<PAGE>
As filed with the Securities and Exchange Commission on August 21, 1997
Registration No. 333-
__________________________________________________________________________
__________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
__________________
CMS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-2726431
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(313) 436-9200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
_______________________
Alan M. Wright
Senior Vice President, Chief Financial Officer and Treasurer
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
313-436-9560
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_______________________
It is respectfully requested that the Commission send copies
of all notices, orders and communications to:
Michael D. VanHemert, Esq. Catherine C. Hood, Esq.
CMS Energy Corporation Reid & Priest LLP
330 Town Center Drive 40 West 57th Street
Dearborn, MI 48126 New York, NY 10019
_______________________
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of the Registration Statement
as determined by market conditions and other factors.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. __
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.
_X_
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. __
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. __
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. __
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
Proposed maximum Proposed maximum Amount of
Title of each class of Amount being offering price aggregate offering registration
securities to be registered registered per unit(1) price(1) fee
_______________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
General Term Notes $200,000,000 100% $200,000,000 $60,606.06
(Registered Trademark),
Series D
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
<FN>
(1) Estimated solely for the purpose of calculating the registration fee.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
</TABLE>
__________________________________________________________________________
__________________________________________________________________________<PAGE>
<PAGE> 1
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
Preliminary Prospectus Dated August 21, 1997
(Subject to Completion)
$200,000,000
CMS ENERGY CORPORATION
GENERAL TERM NOTES (Registered Trademark), SERIES D
__________________
Due from 9 Months to 25 Years from date of issue
CMS Energy Corporation (the "Company" or "CMS Energy") may offer from
time to time up to $200,000,000 aggregate principal amount of its General
Term Notes (Registered Trademark), Series D (the "Notes"). Each Note will
bear interest at a fixed rate payable monthly, quarterly or semi-annually
and will mature on a date from 9 months to 25 years from the date of
issue. The interest rate, issue price, stated maturity, interest payment
dates and certain other terms (including a Survivor's Option, if
applicable) with respect to each Note will be established at the time of
issuance and set forth in a pricing supplement to this Prospectus (a
"Pricing Supplement"). If provided in the applicable Pricing Supplement
with respect to any Note, such Note will be subject to redemption prior to
its stated maturity by the Company, in whole or in part, at redemption
prices declining from a specified premium, if any, to par, together with
accrued interest to the date of redemption. Notes will be issued only in
denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000. The Notes will be unsecured debt securities
of the Company. See "Description of General Term Notes(Registered
Trademark)."
In the case of a Note that provides for monthly interest payments,
interest will be payable, in arrears, on the fifteenth day of each
calendar month; provided, however, that in the event such Note is issued
between the first and fifteenth day of a calendar month, interest
otherwise payable on the fifteenth day of such calendar month will be
payable on the fifteenth day of the next succeeding calendar month. In the
case of a Note that provides for quarterly or semi-annual interest
payments, interest will be payable, in arrears, commencing on the day that
is either three months or six months, as appropriate, from (i) the day on
which such Note is issued, if such Note is issued on the fifteenth day of
a calendar month, or (ii) the fifteenth day of the calendar month prior to
the calendar month in which such Note is issued, if such Note is issued
prior to the fifteenth day of a calendar month, or (iii) the fifteenth day
of the calendar month in which such Note is issued, if such Note is issued
after the fifteenth day of a calendar month.
Each Note initially will be issued in book-entry form and will be
represented only by a global certificate (a "Global Note") registered in
the name of the nominee of The Depository Trust Company (as Depository). A
beneficial interest in a Global Note will be shown on, and transfers
thereof will be effected only through, records maintained by the
Depository and its participants. A beneficial interest in a Global Note
will not be represented by Notes in definitive form except under the
limited circumstances described herein. See "Description of General Term
Notes (Registered Trademark) -- Book-Entry System" and "-- Certificated
Notes."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.<PAGE>
<PAGE>
__________________________________________________________________________
__________________________________________________________________________
[CAPTION]
<TABLE>
Price to Agent's Discount Proceeds to
Public (1) or Commission (2) Company (2) (3)
__________________________________________________________________________
<S> <C> <C> <C>
Per Note . . . 100% Not to exceed 4% Not less than 96%
Total . . . $200,000,000 Not to exceed Not less than
$8,000,000 $192,000,000
__________________________________________________________________________
__________________________________________________________________________
<FN>
(1) Unless otherwise specified in the applicable Pricing Supplement,
the price to the public for each Note will be equal to 100% of the
principal amount thereof. See "Plan of Distribution."
<FN>
(2) The Company will pay J. W. Korth & Company (the "Agent") and such
other agent(s) as the Company may select from time to time
(collectively, the "Agents") an underwriting discount or
commission, not to exceed 4% of the principal amount of any Note,
which discount or commission will be disclosed in the applicable
Pricing Supplement for the Note, depending upon the maturity of the
Note. The names of any additional Agents will be disclosed in a
supplement to this Prospectus. The Company has agreed to indemnify
the Agents against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or to contribute to
payments that the Agents may be required to make in respect
thereof. See "Plan of Distribution."
<FN>
(3) Before deducting expenses payable by the Company estimated at
$181,696.
____________
</TABLE>
Offers to purchase the Notes are being solicited from time to time
by the Agent on behalf of the Company. The Agent has agreed to use its
reasonable best efforts to solicit purchases of the Notes. Following such
solicitation, Notes will be sold through the Agent, acting as principal.
The Notes are offered, subject to prior sale, when, as, and if issued to
and accepted by the Agent, and subject to the right of the Company and the
Agent to reject any order in whole or in part and to withdraw, cancel or
modify the offer made hereby without notice. The Notes will not be listed
on any securities exchange, and there can be no assurance that the Notes
offered by this Prospectus will be sold or that there will be a secondary
market for the Notes. See "Plan of Distribution."
____________
J. W. Korth & Company
The date of this Prospectus is August 21, 1997
______________
(Registered Trademark) Registered Servicemark of J. W. Korth & Company. <PAGE>
<PAGE> 2
Certain person participating in this offering may engage in transactions
that stabilize, maintain, or otherwise affect the price if the Notes.
Specifically, any agent may overallot in connection with the offering and
may bid for, and purchase, the Notes in the open market. For a
Description of these activities, see "Plan Of Distribution."
____________
No person is authorized in connection with the offering made hereby
to give any information or to make any representation not contained or
incorporated by reference in this Prospectus or any Pricing Supplement,
and any information or representation not contained or incorporated herein
must not be relied upon as having been authorized by CMS Energy or any
underwriter, dealer or agent. This Prospectus and any Pricing Supplement
do not constitute an offer to sell or the solicitation of an offer to buy
any securities other than the securities to which they relate or an offer
to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither
the delivery of this Prospectus or any Pricing Supplement nor any sale
made hereunder or thereunder shall, under any circumstances, create any
implication that the information contained or incorporated herein or
therein is correct as of any time subsequent to the date of such
information.
____________
AVAILABLE INFORMATION
CMS Energy is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices located at 500 West Madison, 14th Floor,
Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor,
New York, New York 10048. Copies of such materials can be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a web site (http://www.sec.gov) that contains reports,
proxy statements and other information regarding the Company. The
outstanding Common Stock of CMS Energy is listed on the New York Stock
Exchange and reports, proxy statements and other information concerning
CMS Energy may also be inspected and copied at the offices of such
exchange at 20 Broad Street, New York, New York 10005.
____________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by CMS Energy with the Commission
(File No. 1-9513) pursuant to the Exchange Act are hereby incorporated by
reference in this Prospectus and shall be deemed to be a part hereof:
(1) CMS Energy's Annual Report on Form 10-K for the year ended
December 31, 1996;
(2) CMS Energy's Quarterly Reports on Form 10-Q for the
quarters ended March 31, and June 30, 1997; and
(3) CMS Energy's Current Reports on Forms 8-K
dated March 7, April 24, May 1, June 5, June
11, July 1 and August 21, 1997.
All documents subsequently filed by CMS Energy pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference herein and shall be deemed to be a part hereof
from the date of filing of such documents (such documents, and the
documents enumerated above, being hereinafter referred to as "Incorporated
Documents").
Any statement contained in an Incorporated Document shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
CMS Energy undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or
oral request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such
documents). Requests for such copies should be directed to CMS Energy
Corporation at its principal executive offices located at Fairlane Plaza
South, Suite 1100, 330 Town Center Drive, Dearborn, Michigan 48126,
Attention: Office of the Secretary, telephone: (313) 436-9200.
Certain information contained in this Prospectus summarizes, is
based upon, or refers to information and financial statements contained in
one or more Incorporated Documents; accordingly, such information
contained herein is qualified in its entirety by reference to such
documents and should be read in conjunction therewith.
_________________________
_________________________
<PAGE>
<PAGE> 5
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by,
and should be read in conjunction with, the information appearing
elsewhere in this Prospectus and the Incorporated Documents.
THE COMPANY
CMS Energy, incorporated in 1987, is the parent holding company of
Consumers Energy Company ("Consumers") and CMS Enterprises Company
("Enterprises"). Consumers, a combination electric and gas utility
company serving in all 68 counties of Michigan's Lower Peninsula, is the
largest subsidiary of CMS Energy. Consumers' customer base includes a mix
of residential, commercial and diversified industrial customers, the
largest of which is the automotive industry. Enterprises is engaged in
several domestic and international energy-related businesses including:
(i) oil and gas exploration and production; (ii) acquisition, development
and operation of independent power production facilities; (iii) energy
marketing, risk management and energy management to large customers;
(iv) transmission, storage and processing of natural gas; and (v)
international energy distribution.
CMS Energy conducts its principal operations through the following
seven business segments: (i) electric utility operations; (ii) gas
utility operations; (iii) oil and gas exploration and production
operations; (iv) independent power production; (v) energy marketing,
services and trading; (vi) natural gas storage, transmission and
processing; and (vii) international energy distribution. Consumers or
Consumers' subsidiaries are engaged in two segments: electric operations
and gas operations. Consumers' electric and gas businesses are
principally regulated utility operations. CMS Energy and its subsidiaries
routinely evaluate, invest in, acquire and divest energy-related assets
and/or companies both domestically and internationally. Consideration for
such transactions may involve the delivery of cash or securities.
THE OFFERING
Securities Offered. . . . . . $200,000,000 aggregate principal amount
of General Term Notes (Registered
Trademark), Series D (the "Notes").
Maturity Date . . . . . . . . The Notes will be offered at varying
maturities but in no event will any
Note mature earlier than 9 months from
its date of issue or later than 25
years from its date of issue. The
stated maturity of each Note will be
set forth in the applicable Pricing
Supplement.
Interest Rate . . . . . . . . The interest rate on each Note will be
a fixed rate established at the time of
issuance and set forth in the
applicable Pricing Supplement.
Issue Price . . . . . . . . . The Issue Price with respect to each
Note will be 100% of the principal
amount, unless otherwise set forth in
the applicable Pricing Supplement.
Interest Payment Dates. . . . The interest payment dates with respect
to each Note will be set forth in the
applicable Pricing Supplement. The
Pricing Supplement also will state
whether interest on the related Note
will be payable monthly, quarterly or
semi-annually. See "Description of
General Term Notes (Registered
Trademark) - Interest."
Repayment Upon Death. . . . . If the Pricing Supplement relating to
any Note provides that the holder of
such Note will have the option (the
"Survivor's Option") to elect repayment
of such Note prior to its stated
maturity in the event of the death of
the beneficial owner of such Note, the
Company will repay such Note (or
portion thereof) properly tendered for
repayment by or on behalf of the person
that has authority to act on behalf of
the deceased owner of the beneficial
interest in such Note at a price equal
to 100% of the principal amount of the
beneficial interest of the deceased
owner in such Note plus accrued
interest to the date of such repayment,
subject to an annual aggregate
limitation and an individual holder
limitation on the dollar amount of
Notes that will be repaid in any year
under the Survivor's Option as well as
a limitation on the ability of
surviving joint tenants and tenants by
the entirety to exercise the Survivor's
Option. See "Description of General
Term Notes (Registered Trademark) -
Repayment Upon Death."
Redemption at Company's
Option. . . . . . . . . . . . If it is so provided in the Pricing
Supplement, the Notes will be
redeemable, in whole or in part in
increments of $1,000, at the option of
the Company, at any time after a
specified initial redemption date, on
notice given by the Company not more
than 60 nor less than 30 days prior to
the date of redemption, at redemption
prices declining over a specified
period from a specified premium, if
any, to par, together with accrued
interest to the date of redemption.
See "Description of General Term Notes
(Registered Trademark) - Redemption."
Purchase at the Option of
Holder after a Change in
Control . . . . . . . . . . . On a date no earlier than 60 days nor
later than 90 days (the "Change in
Control Purchase Date") after the date
on which the Company mails written
notice to the Holders of the Notes of
the occurrence of a Change in Control
at any time while the Notes are
outstanding, the Company will purchase
any Note, at the option of its Holder,
for a Change in Control Purchase Price
equal to 101% of the aggregate
outstanding principal amount of the
Notes to be repurchased plus accrued
interest thereon to the Change in
Control Purchase Date. See
"Description of General Term Notes
(Registered Trademark) - Purchase of
Notes Upon Change in Control" for a
summary of these provisions and the
definition of "Change in Control."
Mandatory Sinking Fund. . . . None.
Ranking . . . . . . . . . . . The Notes will be unsecured debt
securities of the Company. The Notes
will rank on a parity in right of
payment with all other unsecured and
unsubordinated indebtedness of the
Company. As of June 30, 1997 the
Company had no secured indebtedness
outstanding. However, the Company has
retained the right to pledge assets to
secure indebtedness in the future,
subject to certain limitations. See
"Description of General Term Notes
(Registered Trademark) - Certain
Restrictive Covenants - Limitations on
Certain Liens."
