A” sets forth a complete and accurate
list of the Securities delivered to the Administrative Agent. The Grantor is the
direct and beneficial owner of each Security listed on Exhibit “A” as being
owned by it, free and clear of any Liens, except for the security interest
granted to the Administrative Agent for the benefit of the Secured Parties
hereunder and other Permitted Liens. The Grantor further represents and warrants
that all such Securities have been duly and validly issued, are fully paid and
non-assessable and constitute the percentage of the issued and outstanding
shares of stock of the respective issuers thereof indicated on Exhibit “A”
hereto.
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 Administrative Agent or
any Bank, 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 Administrative Agent
or such Bank 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
Administrative Agent, with sufficient copies for each of the Banks, such reports
relating to the Collateral as the Administrative Agent shall from time to time
reasonably request.
          4.1.3 Financing Statements and Other Actions; Defense of Title. The
Grantor hereby authorizes the Administrative Agent to file, and if requested
will execute and deliver to the Administrative 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 Administrative Agent in order
to maintain a 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
Administrative 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 such case, the Grantor shall have given the
Administrative Agent not less than 10 days’ prior written notice of such event
or occurrence and the Administrative Agent shall have either (x) determined that
such event or occurrence will not adversely affect the validity, perfection or
priority of the Administrative

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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 Administrative Agent’s security interest in the Collateral.
     4.2. Securities. The Grantor will (i) deliver to the Administrative Agent
immediately upon execution of this Security Agreement the originals of all
Securities constituting Collateral (if any then exist) and (ii) hold in trust
for the Administrative Agent upon receipt and immediately thereafter deliver to
the Administrative Agent any additional Securities constituting Collateral, in
each case together with a stock power or endorsement therefor executed in blank.
     4.3. Stock and Other Ownership Interests. The Grantor will permit any
registerable Collateral to be registered in the name of the Administrative Agent
or its nominee at any time at the option of the Majority Banks following the
occurrence and during the continuance of an Event of Default.
     4.4. Voting Rights and Dividends
     4.5.1 Rights Prior to Default. So long as no Event of Default, and no
Default under Section 9.1(e) of the Credit Agreement, shall have occurred and be
continuing:
     (i) Until the Administrative 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 the Credit Agreement, 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.
     (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
Administrative Agent to hold as, Collateral and shall, if received by the
Grantor, be received in trust for the benefit of the Administrative Agent, be
segregated from the other property or funds of the Grantor, and be forthwith
delivered to the Administrative Agent as Collateral in the same form as so
received (with any necessary endorsement or assignment).
     (iii) The Administrative 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,

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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 9.1(e) of the Credit Agreement or an Event of
Default:
     (i) Upon written notice to the Grantor by the Administrative Agent, which
notice can only be given by the Administrative Agent with respect to the
Collateral consisting of the common stock of Consumers after the Grantor has
filed an application with the Federal Energy Regulatory Commission seeking
approval pursuant to Section 203 of the Federal Power Act, 16 U.S.C. 824b, to
transfer the common stock of Consumers to the Administrative Agent and received
such approval from the Federal Energy Regulatory Commission, 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
Administrative 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. The Grantor shall only file
the application pursuant to Section 203 of the Federal Power Act referred to in
the prior sentence if the Administrative Agent instructs it to do so in writing,
and the Grantor shall have 10 days after receipt of such instruction in which to
prepare and make the filing; provided, that the Administrative Agent can
withdraw such instruction at any time before the expiration of the ninth day
after its receipt.
     (ii) All dividends and interest and other property which are received by
the Grantor after proper written notice has been received by the Grantor
pursuant to paragraph (i) of this Section 4.5.2 shall be received in trust for
the benefit of the Administrative Agent, shall be segregated from other funds of
the Grantor and shall be forthwith paid over to the Administrative Agent as
Collateral in the same form as so received (with any necessary endorsement).
ARTICLE V
DEFAULT
     5.1. Default. The occurrence of any “Event of Default” under, and as
defined in, the Credit Agreement shall constitute an Event of Default hereunder.
     5.2. Acceleration and Remedies. Upon the acceleration of the Obligations
under the Credit Agreement pursuant to Section 9.2 thereof, the Administrative
Agent may, with the concurrence or at the direction of the Majority Banks,
exercise any or all of the following rights and remedies:
          5.2.1 Those rights and remedies provided in this Security Agreement,
the Credit Agreement, or any other Credit Document, provided that this
Section 5.2.1 shall not be

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understood to limit any rights or remedies available to the Administrative Agent
and the other Secured Parties 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 Administrative Agent may deem commercially reasonable. The Administrative
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
     No delay or omission of the Administrative Agent or any other Secured Party
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 Administrative Agent
with the concurrence or at the direction of the Banks required under
Section 10.1 of the Credit Agreement 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 Administrative Agent and the other Secured Parties until the
Secured Obligations have been paid in full in cash and all of the Commitments
have been terminated.
ARTICLE VII
SUBORDINATION OF INTERCOMPANY INDEBTEDNESS
     The Grantor agrees that any and all claims of the Grantor against any
Subsidiary with respect to any “Intercompany Indebtedness” (as hereinafter
defined), any endorser, obligor or any other guarantor of all or any part of the
Secured 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
Secured Obligations; provided, that, for the avoidance of doubt, so long as no
Event of Default shall be continuing, the Borrower and each Subsidiary may make
loans to and receive payments in the ordinary course with respect to
Intercompany Indebtedness (as hereinafter defined) from each other Subsidiary to
the extent not prohibited by the terms of the Credit Agreement and the other
Credit Documents. If all or any part of the assets of any the Borrower or any
Subsidiary, or the proceeds thereof, are subject to any distribution, division
or application to the creditors of party, whether partial or complete, voluntary
or involuntary, and whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of