Certain Covenants . . . . . . So long as any of the Notes are
outstanding the Company has agreed to:
(a) limitations on the creation of
liens or security interests upon the
stock of Consumers and certain other
Subsidiaries; (b) limitations on
transactions between the Company and
its affiliates; and (c) limitations on
certain mergers, consolidations and
sales of assets. Also, so long as the
Notes are outstanding and until the
Notes are rated BBB- or above (or an
equivalent rating) by Standard & Poor's
and one Other Rating Agency, at which
time the Company will be permanently
released from such limitations the
Company has agreed to: (a) limitations
on the issuance or incurrence of
indebtedness by the Company and certain
of its Subsidiaries (other than
Consumers); (b) limitations on the
declaration or payment of dividends on,
or the redemption, retirement or other
acquisition of, the capital stock of
the Company; and (c) additional
limitations on certain mergers,
consolidations and sales of assets. See
"Description of General Term Notes
(Registered Trademark) - Certain
Restrictive Covenants."
Use of Proceeds . . . . . . . Unless otherwise provided in a Pricing
Supplement, the net proceeds of the
sale of the Notes will be used by the
Company for its general corporate
purposes. See "Use of Proceeds."
Liquidity . . . . . . . . . . There is no active public trading
market for the Notes. Any Agent may
make a market in the Notes, but no
Agent is obligated to do so and any
such market making so undertaken may be
discontinued without notice at any
time. There can be no assurance as to
the liquidity of any market that may
develop for the Notes, the ability of
the Holders to sell their Notes, or the
price at which Holders would be able to
sell their Notes. If a trading market
is not developed or is not maintained,
Holders of the Notes may experience
difficulty in reselling them or may be
unable to sell them at all. If a
market for the Notes develops, they may
trade at a discount from their Issue
Price. Future trading prices of the
Notes will depend on many factors,
including prevailing interest rates,
the Company's operating results, and
the market for similar securities. The
Company does not intend to apply for
listing of the Notes on any securities
exchange. Historically, and
particularly in recent periods, the
market for non-investment grade debt
has been subject to disruptions that
have caused substantial volatility in
the prices of securities. There can be
no assurance that the market for the
Notes, if any, will not be subject to
similar disruptions.<PAGE>
<PAGE> 9
THE COMPANY
CMS Energy, incorporated in 1987, is the parent holding
company of Consumers Energy Company ("Consumers") and CMS Enterprises
Company ("Enterprises"). Consumers, a combination electric and gas
utility company serving in all 68 counties of Michigan's Lower Peninsula,
is the largest subsidiary of CMS Energy. Consumers' customer base
includes a mix of residential, commercial and diversified industrial
customers, the largest of which is the automotive industry. Enterprises
is engaged in several domestic and international energy-related businesses
including: (i) oil and gas exploration and production; (ii) acquisition,
development and operation of independent power production facilities;
(iii) energy marketing, risk management and energy management to large
customers; (iv) transmission, storage and processing of natural gas; and
(v) international energy distribution.
CMS Energy conducts its principal operations through the following
seven business segments: (i) electric utility operations; (ii) gas
utility operations; (iii) oil and gas exploration and production
operations; (iv) independent power production; (v) energy marketing,
services and trading; (vi) natural gas storage, transmission and
processing; and (vii) international energy distribution. Consumers or
Consumers' subsidiaries are engaged in two segments: electric operations
and gas operations. Consumers' electric and gas businesses are
principally regulated utility operations. CMS Energy and its subsidiaries
routinely evaluate, invest in acquire and divest energy-related assets
and/or companies both domestically and internationally. Consideration for
such transactions may involve the delivery of cash or securities.
CMS Energy's 1996 consolidated operating revenue was $4,333
million. This consolidated operating revenue was derived from its electric
utility operations (approximately 57% or $2,446 million), its gas utility
operations (approximately 30% or $1,282 million), gas transmission,
storage and marketing (approximately 7% or $320 million), oil and gas
exploration and production activities (approximately 3% or $130 million)
and independent power production and other non-utility activities
(approximately 3% or $155 million). Consumers' consolidated operations in
the electric and gas utility businesses account for the major share of
CMS Energy's total assets, revenue and income. The unconsolidated share
of non-utility electric generation, gas transmission and storage and
international energy distribution revenue for 1996 was $557 million.
Consumers is a public utility serving gas or electricity to almost
six million of Michigan's nine and a half million residents in all of the
68 counties in Michigan's Lower Peninsula. Industries in Consumers'
service area include automotive, metal, chemical, food and wood products
and a diversified group of other industries. Consumers' 1996 consolidated
operating revenue of $3,770 million was derived approximately 65% ($2,446
million) from its electric utility business and approximately 34% ($1,282
million) from its gas utility business. Consumers' rates and certain other
aspects of its business are subject to the jurisdiction of the Michigan
Public Service Commission and the Federal Energy Regulatory Commission.
The foregoing information concerning CMS Energy and its
subsidiaries does not purport to be comprehensive. For additional
information concerning CMS Energy and its subsidiaries' business and
affairs, including their capital requirements and external financing
plans, pending legal and regulatory proceedings and descriptions of
certain laws and regulations to which those companies are subject,
prospective purchasers should refer to the Incorporated Documents. See
"Incorporation of Certain Documents by Reference" and "Available
Information" above.
The address of the principal executive officers of CMS Energy is
330 Town Center Drive, Suite 1100, Dearborn, Michigan 48126. Its
telephone number is (313) 436-9200.
USE OF PROCEEDS
Unless otherwise provided in a Pricing Supplement, the net proceeds
from the sale of the Notes will be used by the Company for its general
corporate purposes.
<PAGE>
<PAGE> 10
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for each of the years ended
December 31, 1992 through 1996, and for the six months ended June 30,
1997, are as follows:
<TABLE>
Six Months
Ended
June 30, 1997 Year Ended December 31,
(unaudited) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
(1)
Ratio of earnings to fixed charges. . . . . . . . 2.13 2.01 1.94 2.07 1.88 -
</TABLE>
(1) For the year ended December 31, 1992, fixed charges exceeded earnings
by $441 million. Earnings as defined include a $520 million pretax
loss on the settlement of MCV power purchases, $(15) million for
potential customer refunds and other reserves related to 1992 but
recorded in 1991, and $6 million relating to CMS Generation's
reduction in its investment in The Oxford Energy Company. The ratio
of earnings to fixed charges would have been 1.33 excluding these
amounts.
For the purpose of computing such ratios, earnings represent net
income before income taxes, net interest charges and the estimated
interest portion of lease rentals.
DESCRIPTION OF GENERAL TERM NOTES (Registered Trademark)
The Notes will be issued as a series of debt securities under an
Indenture, dated as of January 15, 1994 (such Indenture as amended or
supplemented from time to time by one or more supplemental indentures
thereto, including a supplemental indenture relating to the Notes, being
referred to herein as the "Indenture" and all debt securities hereafter
issued under such Indenture being collectively referred to herein as
"Securities"), between the Company and The Chase Manhattan Bank, a New
York banking corporation, as trustee (the "Trustee"). The Company is not
limited by the Indenture as to the aggregate principal amount of
Securities it may issue. The descriptions of the Notes and the Indenture
in this Prospectus are brief summaries of the provisions contained in such
documents and do not purport to be complete. The form of the Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus
is a part, and reference is made thereto for the definitive provisions of
such Indenture. The descriptions herein are qualified in their entirety
by such reference. Certain capitalized terms used herein without
definition shall have the meanings respectively set forth in the
Indenture.
GENERAL
The Notes will be offered pursuant to this Prospectus on a continuing
basis. Each Note will mature from 9 months to 25 years from its date of
issue. The Notes will be issued without coupons in registered form only
and in denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000.
CMS Energy is a holding company and its assets consist primarily of
investment in its subsidiaries. The Securities (including the Notes) will
be obligations exclusively of the Company. The Company's ability to
service its indebtedness, including the Securities, is dependent primarily
upon the earnings of its subsidiaries and the distribution or other
payment of such earnings to the Company in the form of dividends, loans or
advances, and repayment of loans and advances from the Company. The
subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to
the Securities or to make any funds available therefor, whether by
dividends, loans or other payments.
A substantial portion of the consolidated liabilities of the Company
have been incurred by its subsidiaries. Therefore, the Company's rights
and the rights of its creditors, including holders of Securities, to
participate in the distribution of assets of any subsidiary upon the
latter's liquidation or reorganization will be subject to prior claims of
the subsidiary's creditors, including trade creditors, except to the
extent that the Company may itself be a creditor with recognized claims
against the subsidiary (in which case the claims of the Company would
still be subject to the prior claims of any secured creditor of such
subsidiary and of any holder of indebtedness of such subsidiary that is
senior to that held by CMS Energy). As of June 30, 1997, the Company's
subsidiaries had total indebtedness for borrowed money (excluding
intercompany indebtedness) of approximately $ 2,670 million.
The Notes rank on a parity with all other unsecured and
unsubordinated indebtedness of the Company. As of June 30, 1997 the
Company had no secured indebtedness outstanding. However, the Company has
retained the right to secure indebtedness, subject to certain limitations.
See "Certain Restrictive Covenants -- Limitations on Certain Liens."
Notes will be represented by a Global Note registered in the name of
the nominee of the Depository, except under the limited circumstances
described below under "Certificated Notes." A single Global Note will
represent all Notes issued on the same day and having the same terms,
including, but not limited to, the same Interest Payment Dates, rate of
interest, stated maturity and repurchase and redemption provisions (if
any). A beneficial interest in a Global Note will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depository (with respect to interests of its participants) and its
participants (with respect to interests of persons other than its
participants).
Unless the applicable Pricing Supplement provides otherwise, the
price at which each Note will be issued (the "Issue Price") will be 100%
of the principal amount of the Note. Notes will not be issued as
discounted securities, at prices below stated principal amounts, or having
an original issue discount for U.S. federal income tax purposes, unless
the applicable Pricing Supplement so provides and, if applicable,
describes potential U.S. federal income tax consequences.
The Pricing Supplement relating to a Note will set forth, among other
things, the following terms: (i) the date on which such Note will be
issued; (ii) the Issue Price; (iii) the stated maturity date of such Note;
(iv) the rate per annum at which such Note will bear interest; (v) the
Interest Payment Dates for such Note; (vi) whether the holder of such Note
will have the Survivor's Option; (vii) whether and the terms on which such
Note will be subject to redemption by the Company prior to its stated
maturity; and (viii) any other terms not inconsistent with the provisions
of the Indenture.
INTEREST
Each Note will bear interest from the date of issue at the fixed rate
per annum specified therein and in the applicable Pricing Supplement until
the principal thereof is paid or made available for payment. Interest
will be payable either monthly, quarterly or semi-annually on each
Interest Payment Date and at Maturity. Interest will be payable to the
person in whose name a Note is registered at the close of business on the
Regular Record Date next preceding each Interest Payment Date; provided,
however, interest payable at Maturity will be payable to the person to
whom principal shall be payable. Unless otherwise indicated in the
applicable Pricing Supplement, interest will be paid in arrears and shall
be the amount of interest accrued to, but excluding, the Interest Payment
Date. Interest on the Notes will be computed on the basis of a 360-day
year of twelve 30-day months.
The Interest Payment Dates for a Note that provides for monthly
interest payments shall be the fifteenth day of each calendar month;
provided, however, that in the case of a Note issued between the first and
fifteenth day of a calendar month, interest otherwise payable on the
fifteenth day of such calendar month will be payable on the fifteenth day
of the next succeeding calendar month. In the case of a Note that
provides for quarterly interest payments, the Interest Payment Dates shall
be the fifteenth day of each of the months specified in the Pricing
Supplement, commencing on the day that is three months from (i) the day on
which such Note is issued, if such Note is issued on the fifteenth day of
a calendar month, or (ii) the fifteenth day of the calendar month
immediately preceding the calendar month in which such Note is issued, if
such Note is issued prior to the fifteenth day of a calendar month, or
(iii) the fifteenth day of the calendar month in which such Note is
issued, if such Note is issued after the fifteenth day of a calendar
month. In the case of a Note that provides for semi-annual interest
payments, the Interest Payment Dates shall be the fifteenth day of each of
the months specified in the Pricing Supplement, commencing on the day that
is six months from (i) the day on which such Note is issued, if such Note
is issued on the fifteenth day of a calendar month, (ii) the fifteenth day
of the calendar month immediately preceding the calendar month in which
such Note is issued, if such Note is issued prior to the fifteenth day of
a calendar month, or (iii) the fifteenth day of the calendar month in
which such Note is issued, if such Note is issued after the fifteenth day
of a calendar month. The Regular Record Date with respect to any Interest
Payment Date (other than at Maturity) shall be the first day (whether or
not a Business Day) of the calendar month in which such Interest Payment
Date occurs, and, in the case of interest payable at Maturity, the Regular
Record Date shall be the date of Maturity.
Interest on the Notes that is not punctually paid or duly provided
for on any Interest Payment Date ("defaulted interest") shall cease to be
payable to the Holder thereof on the relevant Regular Record Date and may
be paid by the Company to Holders of Notes (i) at the close of business on
a Special Record Date for the payment of such defaulted interest fixed by
the Trustee and not more than 15 nor less than 10 days prior to the date
of the proposed payment, provided that the Company shall have notified the
Trustee in writing of the amount of such defaulted interest, deposited
with the Trustee funds equal to the amount of the proposed payment or made
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, or (ii) in such other lawful manner which is
not inconsistent with the requirements of any securities exchange on which
the Notes are listed for trading.
REDEMPTION
A Note is not subject to redemption at the option of the Company
prior to the date, if any, fixed at the time of sale and designated as the
"Initial Redemption Date" on the face of such Note and in the applicable
Pricing Supplement hereto. If no Initial Redemption Date is indicated
with respect to a Note, such Note is not subject to redemption at the
option of the Company prior to Stated Maturity. If so specified in the
applicable Pricing Supplement, on and after the Initial Redemption Date,
the related Note will be redeemable in whole or in part in increments of
$1,000, at the option of the Company, at redemption prices declining from
a specified premium, if any, to par, together with accrued interest to the
date of redemption, on notice given by the Company not more than 60 nor
less than 30 days prior to the date of redemption. If less than all of
the Notes of like tenor and terms are to be redeemed, the Notes to be
redeemed will be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate. Notwithstanding the foregoing however,
the Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may, at the discretion of
the Company, be held or resold or surrendered to the Trustee for
cancellation. The Notes will not have a sinking fund. See "Purchase of
Notes Upon Change in Control" and "Repayment Upon Death."
With respect to Notes redeemable at the option of the Company, the
applicable Pricing Supplement will specify if the Company would be
prohibited from redeeming such Note as a part of, or in anticipation of,
any refunding operation by the application, directly or indirectly, of
moneys borrowed having an effective interest cost to the Company of less
than the effective interest cost to the Company of such Note.
PURCHASE OF NOTES UPON CHANGE IN CONTROL
In the event of any Change in Control (as defined below) each Holder
of a Note will have the right, at such Holder's option, subject to the
terms and conditions of the Indenture, to require the Company to
repurchase all or any part of such Holder's Note on a date selected by the
Company that is no earlier than 60 days nor later than 90 days (the
"Change in Control Purchase Date") after the mailing of written notice by
the Company of the occurrence of such Change in Control at a repurchase
price payable in cash equal to 101% of the principal amount of such Notes
plus accrued interest to the Change in Control Purchase Date (the "Change
in Control Purchase Price").
Within 30 days after the Change in Control, the Company is obligated
to mail to each Holder of a Note a notice regarding the Change in Control,
which notice shall state, among other things: (i) that a Change in
Control has occurred and that each such Holder has the right to require
the Company to repurchase all or any part of such Holder's Notes at the
Change in Control Purchase Price; (ii) the Change in Control Purchase
Price; (iii) the Change in Control Purchase Date, (iv) the name and
address of the Paying Agent and (v) the procedures that Holders must
follow to cause the Notes to be repurchased.
To exercise this right, a Holder must deliver a Change in Control
Purchase Notice to the Paying Agent at its office in The City of New York,
or any other office of the Paying Agent maintained for such purposes, not
later than 30 days prior to the Change in Control Purchase Date. The
Change in Control Purchase Notice shall state (i) the portion of the
principal amount of any Notes to be repurchased, which must be $1,000 or
an integral multiple thereof, (ii) that such Notes are to be repurchased
by the Company pursuant to the applicable change-in-control provisions of
the Indenture, and (iii) unless the Notes are represented by one or more
Global Notes, the certificate numbers of the Notes to be repurchased.
Any Change in Control Purchase Notice may be withdrawn by the Holder
by a written notice of withdrawal delivered to the Paying Agent not later
than three Business Days prior to the Change in Control Purchase Date.
The notice of withdrawal shall state the principal amount and, if
applicable, the certificate numbers of the Notes as to which the
withdrawal notice relates and the principal amount, if any, which remains
subject to a Change in Control Purchase Notice.
If a Note is represented by a Global Note, the Depository or its
nominee will be the holder of such Note and therefore will be the only
entity that can require the Company to repurchase Notes upon a Change in
Control. To obtain repayment with respect to such Note upon a Change in
Control, the beneficial owner of such Note must provide to the broker or
other entity through which it holds the beneficial interest in such Note
(i) a Change in Control Purchase Notice signed by such beneficial owner,
and such signature must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc. ("NASD") or a commercial bank or trust company having an
office or correspondent in the United States and (ii) instructions to such
broker or other entity to notify the Depository of such beneficial owner's
desire to cause the Company to repurchase such Notes. Such broker or
other entity will provide to the Paying Agent (i) a Change in Control
Purchase Notice received from such beneficial owner and (ii) a certificate
satisfactory to the Paying Agent from such broker or other entity that it
represents such beneficial owner. Such broker or other entity will be
responsible for disbursing any payments it receives upon the repurchase of
such Notes by the Company.
Payment of the Change in Control Purchase Price for a Note in
certificated form (a "Certificated Note") for which a Change in Control
Purchase Notice has been delivered and not withdrawn is conditioned upon
delivery of such Note (together with necessary endorsements) to the Paying
Agent at its office in The City of New York, or any other office of the
Paying Agent maintained for such purpose, at any time (whether prior to,
on or after the Change in Control Purchase Date) after the delivery of
such Change in Control Purchase Notice. Payment of the Change in Control
Purchase Price for such Note will be made promptly following the later of
the Change in Control Purchase Date or the time of delivery of such Note.
If the Paying Agent holds, in accordance with the terms of the
Indenture, money sufficient to pay the Change in Control Purchase Price of
a Note on the Business Day following the Change in Control Purchase Date
for such Note, then, on and after such date, interest on such Note will
cease to accrue, whether or not such Note is delivered to the Paying
Agent, and all other rights of the Holder shall terminate (other than the
right to receive the Change in Control Purchase Price upon delivery of the
Note).
Under the Indenture, a "Change in Control" means an event or series
of events by which (i) CMS Energy ceases to beneficially own, directly or
indirectly, at least 80% of the total voting power of all classes of
Capital Stock then outstanding of Consumers (whether arising from issuance
of securities of the Company or Consumers, any direct or indirect transfer
of securities by CMS Energy or Consumers, any merger, consolidation,
liquidation or dissolution of CMS Energy or Consumers or otherwise); or
(ii) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as such term is
used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
or group shall be deemed to have "beneficial ownership" of all shares that
such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 30% of the Voting Stock of CMS Energy; or
(iii) CMS Energy consolidates with or merges into another corporation or
directly or indirectly conveys, transfers or leases all or substantially
all of its assets to any person, or any corporation consolidates with or
merges into CMS Energy, in either event pursuant to a transaction in which
the outstanding Voting Stock of CMS Energy is changed into or exchanged
for cash, securities, or other property, other than any such transaction
where (A) the outstanding Voting Stock of CMS Energy is changed into or
exchanged for Voting Stock of the surviving corporation and (B) the
holders of the Voting Stock of CMS Energy immediately prior to such
transaction retain, directly or indirectly, substantially proportionate
ownership of the Voting Stock of the surviving corporation immediately
after such transaction.
The Indenture requires CMS Energy to comply with the provisions of
Rule 13e-4 and any other tender offer rules under the Exchange Act which
may then be applicable and file Schedule 13E-4 or any other schedule
required thereunder in connection with any offer by CMS Energy to purchase
Notes at the option of Holders upon a Change in Control. The Change in
Control purchase feature of the Notes may in certain circumstances make
more difficult or discourage a takeover of CMS Energy and, thus, the
removal of incumbent management. The Change in Control purchase feature,
however, is not the result of management's knowledge of any specific
effort to accumulate shares of its common stock or to obtain control of
the Company by means of a merger, tender offer, solicitation or otherwise,
or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, the Change in Control purchase feature is a
customary term contained in similar debt offerings and the terms of such
feature result from negotiations between CMS Energy and the Agents.
Management has no present intention to propose any anti-takeover measures
although it is possible that CMS Energy could decide to do so in the
future.
No Note may be repurchased by the Company as a result of a Change of
Control if there has occurred and is continuing an Event of Default
described under "Events of Default" below (other than a default in the
payment of the Change in Control Purchase Price with respect to the
Notes). In addition, the Company's ability to purchase Notes may be
limited by its financial resources and its inability to raise the required
funds because of restrictions on issuance of securities contained in other
contractual arrangements.
REPAYMENT UPON DEATH
The Pricing Supplement relating to any Note will indicate whether the
holder of such Note will have the Survivor's Option. SEE THE PRICING
SUPPLEMENT TO DETERMINE WHETHER THE SURVIVOR'S OPTION APPLIES TO ANY
PARTICULAR NOTE.
Pursuant to exercise of the Survivor's Option, if applicable, the
Company will repay any Note (or portion thereof) properly tendered for
repayment by or on behalf of the person (the "Representative") that has
authority to act on behalf of the deceased owner of the beneficial
interest in such Note under the laws of the appropriate jurisdiction
(including, without limitation, the personal representative or executor of
such deceased beneficial owner) at a price equal to 100% of the principal
amount of the beneficial interest of the deceased owner in such Note plus
accrued interest to the date of such repayment, subject to the following
limitations. Notwithstanding the foregoing, the Survivor's Option will
not be available to persons who are surviving joint tenants or surviving
tenants by the entirety. The Company may, in its sole discretion, limit
the aggregate principal amount of Notes as to which exercises of the
Survivor's Option will be accepted in any calendar year (the "Annual Put
Limitation") to one percent (1%) of the outstanding principal amount of
the Notes as of the end of the most recent fiscal year, but not less than
$500,000 in any such calendar year, or such greater amount as the Company
in its sole discretion may determine for any calendar year, and may limit
to $100,000, or such greater amount as the Company in its sole discretion
may determine for any calendar year, the aggregate principal amount of
Notes (or portions thereof) as to which exercise of the Survivor's Option
will be accepted in such calendar year with respect to any individual
deceased owner of beneficial interests in such Notes (the "Individual Put
Limitation"). Moreover, the Company will not make principal repayments
pursuant to exercise of the Survivor's Option in amounts that are less
than $1,000, and, in the event that the limitations described in the
preceding sentence would result in the partial repayment of any Note, the
principal amount of such Note remaining outstanding after repayment must
be at least $1,000 (the minimum authorized denomination of the Notes).
Any Note (or portion thereof) tendered pursuant to exercise of the
Survivor's Option may be withdrawn by a written request by the
Representative of the deceased owner received by the Trustee prior to its
repayment.
Each Note (or portion thereof) that is tendered pursuant to valid
exercise of the Survivor's Option will be accepted promptly in the order
all such Notes are tendered, except for any Note (or portion thereof) the
acceptance of which would contravene (i) the Annual Put Limitation, if
applied, or (ii) the Individual Put Limitation, if applied, with respect
to the relevant individual deceased owner of beneficial interests therein.
If, as of the end of any calendar year, the aggregate principal amount of
Notes (or portions thereof) that have been accepted pursuant to exercise
of the Survivor's Option for such year, has not exceeded the Annual Put
Limitation, if applied, for such year, any exercise(s) of the Survivor's
Option with respect to Notes (or portions thereof) not accepted during
such calendar year because such acceptance would have contravened the
Individual Put Limitation, if applied, with respect to an individual
deceased owner of beneficial interests therein will be accepted in the
order all such Notes (or portions thereof) were tendered, to the extent
that any such exercise would not exceed the Annual Put Limitation for such
calendar year. Any Note (or portion thereof) accepted for repayment
pursuant to exercise of the Survivor's Option will be repaid no later than
the first Interest Payment Date that occurs 20 or more calendar days after
the date of such acceptance. Each Note (or any portion thereof) tendered
for repayment that is not accepted in any calendar year due to the
application of the Annual Put Limitation will be deemed to be tendered in
the following calendar year in the order in which all such Notes (or
portions thereof) were originally tendered, unless any such Note (or
portion thereof) is withdrawn by the Representative for the deceased owner
prior to its repayment. In the event that a Note (or any portion thereof)
tendered for repayment pursuant to valid exercise of the Survivor's Option
is not accepted, the Trustee will deliver a notice by first-class mail to
the registered Holder thereof at its last known address as indicated in
the Security Register that states the reasons such Note (or portion
thereof) has not been accepted for repayment.
Subject to the foregoing, in order for a Survivor's Option to be
validly exercised with respect to any Note (or portion thereof), the
Trustee must receive from the Representative of the deceased owner (i) a
written request for repayment signed by the Representative, and such
signature must be guaranteed by a member firm of a registered national
securities exchange or of the NASD or a commercial bank or trust company
having an office or correspondent in the United States, (ii) if such Note
is not represented by a Global Note as described below, tender of the Note
(or portion thereof) to be repaid, (iii) appropriate evidence satisfactory
to the Company and the Trustee that (A) the Representative has authority
to act on behalf of the deceased beneficial owner, (B) the death of such
beneficial owner has occurred and (C) the deceased was the owner of a
beneficial interest in such Note at the time of death, (iv) if applicable,
a properly executed assignment or endorsement, and (v) if the beneficial
interest in such Note is held by a nominee of the deceased beneficial
owner, a certificate satisfactory to the Trustee from such nominee
attesting to the deceased's ownership of a beneficial interest in such
Note. All questions as to the eligibility or validity of any exercise of
the Survivor's Option will be determined by the Company, in its sole
discretion, which determinations will be final and binding on all parties.
If a Note is represented by a Global Note, the Depository or its
nominee will be the Holder of such Note and therefore will be the only
entity that can exercise the Survivor's Option for such Note. To obtain
repayment pursuant to exercise of the Survivor's Option with respect to
such Note, the Representative must provide to the broker or other entity
through which the beneficial interest in such Note is held by the deceased
owner (i) the documents described in clauses (i) and (iii) of the
preceding paragraph and (ii) instructions to such broker or other entity
to notify the Depository of such Representative's desire to obtain
repayment pursuant to exercise of the Survivor's Option. Such broker or
other entity will provide to the Trustee (i) the documents received from
the Representative referred to in clause (i) of the preceding sentence and
(ii) a certificate satisfactory to the Trustee from such broker or other
entity stating that it represents the deceased beneficial owner. Such
broker or other entity will be responsible for disbursing any payments it
receives pursuant to exercise of the Survivor's Option to the appropriate
Representative. See "Book-Entry System."