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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 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 Subsidiary to the
Grantor (“Intercompany Indebtedness”) shall be paid or delivered directly to the
Administrative Agent for application to the Secured Obligations, due or to
become due, until the Secured Obligations shall have 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 Secured Obligations, the Grantor shall receive and
hold the same in trust, as trustee, for the benefit of the Secured Parties, and
shall forthwith deliver the same to the Administrative Agent, for the benefit of
the Secured Parties, in precisely the form received (except for any necessary
endorsement or assignment of the Grantor), for application to the Secured
Obligations, due or to become due, until the Secured Obligations shall have been
fully paid and satisfied in cash, and, until so delivered, the same shall be
held in trust by the Grantor as the property of the Secured Parties.
ARTICLE VIII
GENERAL PROVISIONS
     8.1. Secured Party Performance of Grantor’s Obligations. Without having any
obligation to do so, the Administrative 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 Administrative Agent for any reasonable amounts
paid by the Administrative Agent pursuant to this Section 8.1. The Grantor’s
obligation to reimburse the Administrative 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 Administrative Agent at any time and from time to
time in the sole discretion of the Administrative Agent and appoints the
Administrative 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 and which are Securities or with financial intermediaries holding
other Investment Property as may be necessary or advisable solely to give the
Administrative Agent Control over such Securities or other Investment Property,
(ii) following the occurrence and during the continuance of an Event of Default,
to apply the proceeds of any Collateral received by the Administrative Agent to
the Secured Obligations and (iii) 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 Credit Document), and the
Grantor agrees to reimburse the Administrative Agent on demand for any
reasonable payment made or any reasonable expense incurred by the Administrative
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 Agreement.
     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
Administrative Agent and the other Secured Parties and their respective
successors and assigns (including all persons who become

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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 Administrative 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 Agreement) 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 Administrative 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 Administrative Agent) paid or
incurred by the Administrative 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.
     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 ADMINISTRATIVE 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 CREDIT 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 ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO PROCEED
AGAINST THE GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE
BANKS 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
ADMINISTRATIVE AGENT OR THE BANKS. THE GRANTOR

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AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING
BROUGHT BY THE ADMINISTRATIVE 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 ADMINISTRATIVE AGENT. THE GRANTOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENT MAY COMMENCE
A PROCEEDING DESCRIBED IN THIS SECTION.
     8.8. Indemnity. The Grantor hereby agrees to indemnify the Administrative
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 Administrative
Agent is a party thereto) imposed on, incurred by or asserted against the
Administrative 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.
     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 One Energy Plaza, Jackson, Michigan 49201, Attention:
James E. Brunner Attention: Laura L. Mountcastle, and if to the Administrative
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.
     8.10. Continuing Security Interest; Assignments under Credit Agreement.
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 Secured Obligations now or hereafter
existing under the Credit Agreement, whether for principal, interest, fees,
expenses or otherwise, and all other amounts payable under this Security
Agreement and the termination of all of the Commitments or (y) the release by
the Administrative Agent of its security interest in 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 Administrative Agent hereunder, to
the benefit of, and be enforceable by, the Administrative Agent and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii) and Section 8.3 above, any Bank may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (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 Bank herein or otherwise, subject, however to
the provisions of Sections 10.3, 12.1 and 13.12 of the Credit Agreement. Upon
the earlier to occur of (A) the payment in full of all Secured Obligations now
or hereafter existing under the Credit Agreement, whether for principal,
interest, fees, expenses or otherwise, and all other amounts payable under this
Security Agreement and the termination of all of the Commitments or (B) the
release by the Administrative Agent of its security interest in all of the
Collateral, the security interest granted

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hereby shall terminate and all rights to the Collateral shall revert to the
Grantor. In addition, the Administrative Agent shall release any Collateral as
permitted or required pursuant to Section 10.3 of the Credit Agreement. Upon any
such termination, the Administrative 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 ADMINISTRATIVE AGENT EACH
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY
OTHER CREDIT DOCUMENT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER
OR THEREUNDER.
[Remainder of page intentionally blank.]

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     IN WITNESS WHEREOF, the Grantor and the Administrative Agent have executed
this Security Agreement as of the date first above written.

            CMS ENERGY CORPORATION
      By:   /s/ Laura L. Mountcastle         Name:   Laura L. Mountcastle       
Title: Vice President and Treasurer     

Signature Page to
Pledge and Security Agreement
(CMD Energy)

 

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        AGREED AND ACKNOWLEDGED:

BARCLAYS BANK PLC, as Administrative
Agent
    By:   /s/ Ann E. Sutton       Name:   Ann E. Sutton      Title:   Director 
   

Signature Page to
Pledge and Security Agreement
(CMD Energy)

 

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EXHIBIT “A”
List of Pledged Securities and Pledged Instruments
(See Section 3.4 of Security Agreement)
STOCK OWNED BY CMS ENERGY CORPORATION:

                          Issuer   Certificate Number   Number of Shares  
Percentage Ownership Interest
Consumers Energy Company
    04       84,108,789       100 %   INSTRUMENTS OWNED BY CMS ENERGY
CORPORATION                           Obligor   Amount   Interest Rate  
Maturity
None
                       

GENERAL INTANGIBLES AND OTHER SECURITIES OR OTHER INVESTMENT
PROPERTY (CERTIFICATED AND UNCERTIFICATED)
OWNED BY CMS ENERGY CORPORATION:

                  Issuer   Description of Collateral   Percentage Ownership
Interest
None
               

A-1

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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

B-1