A REPRESENTATIVE MAY OBTAIN THE FORMS USED TO EXERCISE THE SURVIVOR'S
OPTION FROM THE CHASE MANHATTAN BANK, THE TRUSTEE, AT 450 WEST 33RD
STREET, 15TH FLOOR, NEW YORK, NEW YORK 10001-2697, ATTENTION: GLOBAL
TRUST SERVICES, DURING NORMAL BUSINESS HOURS.
PAYMENT AND PAYING AGENTS
Payments of principal, premium, if any, and interest on Notes
represented by a Global Note will be made to the Depository through such
Paying Agent or Paying Agents in The City of New York as the Company may
designate from time to time or by wire transfer to the Depository. See
"Book-Entry System." Payments of principal, premium, if any, and interest
on Certificated Notes will be made upon surrender of such Notes at the
office of such Paying Agent or Paying Agents in The City of New York as
the Company may designate from time to time, except that at the option of
the Company, payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
The principal corporate trust office of The Chase Manhattan Bank,
located at 450 West 33rd Street, 15th Floor, New York, New York 10001-
2697, has been designated as the Company's sole Paying Agent for payments
with respect to the Notes. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except
that the Company will be required to maintain a Paying Agent in each Place
of Payment for the Notes.
BOOK-ENTRY SYSTEM
The Notes will be issued initially in the form of one or more Global
Notes that will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York ("DTC"), which will act as securities
depository for the Notes. The Notes will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's partnership
nominee). DTC and any other depository which may replace DTC as
depository for the Notes are sometimes referred to herein as the
"Depository."
Upon issuance, all Notes having the same issue date, interest rate,
redemption provisions, provisions for repurchase at the option of the
Holder, stated maturity and other provisions will be represented by one or
more Global Notes. Except under the limited circumstances described
below, Notes represented by Global Notes will not be exchangeable for
Certificated Notes.
So long as the Depository, or its nominee, is the registered owner of
a Global Note, such Depository or such nominee, as the case may be, will
be considered the sole registered holder of the individual Notes
represented by such Global Note for all purposes under the Indenture.
Payments of principal of and premium, if any, and any interest on
individual Notes represented by a Global Note will be made to the
Depository or its nominee, as the case may be, as the registered holder of
such Global Note. Except as set forth below, owners of beneficial
interests in a Global Note will not be entitled to have any of the
individual Notes represented by such Global Note registered in their
names, will not receive or be entitled to receive physical delivery of any
such Note and will not be considered the registered holder thereof under
the Indenture, including, without limitation, for purposes of consenting
to any amendment thereof or supplement thereto as described in this
Prospectus.
The following is based upon information furnished by DTC:
DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities
that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants ("Direct Participants")
include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the NASD.
Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the
Notes on DTC's records. The ownership interest of each actual
purchaser of each Note ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements
of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers
of ownership interests in the Notes are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Notes, except in the event that use of
the book-entry system for one or more Notes is discontinued.
To facilitate subsequent transfers, all Global Notes
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Global Notes
with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the
identity of the Direct Participants to whose accounts such Notes are
credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to
time.
Redemption notices shall be sent to Cede & Co. If less than
all of the Notes are being redeemed, DTC's practice is to determine
by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect
to Notes. Under its usual procedures, DTC mails an Omnibus Proxy to
the Company as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Notes are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on
the payable date in accordance with their respective holdings shown
on DTC's records unless DTC has reason to believe that it will not
receive payment on the payable date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such Participant and not of DTC,
any Agents, or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Company,
disbursement of such payments to Direct Participants shall be the
responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities
depository with respect to the Notes at any time by giving 90 days'
notice to the Company or the Trustee. Under such circumstances, in
the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered in
exchange for the Notes represented by the Global Notes held by the
DTC. See "Certificated Notes."
In addition, the Company may decide to discontinue use of
the system of book-entry transfers through DTC (or a successor
securities depository). In that event, Certificated Notes will be
printed and delivered in exchange for the Notes represented by the
Global Notes held by DTC. See "Certificated Notes."
The information in this section concerning DTC and DTC's book-entry
system has been obtained from DTC. The Company believes such information
to be reliable, but the Company takes no responsibility for the accuracy
thereof.
None of the Company, any Agents, the Trustee, any paying agent or the
registrar for the Notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests in a Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
CERTIFICATED NOTES
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company by
the earlier of (i) 90 days from the date the Company receives notice to
the effect that the Depository is unwilling or unable to act, or the
Company determines that the Depository is unable to act or (ii) the
effectiveness of the Depository's resignation or failure to fulfill its
duties as Depository, the Company will issue Certificated Notes in
exchange for the Notes represented by the Global Notes held by the
Depository. In addition, the Company may at any time and in its sole
discretion determine not to have Notes represented by a Global Note and,
in such event, will issue individual Certificated Notes in exchange for
the Notes represented by the Global Note. In either instance, the owner
of a beneficial interest in a Note represented by a Global Note will be
entitled to have such Note registered in its name and will be entitled to
physical delivery of such Note in certificated form. Individual
Certificated Notes so issued will be issued in fully registered form,
without coupons, in one or more authorized denominations as described
above under "General."
Certificated Notes will be exchangeable for other Certificated Notes
of any authorized denominations and of a like aggregate principal amount
and tenor.
Certificated Notes may be presented for exchange as provided above,
and may be presented for registration of transfer (duly endorsed, or
accompanied by a duly executed written instrument of transfer), at the
office of The Chase Manhattan Bank, the Trustee, in The City of New York,
(the "Security Registrar") or at the office of any other transfer agent
designated by the Company for such purpose with respect to the Notes and
referred to in the applicable Pricing Supplement, without service charge
and upon payment of any taxes and other governmental charges as described
in the Indenture. Such transfer or exchange will be effected upon the
Security Registrar or such other transfer agent, as the case may be, being
satisfied with the documents of title and identity of the person making
the request. If a Pricing Supplement refers to any transfer agents (in
addition to the Security Registrar) designated by the Company with respect
to the Notes, the Company may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any
such transfer agent acts, except that the Company will be required to
maintain a transfer agent in each Place of Payment for the Notes. The
Company may at any time designate additional transfer agents with respect
to the Notes.
The Company will not be required to (i) issue, register the transfer
of or exchange Certificated Notes during a period beginning at the opening
of business 15 days before the selection of Notes to be redeemed and
ending at the close of business on the day of mailing of the relevant
notice of redemption; or (ii) register the transfer of or exchange any
Certificated Note, or portion thereof, called for redemption, except the
unredeemed portion of any Certificated Note being redeemed in part.
If a Certificated Note is mutilated, destroyed, lost or stolen, it
may be replaced at the corporate trust office or agency of the Trustee in
The City of New York upon payment by the Holder of such expenses as may be
incurred by the Company and the Trustee in connection therewith and the
furnishing of such evidence and indemnity as the Company and the Trustee
may require. Mutilated Notes must be surrendered before new Notes will be
issued.
CERTAIN RESTRICTIVE COVENANTS
The Indenture contains, among others, the covenants described below.
Certain capitalized terms used below are defined herein under the heading
"Certain Definitions."
LIMITATION ON CONSOLIDATED INDEBTEDNESS. The Indenture provides that
so long as any of the Notes are Outstanding and until the Notes are rated
BBB- or above (or an equivalent rating) by Standard & Poor's and one Other
Rating Agency, at which time the Company will be permanently released from
the provisions of this "Limitation on Consolidated Indebtedness", the
Company shall not, and shall not permit any Restricted Subsidiary to,
issue, create, assume, guarantee, incur or otherwise become liable for
(collectively, "issue"), directly or indirectly, any Indebtedness unless
(a) the Consolidated Coverage Ratio of the Company and its Consolidated
Subsidiaries for the four consecutive fiscal quarters immediately
preceding the issuance of such Indebtedness (as shown by a pro forma
consolidated income statement of the Company and its Consolidated
Subsidiaries for the four most recent fiscal quarters ending at least 30
days prior to the issuance of such Indebtedness after giving effect to
(i) the issuance of such Indebtedness and (if applicable) the application
of the net proceeds thereof to refinance other Indebtedness as if such
Indebtedness was issued at the beginning of the period, (ii) the issuance
and retirement of any other Indebtedness since the first day of the period
as if such Indebtedness was issued or retired at the beginning of the
period and (iii) the acquisition of any company or business acquired by
the Company or any Subsidiary of the Company since the first day of the
period (including giving effect to the pro forma historical earnings of
such company or business), including any acquisition which will be
consummated contemporaneously with the issuance of such Indebtedness, as
if in each case such acquisition occurred at the beginning of the period)
exceeds a ratio of 1.6 to 1.0 and (b) immediately after giving effect to
the issuance of such Indebtedness and (if applicable) the application of
the net proceeds thereof to refinance other Indebtedness, the Consolidated
Leverage Ratio shall not exceed a ratio of 0.75 to 1.0.
The foregoing limitation is subject to exceptions for certain
revolving Indebtedness to banks provided that the aggregate outstanding
principal amount of such revolving Indebtedness shall not exceed
$1,000,000,000, Indebtedness outstanding on the date of the original
Indenture, certain refinancings and Indebtedness of the Company to a
Subsidiary or by a Subsidiary to the Company.
LIMITATION UPON RESTRICTED PAYMENTS. The Indenture provides that, so
long as any of the Notes are Outstanding and until the Notes are rated
BBB- or above (or an equivalent rating) by Standard & Poor's and one Other
Rating Agency, at which time the Company will be permanently released from
the provisions of this "Limitation upon Restricted Payments", the Company
will not, and will not permit any of its Restricted Subsidiaries, directly
or indirectly, to, (i) declare or pay any dividend or make any
distribution on the Capital Stock of the Company to the direct or indirect
holders of the Company's Capital Stock (except dividends or distributions
payable solely in Non-Convertible Capital Stock of the Company or in
options, warrants or other rights to purchase such Non-Convertible Capital
Stock and except dividends or distributions payable to the Company or a
Subsidiary) or (ii) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company (any such dividend, distribution,
purchase, redemption, repurchase, other acquisition or retirement, being
hereinafter referred to as a "Restricted Payment") if at any time the
Company or such Subsidiary makes such Restricted Payment: (1) an Event of
Default, or an event that with the lapse of time or the giving of notice
or both would constitute an Event of Default, shall have occurred and be
continuing (or would result therefrom); or (2) the aggregate amount of
such Restricted Payment and all other Restricted Payments made since
September 30, 1993, would exceed the sum of: (a) $120,000,000 plus 100%
of Consolidated Net Income from September 30, 1993 to the end of the most
recent fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such sum shall be a deficit, minus 100% of
the deficit) and (b) the aggregate Net Proceeds received by the Company
from the issue or sale of or contribution with respect to its Capital
Stock after September 30, 1993.
The foregoing provisions will not prohibit: (i) dividends or other
distributions paid in respect of any class of Capital Stock issued by the
Company in connection with the acquisition of any business or assets by
the Company or a Restricted Subsidiary where the dividends or other
distributions with respect to such Capital Stock are payable solely from
the net earnings of such business or assets; (ii) any purchase or
redemption of Capital Stock of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Capital Stock of the
Company (other than Redeemable Stock or Exchangeable Stock);
(iii) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividends would have complied with
this covenant; or (iv) payments pursuant to the Tax Sharing Agreement.
LIMITATIONS ON CERTAIN LIENS. The Indenture provides that so long as
any of the Notes are outstanding, the Company shall not create, incur,
assume or suffer to exist any Lien intended to or having the effect of
conferring upon a creditor of the Company or any Subsidiary of the Company
a preferential interest upon or with respect to the Capital Stock of
Consumers, Enterprises or CMS NOMECO Oil & Gas Co. ("NOMECO") without
making effective provision whereby the Notes shall be (so long as such
creditor shall be so secured) equally and ratably secured. The foregoing
does not apply to (a) Liens securing Indebtedness of the Company, provided
that on the date such Liens are created, and after giving effect to such
Indebtedness, the aggregate principal amount at maturity of all of the
secured Indebtedness of the Company shall not exceed 10% of Consolidated
Assets on such date or (b) certain liens for taxes, pledges to secure
workman's compensation, other statutory obligations and certain support
obligations not to exceed $30 million at any one time outstanding, certain
materialmen's, mechanic's and similar liens and certain purchase money
liens.
The foregoing limitations regarding Consolidated Indebtedness,
Restricted Payments and Liens do not apply to Consumers, the Company's
largest Subsidiary. In addition, they do not currently limit transactions
by any of the Company's other Subsidiaries because none of such
Subsidiaries would currently fall under the definition of Restricted
Subsidiaries.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Indenture provides
that so long as any of the Notes are Outstanding, the Company may not,
directly or indirectly, conduct any business or enter into any transaction
or series of related transactions (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with an
Affiliate unless the terms of such business, transaction or series of
transactions are as favorable to the Company as terms that could be
obtainable at the time for a comparable transaction or series of related
transactions in arm's-length dealings with an unrelated third person.
This covenant shall not apply to (i) any compensation paid to officers and
directors of the Company which has been approved by the Board of Directors
of the Company or (ii) loans to the Company or an Affiliate pursuant to a
global cash management program, which loans mature within one year from
the date thereof.
LIMITATION ON CONSOLIDATION, MERGER, SALE OR CONVEYANCE. The
Indenture provides that so long as any of the Notes are Outstanding the
Company shall not consolidate with or merge into any other person or sell,
lease or convey its property as an entirety or substantially as an
entirety unless, upon any such consolidation, merger, sale, lease or
conveyance, and after giving effect thereto, (i) the person formed by such
consolidation or into which the Company shall have been merged or which
shall have acquired such property (the "Continuing Entity") shall be a
corporation and shall have expressly assumed all of the Company's
obligations under the Notes and the Indenture, and (ii) no Event of
Default, or an event that, with the lapse of time or the giving of notice
or both, would become an Event of Default under the Indenture shall have
happened and be continuing, The Indenture also provides that so long as
any of the Notes are Outstanding and until the Notes are rated BBB- or
above (or an equivalent rating) by Standard & Poor's and one Other Rating
Agency, at which time the Company will be permanently released from such
provisions, the Company shall not consolidate with or merge into any other
person or sell, lease or convey its property as an entirety or
substantially as an entirety unless, upon any such consolidation, merger,
sale, lease or conveyance, and after giving effect thereto, (i) the
Consolidated Net Worth of the Continuing Entity shall be at least equal to
the Consolidated Net Worth of the Company immediately prior to the
transaction and (ii) the Continuing Entity would be entitled to incur at
least $1 of additional Indebtedness (other than revolving Indebtedness to
banks) without violating the restriction set forth in "-- Limitations on
Consolidated Indebtedness" above.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in
the Indenture. Reference is made thereto for the full definition of all
such terms, as well as any other terms used herein for which no definition
is provided.
"AFFILIATE" of any specified person means any other person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this
definition, "control" when used with respect to any specified person means
the power to direct or cause the direction of the management and policies
of such person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"AMORTIZATION EXPENSE" means, for any period, amounts recognized
during such period as amortization of capital leases, depletion, nuclear
fuel, goodwill and assets classified as intangible assets in accordance
with generally accepted accounting principles.
"CAPITAL LEASE OBLIGATIONS" of a person means any obligation that is
required to be classified and accounted for as a capital lease on the face
of a balance sheet of such person prepared in accordance with generally
accepted accounting principles; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with generally
accepted accounting principles; the stated maturity thereof shall be the
date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty; and such obligation shall be deemed
secured by a Lien on any property or assets to which such lease relates.
"CAPITAL STOCK" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interest in (however designated) corporate stock, including any Preferred
Stock or Letter Stock.
"CONSOLIDATED ASSETS" means, at any date of determination, the
aggregate assets of the Company and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"CONSOLIDATED CAPITAL" means, at any date of determination, the sum
of (a) Consolidated Indebtedness, (b) consolidated equity of the common
stockholders of the Company and the Consolidated Subsidiaries,
(c) consolidated equity of the preference stockholders of the Company and
the Consolidated Subsidiaries and (d) consolidated equity of the preferred
stockholders of the Company and the Consolidated Subsidiaries, in each
case, determined at such date in accordance with generally accepted
accounting principles.
"CONSOLIDATED COVERAGE RATIO" with respect to any period means the
ratio of (i) the aggregate amount of Operating Cash Flow for such period
to (ii) the aggregate amount of Consolidated Interest Expense for such
period.
"CONSOLIDATED INDEBTEDNESS" means, without duplication, at any date
of determination, the sum of the aggregate Indebtedness of the Company
plus the aggregate debt (as such term is construed in accordance with
generally accepted accounting principles) of the Consolidated
Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total
interest expense in respect of Indebtedness of the Company and its
Consolidated Subsidiaries, including, without duplication, (i) interest
expense attributable to capital leases, (ii) amortization of debt
discount, (iii) capitalized interest, (iv) cash and noncash interest
payments, (v) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (vi) net
costs under Interest Rate Protection Agreements (including amortization of
discount) and (vii) interest expense in respect of obligations of other
persons deemed to be Indebtedness of the Company or any Consolidated
Subsidiaries under clause (v) or (vi) of the definition of Indebtedness,
provided, however, that Consolidated Interest Expense shall exclude any
costs otherwise included in interest expense recognized on early
retirement of debt.
"CONSOLIDATED LEVERAGE RATIO" means, at any date of determination,
the ratio of Consolidated Indebtedness to Consolidated Capital.
"CONSOLIDATED NET INCOME" means, for any period, the net income of
the Company and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles;
provided, however, that there shall not be included in such Consolidated
Net Income: (i) any net income of any person if such person is not a
Subsidiary, except that (A) the Company's equity in the net income of any
such person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
person during such period to the Company or a Consolidated Subsidiary as a
dividend or other distribution and (B) the Company's equity in a net loss
of any such person for such period shall be included in determining such
Consolidated Net Income; (ii) any net income of any person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition; and (iii) any gain or loss
realized upon the sale or other disposition of any property, plant or
equipment of the Company or its Consolidated Subsidiaries which is not
sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital
Stock of any person.
"CONSOLIDATED NET WORTH" of any person means the total of the amounts
shown on the consolidated balance sheet of such person and its
consolidated subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles, as of any date
selected by such person not more than 90 days prior to the taking of any
action for the purpose of which the determination is being made (and
adjusted for any material events since such date), as (i) the par or state
value of all outstanding Capital Stock plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit, (B) any
amounts attributable to Redeemable Stock and (C) any amounts attributable
to Exchangeable Stock.
"CONSOLIDATED SUBSIDIARY" means, any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Company in
accordance with generally accepted accounting principles.
"EXCHANGEABLE STOCK" means any Capital Stock of a corporation that is
exchangeable or convertible into another security (other than Capital
Stock of such corporation that is neither Exchangeable Stock nor
Redeemable Stock).
"INDEBTEDNESS" of any person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such
person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such person is responsible or liable; (ii) all Capital Lease Obligations
of such person; (iii) all obligations of such person issued or assumed as
the deferred purchase price of property, all conditional sale obligations
and all obligations under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any obligor
or any letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such person to the
extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business
Day following receipt by such person of a demand for reimbursement
following payment on the letter of credit); (v) all obligations of the
type referred to in clauses (i) through (iv) of other persons and all
dividends of other persons for the payment of which, in either case, such
person is responsible or liable as obligor, guarantor or otherwise; and
(vi) all obligations of the type referred to in clauses (i) through (v) of
the other persons secured by any Lien on any property or asset of such
person (whether or not such obligation is assumed by such person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"LETTER STOCK,", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
intended to reflect the separate performance of certain of the businesses
or operations conducted by such corporation or any of its subsidiaries.
"LIEN" means any lien, mortgage, pledge, security interest,
conditional sale, title retention agreement or other charge or encumbrance
of any kind.
"NET PROCEEDS" means, with respect to any issuance or sale or
contribution in respect of Capital Stock, the aggregate proceeds of such
issuance, sale or contribution, including the fair market value (as
determined by the Board of Directors and net of any associated debt and of
any consideration other than Capital Stock received in return) of property
other than cash received by the Company, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as
a result thereof, provided, however, that if such fair market value as
determined by the Board of Directors of property other than cash is
greater than $25 million, the value thereof shall be based upon an opinion
from an independent nationally recognized firm experienced in the
appraisal or similar review of similar types of transactions.
"NON-CONVERTIBLE CAPITAL STOCK" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
Capital Stock other than Preferred Stock of such corporation; provided,
however, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"OPERATING CASH FLOW" means for any period, with respect to the
Company and its Consolidated Subsidiaries, the aggregate amount of
Consolidated Net Income after adding thereto Consolidated Interest Expense
(adjusted to include costs recognized on early retirement of debt), income
taxes, depreciation expense, Amortization Expense, any noncash
amortization of debt issuance costs, any nonrecurring, noncash charges to
earnings and any negative accretion recognition.
"OTHER RATING AGENCY" means any one of Duff & Phelps Credit Rating
Co., Fitch Investors Service, L.P. or Moody's Investors Service, Inc., and
any successor to any of these organizations which is a nationally
recognized statistical rating organization.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PREFERRED STOCK," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) that is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.
"REDEEMABLE STOCK" means any Capital Stock that by its terms or
otherwise is required to be redeemed prior to the first anniversary of the
Maturity of any Outstanding Notes or is redeemable at the option of the
holder thereof at any time prior to the first anniversary of the Maturity
of any Outstanding Notes.
"RESTRICTED SUBSIDIARY" means any Subsidiary (other than Consumers
and its subsidiaries) of the Company which at the time of determination
had assets which, as of the date of the Company's most recent quarterly
consolidated balance sheet, constituted at least 10% of the total
Consolidated Assets of the Company and its Consolidated Subsidiaries and
any other Subsidiary which from time to time is designated a Restricted
Subsidiary by the Board of Directors of the Company, provided that no
Subsidiary may be designated a Restricted Subsidiary if, immediately after
giving effect thereto, an Event of Default, or an event that, with the
lapse of time or the giving of notice or both, would constitute an Event
of Default, would exist or the Company and its Restricted Subsidiaries
could not incur at least $1 of additional Indebtedness under the
restriction set forth under "-- Limitations on Consolidated Indebtedness"
above and (i) any such Subsidiary so designated as a Restricted Subsidiary
must be organized under the laws of the United States or any state
thereof; (ii) more than 80% of the Voting Stock of such Subsidiary must be
owned of record and beneficially by the Company or a Restricted
Subsidiary; (iii) such Restricted Subsidiary must be a Consolidated
Subsidiary; and (iv) such Subsidiary must not therefore have been
designated as a Restricted Subsidiary.
"STANDARD & POOR'S" shall mean Standard & Poor's Rating Group, a
division of McGraw Hill Inc., and any successor thereto which is a
nationally recognized statistical rating organization, or if such entity
shall cease to rate the Notes or shall cease to exist and there shall be
no such successor thereto, any other nationally recognized statistical
rating organization selected by the Company which is acceptable to the
Trustee.
"SUBSIDIARY" means any corporation of which more than 50% of the
outstanding Voting Stock is at the time directly or indirectly owned by
the parent company and/or one or more companies which are themselves
subsidiaries of such parent company. "Subsidiary" means a subsidiary of
the Company.
"TAX SHARING AGREEMENT" means the Amended and Restated Agreement for
the Allocation of Income Tax Liabilities and Benefits, dated as of
January 1, 1994, as amended or supplemented from time to time, by and
among the Company, each of the members of the Consolidated Group (as
defined therein), and each of the corporations that become members of the
Consolidated Group.
"VOTING STOCK" means securities of any class or classes the holders
of which are ordinarily, in the absence of contingencies, entitled to vote
for corporate directors (or persons performing similar functions).
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture with
respect to the Notes: (a) default in the payment of interest upon any
Note when such interest becomes due and payable and continuance of such
default for 30 days; (b) default in the payment of all or any part of the
principal of (or premium, if any, on) any Note when it becomes due and
payable at its Maturity; (c) default in the performance of any covenants
of the Company in the Indenture, continued for 60 days after written
notice as provided in the Indenture; (d) a default or event of default in
respect of any Indebtedness of the Company shall occur which results in
the acceleration of $25,000,000 or more of the principal amount of such
Indebtedness or Indebtedness of the Company in excess of $25,000,000 shall
not be paid at maturity thereof, which default shall not have been waived
by the holder or holders of such Indebtedness within 30 days of such
default; (e) entry of final judgments against the Company aggregating in
excess of $25,000,000 which remain undischarged or unbonded for a period
(during which execution shall not be effectively stayed) of 60 days;
(f) certain events in bankruptcy, insolvency or reorganization involving
the Company. Subject to the provisions of the Indenture relating to the
duties of the Trustee in case an Event of Default shall occur and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of
the Holders of Notes, unless such Holders shall have offered to the
Trustee reasonable indemnity.
If an Event of Default with respect to the Notes shall occur and be
continuing, (i) either the Trustee or the Holders of at least a majority
in aggregate principal amount of the Outstanding Notes may accelerate the
maturity of the Outstanding Notes and (ii) the Holders of not less than a
majority of the aggregate outstanding principal amount of the Outstanding
Notes, may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee; provided, however, that after any such
acceleration, but before a judgment or decree for payment of the money due
has been obtained, the Holders of not less than a majority in aggregate
principal amount of Outstanding Notes may, under certain circumstances,
rescind and annul such acceleration and its consequences if all Events of
Default, other than the non-payment of accelerated principal, have been
cured or waived as provided in the Indenture. For information as to
waiver of defaults, see "Modification of the Indenture."
No Holder of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such
Holder shall have previously given to the Trustee written notice of a
continuing Event of Default and unless also the holders of at least 25% in
aggregate principal amount of the Outstanding Notes shall have made
written request, and offered satisfactory indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in aggregate principal amount of
the Outstanding Notes a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days. However, such
limitations do not apply to a suit instituted by a Holder of a Note for
the enforcement of payment of the principal of or interest on such Note on
or after the respective due dates expressed in such Note.
The Company will be required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its
obligations under the Indenture and as to any default in such performance.
MODIFICATION OF THE INDENTURE
Modification and amendment of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities
affected thereby, provided that no such modification or amendment may,
without the consent of the Holder of each Outstanding Security affected
thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal or interest on, any Outstanding Security, or
reduce the principal amount thereof or rate of interest thereon, or change
the Redemption Price applicable to any Security; (b) change the place or
currency of payment of principal of or premium, if any, or interest on any
Security; (c) impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity (or in the case of
redemption or repayment at the option of the Holder, on or after the
Redemption Date or Repayment Date) thereof; (d) reduce the above-stated
percentage of Outstanding Securities necessary to modify or amend the
Indenture or the consent of whose Holders is required for any waiver or
reduce the percentage required for quorum or voting; or (e) modify the
foregoing requirements. The Holders of at least a majority in aggregate
principal amount of the Outstanding Securities of a series may waive past
defaults with respect to such series except payment defaults and the
Holders of at least a majority in aggregate principal amount of all
Outstanding Securities may waive compliance by the Company with certain
covenants.
Modification and amendment of the Indenture may be made by the
Company and the Trustee without the consent of any Holder, for any of the
following purposes: (a) to evidence the succession of another corporation
to the Company; (b) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Securities; (c) to add additional
Events of Default for the benefit of the Holders of all or any series of
Securities; (d) to change any provision of the Indenture to facilitate the
issuance of Securities in bearer form; (e) to change or eliminate any
provision of the Indenture, provided no Security Outstanding of any series
is entitled to the benefit of such provision; (f) to secure the
Securities; (g) to establish the form or terms of Securities; (h) to
provide for the acceptance of appointment by a successor Trustee; (i) to
cure any ambiguity, defect or inconsistency in the Indenture provided such
action does not materially adversely affect the interests of Holders of
Securities or (j) to supplement provisions of the Indenture to permit or
facilitate the defeasance or discharge of a series of Securities provided
that such action shall not materially adversely affect the interests of
Holders of Securities of such Series.
DEFEASANCE, COVENANT DEFEASANCE AND DISCHARGE
The Indenture provides that the Company may elect (A) to defease and
be discharged from all of its obligations with respect to the Securities
or any series thereof (except for the obligations to register the transfer
or exchange of such Securities, to replace temporary or mutilated,
destroyed, lost or stolen Securities, to maintain an office or agency in
respect of such Securities, to hold monies for repayment in trust and
certain other obligations), and that the provisions of the Indenture will
no longer be in effect with respect to such Securities (except as
aforesaid) ("defeasance") or (B) to be released from its covenants set
forth in the Indenture with respect to, among other things, limitation on
Consolidated Indebtedness, limitation on Restricted Payments, limitation
on transactions with Affiliates, limitation on Liens, limitation on
consolidation, merger, sale or conveyance, repurchase obligations on
Change in Control, ("covenant defeasance") with respect to such
Securities, upon in the case of (A) or (B) the deposit with the Trustee
(or other qualifying trustee), in trust for such purpose, of money and/or
U.S. Government Obligations which, without any reinvestment, but through
the scheduled payment of principal and interest in accordance with their
terms, will provide money in an amount sufficient to pay the principal of
(and premium, if any) and interest on the Notes on the scheduled due dates
therefor. Such a trust may only be established, if, among other things,
(x) such defeasance or covenant defeasance will not result (whether
immediately or with notice or lapse of time or both) in a breach or
violation of, or constitute a default under, any material agreement to
which the Company is party or by which it is bound and (y) the Company has
delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of such Securities will not
recognize income, gain or loss for federal income tax purposes as a result
of such defeasance or covenant defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance or covenant defeasance had
not occurred. Such Opinion of Counsel, in the case of defeasance under
clause (A) above, must refer to and be based upon a ruling of the Internal
Revenue Service or a change in applicable federal income tax law occurring
after the date of the Indenture.
In the event the Company exercises its option to effect a covenant
defeasance with respect to the Securities of any series as described in
the preceding paragraph and such Securities of such series are declared
due and payable because of the occurrence of any Event of Default (other
than an Event of Default caused by failure to comply with the covenants
that are defeased), and the amount of money and U.S. Government
Obligations on deposit with the Trustee would be insufficient to pay
amounts due on the Securities of such series at the time of the
acceleration resulting from such Event of Default, the Company will remain
liable for such payments.
The Company may obtain a discharge of the Indenture with respect to
all Securities then Outstanding (except for certain obligations to
register the transfer or exchange of such Securities, to replace temporary
or mutilated, destroyed, lost or stolen Securities, to maintain an office
or agency in respect of such Securities, to hold monies for repayment in
trust and certain other obligations) when all Securities theretofore
authenticated and delivered have, with certain exceptions, been delivered
to the Trustee for cancellation or by irrevocably depositing in trust with
the Trustee money, and/or U.S. Government Obligations which, without any
reinvestment but through the scheduled payment of principal and interest
in accordance with their terms, will provide money in an amount sufficient
to pay all the principal of (and premium, if any) and interest on the
Securities on the Stated Maturities or redemption dates thereof, provided
that such Securities are by their terms due and payable, or are to be
called for redemption, within one year and the Company has delivered to
the Trustee an Opinion of Counsel to the effect that the Holders of such
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such discharge and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such discharge had not occurred.
THE TRUSTEE UNDER THE INDENTURE
The Chase Manhattan Bank is the Trustee under the Indenture. The
Company maintains banking and borrowing relations with The Chase Manhattan
Bank.
PLAN OF DISTRIBUTION
The Agents will be J. W. Korth & Company and such other agents as the
Company may designate from time to time. The names of any additional
Agents will be disclosed in a supplement to this Prospectus. Subject to
the terms and conditions set forth in a distribution agreement (the
"Distribution Agreement") among the Company and the Agents, offers to
purchase the Notes will be solicited from time to time by the Agents on
behalf of the Company, and the Notes may be offered on a continuous basis
by the Company through the Agents. Each Agent will agree to use its
reasonable best efforts to solicit purchases of the Notes. Following such
solicitation, the Agents, severally and not jointly, may purchase Notes
from the Company, for their own account, from time to time. Notes
acquired by any Agent will be offered either directly to the public or to
certain dealers that will then reoffer the Notes to the public. Sales by
an Agent to any dealer will be made pursuant to an agreement between such
Agent and dealer (each a "Dealer Agreement").
A Pricing Supplement with respect to each offering of Notes by the
Company will set forth, among other things, the name of each Agent
participating in the distribution of such Notes, the price to public of
such Notes and the proceeds to the Company from such sale, any
underwriting discounts or commissions and other items constituting Agent's
compensation, and any discounts or concessions allowed, reallowed or paid
to dealers. After any initial public offering of Notes pursuant to a
Pricing Supplement, the price to the public of such Notes, and the related
underwriting discount and selling concession, may be changed.
The Agent has advised the Company that all initial offers by any
Agents and by any dealers, unless otherwise set forth in the applicable
Pricing Supplement, are proposed to be made at prices equal to 100% of the
principal amount of the Notes being sold, less, in the case of an offer by
an Agent to a dealer, a price concession not in excess of the amount set
forth in the applicable Pricing Supplement. Offers and sales by Agents or
dealers subsequent to the initial offering may be at varying prices
determined at the time of sale.
The Notes will not be listed on any securities exchange and will not
be traded, when issued, on any other established trading market. Any
Agent may make a market in the Notes, but no Agent is obligated to do so.
Any market-making so undertaken may be discontinued at any time without
notice. There can thus be no assurance that a secondary market for the
Notes will exist or as to the liquidity or continuation of any such
market. Moreover, the Company reserves the right to withdraw, cancel or
modify the offer made hereby at any time without notice, and any such
withdrawal, cancellation or modification also may adversely affect the
liquidity of the Notes.
In order to facilitate the offering of the Notes, any Agent may
engage in transactions that stabilize, maintain or otherwise affect the
price of the Notes. Specifically, any Agent may overallot in connection
with the offering, creating a short position in the Notes for its own
account. In addition, to cover overallotments or to stabilize the price
of the Notes, any Agent may bid for, and purchase, the Notes in the open
market. Any of these activities may stabilize or maintain the market
price of the Notes above independent market levels. The Agents are not
required to engage in these activities, and may end any of these
activities at any time.
The Distribution Agreement provides, and the terms of each Dealer
Agreement will provide, that the obligations of any Agent or dealer to
purchase Notes will be subject to certain conditions precedent. The
nature of the Agent's obligations under the Distribution Agreement is such
that an Agent will be obligated to purchase all of the Notes offered by
any Pricing Supplement naming such Agent if any of such Notes are
purchased. The Company, or any Agent with respect to itself, may
terminate the Distribution Agreement at any time upon written notice.
The Company has agreed to indemnify the Agents against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), or to contribute to payments that the
Agents may be required to make in respect thereof.
LEGAL OPINIONS
Opinions as to the legality of the Notes will be rendered for
CMS Energy by Michael D. VanHemert, Assistant General Counsel for
CMS Energy. Certain legal matters with respect to the Notes will be
passed upon by Reid & Priest LLP, New York, N.Y., counsel for the Agents.
Reid & Priest LLP provides legal services to an affiliate of CMS Energy
and has, from time to time, provided legal services to CMS Energy.
EXPERTS
The consolidated financial statements and schedules of CMS Energy as
of December 31, 1996 and 1995, and for each of the three years in the
period ended December 31, 1996 incorporated by reference in this
Prospectus, have been audited by Arthur Andersen LLP (formerly Arthur
Andersen & Co.), independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving
said reports.
With respect to the unaudited interim consolidated financial
information for the periods ended March 31 and June 30, 1997, Arthur
Andersen LLP has applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate reports thereon state that they did not audit and they did not
express an opinion on that interim consolidated financial information.
Accordingly, the degree of reliance on their reports on that information
should be restricted in light of the limited nature of the review
procedures applied. In addition, the accountants are not subject to the
liability provisions of Section 11 of the Securities Act, for their
reports on the unaudited interim consolidated financial information
because those reports are not a "report" or "part" of the registration
statement prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Securities Act.
Future consolidated financial statements of CMS Energy and the
reports thereon of Arthur Andersen LLP also will be incorporated by
reference in this Prospectus in reliance upon the authority of that firm
as experts in giving those reports to the extent that said firm has
audited said consolidated financial statements and consented to the use of
their reports thereon.<PAGE>
<PAGE>
______________________________________ ________________________________
______________________________________ ________________________________
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus or any
Pricing Supplement in connection with
the offerings covered by this
Prospectus and any Pricing Supplement
and, if given or made, such information $200,000,000
or representations must not be relied
upon as having been authorized by the
Company or any Agent. Neither this
Prospectus nor any Pricing Supplement CORPORATION
constitutes an offer to sell, or a CMS ENERGY
solicitation of an offer to buy, the
securities to which this Prospectus and
any Pricing Supplement relate in any
jurisdiction where or to any person to GENERAL TERM NOTES
whom it is unlawful to make such offer (Registered Trademark),
or solicitation. Neither the delivery SERIES D
of this Prospectus or any Pricing
Supplement nor any sale made hereunder
shall under any circumstances create an
implication that there has not been any
change in the facts set forth in this
Prospectus or in the affairs of the
Company since the date hereof.
_______________________ _______________________
PROSPECTUS
TABLE OF CONTENTS
__________________, 1997
Page
_______________________
Available Information . . . . . . . 2
Incorporation of
Certain Documents
by Reference . . . . . . . . . . 2
Prospectus Summary . . . . . . . . 4
The Company . . . . . . . . . . . . 8
Use of Proceeds . . . . . . . . . . 8 J.W. Korth & Company
Ratio of Earnings to
Fixed Charges . . . . . . . . . . 9
Description of General
Term Notes (Registered
Trademark). . . . . . . . . . . . 9
Plan of Distribution. . . . . . . . 27
Legal Opinions. . . . . . . . . . . 28
Experts . . . . . . . . . . . . . . 28
_______________________________________ ______________________________
_______________________________________ ______________________________
<PAGE>
<PAGE> II-1
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
ESTIMATED
AMOUNT
Filing fee - Securities and Exchange Commission . . . . . $ 60,606
Services of Trustee (including counsel). . . . . . . . . . . 15,000
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Rating Agency fee . . . . . . . . . . . . . . . . . . . . . 40,000
Services of counsel . . . . . . . . . . . . . . . . . . . . 20,000
Services of independent public accountants,
Arthur Andersen LLP. . . . . . . . . . . . . . . . . . . . 11,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . 4,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 15,500
________
Total: $181,606
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following resolution was adopted by the Board of Directors of
CMS Energy on May 6, 1987:
RESOLVED: That effective March 1, 1987 the Corporation shall
indemnify to the full extent permitted by law every person (including the
estate, heirs and legal representatives of such person in the event of the
decease, incompetency, insolvency or bankruptcy of such person) who is or
was a director, officer, partner, trustee, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against all liability, costs, expenses, including attorneys' fees,
judgments, penalties, fines and amounts paid in settlement, incurred by or
imposed upon the person in connection with or resulting from any claim or
any threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative, investigative or of whatever nature,
arising from the person's service or capacity as, or by reason of the fact
that the person is or was, a director, officer, partner, trustee, employee
or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise. Such right of indemnification shall not be deemed exclusive
of any other rights to which the person may be entitled under statute,
bylaw, agreement, vote of shareholders or otherwise.
CMS ENERGY'S BYLAWS PROVIDE:
The Corporation may purchase and maintain liability insurance, to the
full extent permitted by law, on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against such person and
incurred by such person in any such capacity.
Article VIII of the Articles of Incorporation reads:
A director shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach of duty as a director except
(i) for a breach of the director's duty of loyalty to the Corporation or
its shareholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) for a
violation of Section 551(l) of the Michigan Business Corporation Act, and
(iv) any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of this Article VIII, and no
modification to its provisions by law, shall apply to, or have any effect
upon, the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment, repeal or modification.
Article IX of the Articles of Incorporation reads:
Each director and each officer of the Corporation shall be
indemnified by the Corporation to the fullest extent permitted by law
against expenses (including attorneys' fees), judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or
her in connection with the defense of any proceeding in which he or she
was or is a party or is threatened to be made a party by reason of being
or having been a director or an officer of the Corporation. Such right of
indemnification is not exclusive of any other rights to which such
director or officer may be entitled under any now or hereafter existing
statute, any other provision of these Articles, bylaw, agreement, vote of
shareholders or otherwise. If the Business Corporation Act of the State
of Michigan is amended after approval by the shareholders of this Article
IX to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted
by the Business Corporation Act of the State of Michigan, as so amended.
Any repeal or modification of this Article IX by the shareholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
Sections 561 through 571 of the Michigan Business Corporation Act
provide CMS Energy with the power to indemnify directors, officers,
employees and agents against certain expenses and payments, and to
purchase and maintain insurance on behalf of directors, officers,
employees and agents.
Officers and directors are covered within specified monetary limits
by insurance against certain losses arising from claims made by reason of
their being directors or officers of CMS Energy or of CMS Energy's
subsidiaries and CMS Energy's officers and directors are indemnified
against such losses by reason of their being or having been directors or
officers of another corporation, partnership, joint venture, trust or
other enterprise at CMS Energy's request. In addition, CMS Energy has
indemnified each of its present directors by contracts that contain
affirmative provisions essentially similar to those in sections 561
through 571 of the Michigan Business Corporation Act summarized above.
ITEM 16. EXHIBITS.
Exhibit No.
(1) - Form of Distribution Agreement.
(4)(a)(i) - Indenture dated as of January 15, 1994 between
CMS Energy and The Chase Manhattan Bank, as Trustee,
relating to the Notes. (Designated in CMS Energy's
Form 8-K dated March 29, 1994, File No. 1-9513, as
Exhibit (4)(a).)
(4)(a)(ii) - First Supplemental Indenture dated as of January 20,
1994 between CMS Energy and The Chase Manhattan Bank, as
Trustee. (Designated in CMS Energy's Form 8-K dated
March 29, 1994, File No. 1-9513, as Exhibit (4)(b).)
(4)(a)(iii) - Second Supplemental Indenture dated as of March 19, 1996
between CMS Energy and The Chase Manhattan Bank, as
Trustee. (Designated in CMS Energy's Form 10-Q for the
quarter ended March 31, 1996, File No. 9-9513, as
Exhibit (4).)
(4)(a)(iv) - Third Supplemental Indenture dated as of March 17, 1997
between CMS Energy and The Chase Manhattan Bank, as
Trustee (Designated in CMS Energy's Form 8-K dated May
1, 1997, File No. 9-9513, as Exhibit (4)(a)(iv).)
(4)(a)(v) - Form of Fourth Supplemental Indenture
(5) - Opinion of Counsel.
(12) - Statement regarding computation of ratio of earnings to
fixed charges.
(15) - Letter regarding unaudited interim financial
information.
(23)(a) - Consent of Counsel is contained in Exhibit 5 hereto.
(23)(b) - Consent of Arthur Andersen LLP.
(24) - Powers of Attorney.
(25) - Form T-1, Statement of Eligibility of Trustee.
Exhibits listed above which have been filed with the
Securities and Exchange Commission are incorporated herein by reference
with the same effect as if filed with this registration statement.
<PAGE>
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; (iii) To include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement; provided, however, that (i) and
(ii) do not apply if the registration statement is on Form S-3 or Form S-
8, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
_____________________<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dearborn, and State of Michigan,
on the 21st day of August, 1997.
CMS ENERGY CORPORATION
By /s/ A. M. Wright
____________________
Alan M. Wright
Senior Vice President,
Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons
in the capacities on the 21st day of August, 1997.
Name
____
(i) Principal executive officer:
Chairman of the Board,
Chief Executive Officer
/s/ William T. McCormick, Jr. and Director
________________________________
(William T. McCormick, Jr.)
(ii) Principal financial officer:
Senior Vice President,
/s/ A. M. Wright Chief Financial Officer
________________________________ and Treasurer
(Alan M. Wright)
(iii) Controller or principal accounting officer:
/s/ P. D. Hopper Senior Vice President,
_______________________________ Controller and Chief
(Preston D. Hopper) Accounting Officer
* Director
_______________________________
(John M. Deutch)
* Director
_______________________________
(James J. Duderstadt)
* Director
_______________________________
(Kathleen R. Flaherty)
* Director
_______________________________
(Victor J. Fryling)
* Director
_______________________________
(Earl D. Holton)
<PAGE>
<PAGE>
* Director
_______________________________
(William U. Parfet)
* Director
_______________________________
(Percy A. Pierre)
* Director
______________________________
(Kenneth Whipple)
* Director
______________________________
(John B. Yasinsky)
*By /s/ A. M. Wright
__________________________
Alan M. Wright
Attorney-in-fact
Exhibit 1
CMS Energy Corporation
$200,000,000
General Term Notes(R), Series D
Due From Nine Months to Twenty-Five Years from Date of Issue
DISTRIBUTION AGREEMENT
August __, 1997
J. W. KORTH & COMPANY
32841 Middlebelt Road, Suite 400
Farmington Hills, Michigan 48334
Dear Sirs:
CMS Energy Corporation, a Michigan corporation (the "Company"),
confirms its agreement with you (the "Agent," and together with such
additional agents as may be named from time to time, the "Agents") with
respect to the issue and sale by the Company of up to $200,000,000
aggregate principal amount of its General Term Notes(R), Series D (the
"Notes"). The Notes are to be issued under an Indenture, dated as of
January 15, 1994 as supplemented by a First Supplemental Indenture dated
as of January 20, 1994, a Second Supplemental Indenture dated as of March
19, 1996, a Third Supplemental Indenture dated as of March 17, 1997 and a
Fourth Supplemental Indenture dated as of August __, 1997 (such Indenture,
as so supplemented, the "Indenture"), between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"). The Notes will have the
maturities, annual interest rates, redemption provisions, if any, and
other terms specified in a pricing supplement to the Prospectus referred
to below.
Subject to the terms and conditions stated herein, the Company
hereby (i) appoints J. W. Korth & Company as the agent of the Company for
the purpose of soliciting and receiving offers to purchase the Notes, (ii)
reserves the right, from time to time, to appoint additional agents for
the purpose of soliciting and receiving offers to purchase the Notes,
provided that (a) the Company shall furnish the Agents with reasonable
advance notification of the addition of any such agent, (b) such
_____________________
(R) Registered servicemark of J. W. Korth and Company<PAGE>
additional agent shall be
acceptable to J. W. Korth & Company and (c) each such additional agent shall
be required to become a party to this agreement and undertake the obligations of
an Agent hereunder pursuant to an Additional Agent Appointment Agreement
substantially in the form of Exhibit E hereto, and (iii) agrees that,
whenever the Company determines to sell Notes pursuant to this Agreement,
such Notes shall be sold pursuant to a supplemental agreement between the
Company and J. W. Korth & Company (the "Purchasing Agent") with the
Purchasing Agent purchasing such Notes as principal; the supplemental
agreement will also specify the amount of Notes being sold which have been
solicited by each Agent. Each such supplemental agreement (which shall be
either oral, to be confirmed in writing, or written, and in either case the
written confirmation of an oral agreement or the written supplemental
agreement shall be substantially in the form of Exhibit B hereto and may take
the form of an exchange of any standard form of written telecommunication
between the Purchasing Agent and the Company) is herein referred to as a "Terms
Agreement." Any such Terms Agreement may be signed on behalf of the
Company by such persons as are authorized from time to time by the Board
of Directors of the Company to bind the Company in this regard. Under no
circumstances will any Agent be obligated to purchase, or the Company be
obligated to sell, any Notes, unless a Terms Agreement has been entered
into between the Company and the Purchasing Agent with respect to such
Notes.
1. SOLICITATIONS BY THE AGENTS OF OFFERS TO PURCHASE;
PURCHASES BY THE PURCHASING AGENT OF NOTES AS PRINCIPAL.
Following the Commencement Date (defined below), the Company shall
notify the Agents from time to time as to the commencement of a period
during which the Notes may be offered and sold by the Agents. On the
basis of the representations and warranties herein contained, but subject
to the terms and conditions herein set forth, the Agents will use their
respective reasonable best efforts to solicit offers to purchase the Notes
upon the terms and conditions set forth in the Prospectus as then amended
and supplemented and as contemplated by the Note Administrative Procedures
attached hereto as Exhibit A ("the Procedures").
The Agents are authorized to solicit orders for the Notes only in
denominations of $1,000 or any amount in excess thereof which is a
multiple of $1,000 and, unless otherwise agreed to by the Company, at a
purchase price equal to 100% of their principal amount. In soliciting
offers to purchase the Notes hereunder, the Agents are acting solely as
agents for the Company, and not as principals. Each Agent shall
communicate to the Company, orally or in writing, each reasonable offer or
indication of interest received by it to purchase Notes. Each Agent shall
have the right to reject, in its discretion reasonably exercised, any
offer received by it to purchase the Notes, in whole or in part, and any
such rejection shall not be deemed a breach of its agreements contained
herein. The Company shall have the right to accept offers to purchase the
Notes and may reject any such offer in whole or in part. The obligations
of the Agents under this Agreement shall be several and not joint.
Each acceptance by the Company of an offer to purchase Notes shall
be in accordance with the terms of this Agreement and a Terms Agreement
which will provide for the sale of such Notes to, and the purchase and
reoffering thereof by, the Purchasing Agent as principal. The commitment
of the Purchasing Agent to purchase Notes pursuant to any Terms Agreement
(and any contemporaneous purchase of Notes by an Agent from the Purchasing
Agent) shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth. Each Terms
Agreement shall describe the Notes to be purchased pursuant thereto by the
Purchasing Agent as principal, specify the principal amount of such Notes,
the price to be paid to the Company for such Notes, the rate at which
interest will be paid on the Notes, the date and time of delivery of
payment for such Notes (the "Settlement Date"), whether the Notes provide
for a survivor's option or for optional redemption by the Company and on
what terms and conditions, the place of delivery of the Notes and payment
therefor, the method of payment and any requirements for the delivery of
the opinions of counsel, the certificates from the Company, and the letter
from Arthur Andersen LLP, pursuant to Section 6(B)(b). The Agents may
reallow any portion of the commission payable pursuant hereto to dealers
or purchasers in connection with the offer and sale of any Notes.
The Company agrees to pay to the Purchasing Agent, as
consideration for soliciting the sale of the Notes pursuant to a Terms
Agreement, a commission in the form of a discount equal to a percentage
not greater than 4%, which percentage shall be set forth in the applicable
Terms Agreement, of the principal amount of each Note sold by the Company;
the Purchasing Agent and the other Agents will share such commission in
such proportion as they may agree.
Delivery of the certificates for Notes pursuant to any Terms
Agreement shall be made as agreed to between the Company and the
Purchasing Agent as specified in the Terms Agreement, not later than the
Settlement Date set forth in such Terms Agreement, against payment of
funds to the Company in the net amount due to the Company for such Notes
by the method and in the form specified in the Terms Agreement.
The Agents and the Company agree to perform the respective duties
and obligations specifically provided to be performed by them in the
Procedures. The Procedures may be amended only by written agreement of
the Company and the Agents.
The documents required to be delivered by Section 6 of this
Agreement shall be delivered at the office of Reid & Priest LLP, counsel
for the Agents, 40 West 57th Street, New York, New York 10019, on such
date as may be agreed to by the Company and the Agents (the "Commencement
Date").
2. OTHER ACTIVITIES OF AGENTS. The Company acknowledges that
nothing in this Agreement shall prohibit any Agent from (i) acting as
broker for the sale of Notes by customers other than the Company, (ii)
soliciting the sale of Notes through such Agent as broker for a seller,
soliciting the sale of Notes to such Agent as principal and soliciting
offers to buy Notes, (iii) purchasing Notes in the secondary market, and
(iv) offering and selling as principal for its own account Notes which
such Agent has purchased.
3. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to, and agrees with, the Agents as of the date hereof, as of
the Commencement Date and as of the times referred to in Section 4(g)
hereof (the Commencement Date and each such time hereinafter sometimes
referred to as a "Representation Date"), that:
(a) A registration statement (File No. 333-_____) in
respect of $200,000,000 aggregate principal amount of debt
securities of the Company, including the Notes, has been filed
with the Securities and Exchange Commission (the "Commission");
such registration statement and any post-effective amendment
thereto, each in the form heretofore delivered or to be delivered
to the Agents, including all documents incorporated by reference
in the prospectus contained therein, have been declared effective
by the Commission in such form, and no other document with respect
to such registration statement or other document incorporated by
reference therein has heretofore been filed or transmitted for
filing with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued and
no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with
the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Securities Act of 1933, as
amended (the "Act"), being hereinafter called a "Preliminary
Prospectus"); such registration statement, as amended at the time
it became effective, including all exhibits thereto and the
documents incorporated by reference therein at the time such
registration statement became effective, being hereinafter called
the "Registration Statement"; the prospectus, including any
prospectus supplement relating to the Notes, in the form in which
it has most recently been filed, or transmitted for filing, with
the Commission on or prior to the date of this Agreement, being
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein
pursuant to the applicable form under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus, including any supplement to the
Prospectus that sets forth only the terms of a particular issue of
the Notes and the manner of distribution thereof (a "Pricing
Supplement"), shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and incorporated by
reference in such Preliminary Prospectus or Prospectus, as the
case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Section 13(a) or 15(d) of
the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to and include the
Prospectus as amended or supplemented (including the applicable
Pricing Supplement) in relation to the Notes sold pursuant to this
Agreement, in the form in which it is filed, or transmitted for
filing, with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 4(a)(ii) hereof, including any
documents incorporated by reference therein as of the date of such
filing or transmission);
(b) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission (or, if an
amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and none
of such documents, when they were filed, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents are filed
with the Commission, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Agent
expressly for use in the Prospectus as amended or supplemented;
(c) The Registration Statement and the Prospectus
conform, and any amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects
to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission thereunder, and the Registration
Statement, as of its effective date, and the Prospectus, as of its
filing date, do not, and any amendments or supplements to the
Registration Statement or the Prospectus will not, contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they
were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Agent expressly for use
in the Registration Statement or the Prospectus as amended or
supplemented or any such statements in or omissions from that part
of the Registration Statement that constitutes the Statement of
Eligibility on Form T-1 of the Trustee under the Trust Indenture
Act;
(d) Since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus
there has not been any material adverse change in the business,
properties, financial condition or results of operations of the
Company and its consolidated subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, as
amended or supplemented;
(e) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Michigan, with corporate power and corporate
authority to own or lease its properties and conduct its business
as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, in which the
failure to so qualify and be in good standing would materially and
adversely affect the business, financial condition or results of
operations of the Company and its consolidated subsidiaries, taken
as a whole;
(e) The filing of the Registration Statement with
respect to the Notes has, and the issuance and sale of the Notes
pursuant to this Agreement and any Terms Agreement have, been duly
authorized by the Company, and, when Notes are authenticated and
issued pursuant to the Indenture and delivered against payment of
the consideration as specified in this Agreement and any
applicable Terms Agreement, such Notes will have been duly
executed, issued and delivered by the Company and will constitute
valid and legally binding obligations of the Company, enforceable
in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles and will be entitled to the benefits
provided by the Indenture; the Indenture has been duly authorized,
executed and delivered by the Company and is duly qualified under
the Trust Indenture Act and the Indenture constitutes a valid and
legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles;
and the Indenture conforms, and the Notes will conform, in all
material respects, to the descriptions thereof contained in the
Prospectus as amended or supplemented to relate to each issuance
of Notes;
(f) The issue and sale of the Notes and the
compliance by the Company with all of the provisions of the Notes,
the Indenture, this Agreement and any Terms Agreement, and the
consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its significant
subsidiaries (as defined in Rule 405 as promulgated by the
Commission under the Act) is a party or by which the Company or
any of its significant subsidiaries is bound, or to which any of
the property or assets of the Company or any of its significant
subsidiaries is subject, that is material to the business,
properties, financial condition or results of operations of the
Company and its consolidated subsidiaries, taken as a whole, nor
will such action result in any violation of the provisions of the
Articles of Incorporation, as amended, or the By-laws of the
Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its significant subsidiaries or any of their
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of
the Notes or the consummation by the Company of the other
transactions contemplated by this Agreement or any Terms Agreement
or the Indenture, except such as have been, or will have been
prior to the Commencement Date, obtained under the Act and the
Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or blue sky laws in connection with the solicitation by
any Agent of offers to purchase Notes and with purchases of Notes
by such Agent as principal;
(g) Other than as set forth or contemplated in the
Prospectus, as amended or supplemented, there are no legal or
governmental proceedings pending to which the Company or any of
its significant subsidiaries is a party or of which any property
of the Company or any of its significant subsidiaries is the
subject with respect to which there is a reasonable likelihood of
one or more determinations which would individually or in the
aggregate have a material adverse effect on the business,
properties, financial condition or results of operations of the
Company and its consolidated subsidiaries, taken as a whole; and,
to the best of the Company's knowledge, no such proceedings are
threatened by governmental authorities or others;
(h) The Company is not subject to regulation under
the Investment Company Act of 1940, as amended;
(i) The Company will apply the net proceeds from the
sale of Notes for the purpose set forth in the Prospectus under
the caption "Use of Proceeds";
(j) To the best of the Company's knowledge, Arthur
Andersen LLP, who have audited certain financial statements of the
Company incorporated by reference in the Registration Statement
and the Prospectus, are independent public accountants as required
by the Act and the rules and regulations of the Commission
thereunder;
(k) Immediately after the sale of Notes by the
Company hereunder and under any Terms Agreement, the aggregate
amount of Notes which shall have been issued and sold by the
Company hereunder and under any Terms Agreement and of any debt
securities of the Company (other than such Notes) that shall have
been issued and sold pursuant to the Registration Statement will
not exceed the amount of debt securities registered under the
Registration Statement;
(l) Other than as set forth or contemplated in the
Prospectus, as amended or supplemented, the Company owns or
possesses all permits, licenses and other authorizations necessary
to own, lease or use its properties and assets and to conduct its
business in the manner described in the Prospectus, except to the
extent that the failure to own or possess any such permit, license
or other authorization would not have a material adverse effect on
the business, properties, financial condition or results of
operations of the Company and its consolidated subsidiaries, taken
as a whole, and the Company has not received any notice of
proceedings relating to the revocation or modification of any such
permit, license or other authorization which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, might reasonably be expected to have a material adverse
effect upon the business, properties, financial condition or
results of operations of the Company and its consolidated
subsidiaries, taken as a whole; and
(m) Other than as set forth in the Prospectus as
amended or supplemented, no event or condition exists that
constitutes, or with the giving of notice or lapse of time or both
would constitute, a default under any bond, debenture, note or
other evidence of indebtedness for money borrowed by the Company
or any of its significant subsidiaries or under any indenture,
mortgage, loan agreement or instrument under which there may be
issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or any of its
significant subsidiaries, if such default would result in such
indebtedness in an aggregate principal amount exceeding
$25,000,000 becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable.
4. COVENANTS OF THE COMPANY. The Company agrees with each of
the Agents:
(a) (i) To make no amendment or supplement to the
Registration Statement or the Prospectus after the date of any
Terms Agreement by the Purchasing Agent to purchase Notes as
principal and prior to the related Settlement Date prior to having
afforded each Agent a reasonable opportunity to review and comment
on it and having reasonably considered any such comments; provided
however, that, if any amendment or supplement to the Registration
Statement or the Prospectus shall be transmitted for filing or
filed after the date of any Terms Agreement between the Company
and the Purchasing Agent for the purchase of Notes and prior to
the related Settlement Date, the Purchasing Agent may unilaterally
terminate such Terms Agreement and upon any such termination no
Agent shall have any further obligation under such Terms
Agreement; (ii) to prepare, with respect to any Notes to be sold
through or to such Agent pursuant to this Agreement, a Pricing
Supplement with respect to such Notes in a form previously
approved by such Agent and to file such Pricing Supplement
pursuant to Rule 424(b) under the Act within the applicable time
period prescribed for such filing by such Rule; (iii) to make no
amendment or supplement to the Registration Statement or
Prospectus, other than any Pricing Supplement, at any time prior
to having afforded each Agent a reasonable opportunity to review
and promptly comment on it and having reasonably considered any
such comments; (iv) to file timely all reports and any definitive
proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act (all such reports and proxy or
information statements which are so filed and which have not been
subsequently superseded shall be referred to as the "Incorporated
Documents") for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Notes, and
during such period to advise such Agent, promptly after the
Company receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or has become effective
or any amendment or supplement to the Prospectus (other than any
Pricing Supplement that relates to Notes not purchased through or
by such Agent) has been filed with the Commission, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Notes, of the
suspension of the qualification of the Notes for offering or sale
in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amendment or supplement of the Registration
Statement or Prospectus or for additional information; and (v) in
the event of the issuance of any such stop order or of any such
order preventing or suspending the use of any such prospectus or
suspending any such qualification, promptly to use reasonable
efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as
the Agents may reasonably request to qualify such Notes for
offering and sale under the securities laws of such jurisdictions
in the United States as the Agents may reasonably request and to
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of such Notes, provided
that in connection therewith the Company shall not be required to
qualify as a foreign corporation, to file a general consent to
service of process in any jurisdiction, take any action which
would subject it to general service of process in any jurisdiction
where it is not now subject or file annual reports with such
jurisdictions or comply with any other requirements deemed by the
Company in its reasonable judgment expressed in writing to the
Purchasing Agent to be unduly burdensome; and to inform the Agents
promptly of any notices it may receive from any state securities
agency which limits or will limit any such qualification or
exemption;
(c) To furnish the Agents with copies of the
Prospectus as amended or supplemented, in the form in which it is
filed with the Commission pursuant to Rule 424(b) of the Act, in
such quantities as the Agents may from time to time reasonably
request, and, if the delivery of a prospectus is required at any
time in connection with the offering or sale of any Notes and if
at such time any event shall have occurred as a result of which it
is necessary to further amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of
a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or, if
for any other reason during such period it is necessary to further
amend or supplement the Prospectus or to file under the Exchange
Act any document incorporated by reference in the Prospectus in
order to comply with the Act, the Exchange Act or the Trust
Indenture Act, to notify each Agent and request the Agents, in
their capacity as agents of the Company, to suspend solicitation
of offers to purchase Notes from the Company (and, if so notified,
each Agent shall cease such solicitations as soon as possible, but
in any event not later than one business day later); and if the
Company shall decide to amend or supplement the Registration
Statement or the Prospectus as then amended or supplemented, to so
advise the Agents by telephone (with confirmation in writing) and
to prepare and cause to be filed as soon as practicable with the
Commission an amendment or supplement to the Registration
Statement or the Prospectus as then amended or supplemented that
will correct such statement or omission or effect such compliance;
provided, however, that if during such period an Agent continues
to own Notes purchased from the Company by such Agent as principal
or an Agent is otherwise required to deliver a prospectus in
respect of transactions in the Notes, the Company shall promptly
prepare and file with the Commission such an amendment or
supplement;
(d) To make generally available to its security
holders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration
Statement (as defined in Rule 158(c) of the Act), an earnings
statement of the Company and its consolidated subsidiaries (which
need not be audited) covering a period of at least 12 months
beginning after the later of (i) the effective date of the
Registration Statement, (ii) the effective date of each post-
effective amendment to the Registration Statement, and (iii) the
date of each filing by the Company with the Commission of an
Annual Report on Form 10-K that is incorporated by reference in
the Registration Statement, which earning statements shall comply
with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company,
Rule 158 of the Act);
(e) So long as any Notes are outstanding, to furnish
to such Agent, without charge, copies of its Annual Report on Form
10-K and other financial reports of the Company furnished or made
available to the public generally, and deliver to such Agent, (i)
as soon as they are available, copies of any Incorporated
Documents; and (ii) such additional publicly available information
concerning the business and financial condition of the Company as
such Agent may from time to time reasonably request;
(f) That, from the date of any Terms Agreement with
the Purchasing Agent and continuing to and including the related
Settlement Date, the Company will not, without the prior written
consent of each Agent, which consent shall not be unreasonably
withheld, issue or announce the proposed issuance of, offer, sell,
contract to sell or otherwise dispose of any debt securities of
the Company which both mature more than 9 months after such
Settlement Date and are substantially similar to the Notes and
which are expected to be distributed on a retail basis in a manner
comparable to that set forth in Exhibit A;
(g) That each execution and delivery by the Company
of a Terms Agreement with the Purchasing Agent shall be deemed to
be an affirmation to each Agent that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the date of such Terms Agreement, as though made at
and as of such date, and an undertaking that such representations
and warranties will be true and correct as of the Settlement Date
for the Notes relating to such sale, as though made at and as of
such date (except that such representations and warranties shall
be deemed to relate to the Registration Statement and the
Prospectus, as amended and supplemented, relating to such Notes);
(h) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a
Pricing Supplement), each time a document filed under the Act or
the Exchange Act is incorporated by reference into the Prospectus
(other than (A) a Current Report pursuant to Section 13 or 15(d)
of the Exchange Act on Form 8-K relating exclusively to the
previous issuance of Notes under the Registration Statement or (B)
a Quarterly Report on Form 10-Q under the Exchange Act, unless, in
the case of clause (B), the Agents shall otherwise request), and
each time the Company sells Notes to the Purchasing Agent as
principal and the applicable Terms Agreement specifies the
delivery of an opinion or opinions by Reid & Priest LLP, counsel
to the Agent, as a condition to the purchase of Notes pursuant to
such Terms Agreement, at the request of such Agent, Reid & Priest
LLP shall furnish to such Agent its written opinion, dated the
date of such amendment, supplement, incorporation or Settlement
Date relating to such sale, as the case may be, in form reasonably
satisfactory to such Agent to the effect that such Agent may rely
on the opinion of such counsel as to the matters referred to in
Section 6(A)(c), which was last furnished to such Agent to the
same extent as though it was dated the date of such letter
authorizing reliance (except that the statements in such last
opinion shall be deemed to relate to the Registration Statement
and the Prospectus as amended and supplemented to such date or, in
lieu of such opinion, an opinion of the same tenor as the opinion
of such counsel as to the matters referred to in Section 6(A)(c),
but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date), and
reasonably in advance of the time that any such opinion is to be
delivered the Company shall furnish to such counsel such papers
and information as they may reasonably request to enable them to
pass on such matters;
(i) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a
Pricing Supplement), each time a document filed under the Act or
the Exchange Act is incorporated by reference into the Prospectus
(other than (A) a Current Report pursuant to Section 13 or 15(d)
of the Exchange Act on Form 8-K relating exclusively to the
previous issuance of Notes under the Registration Statement or (B)
a Quarterly Report on Form 10-Q under the Exchange Act, unless, in
the case of clause (B), the Agents shall otherwise request), and
each time the Company sells Notes to the Purchasing Agent as
principal and the applicable Terms Agreement specifies the
delivery of an opinion under this Section 4(i) as a condition to
the purchase of Notes pursuant to such Terms Agreement, the
Company shall furnish or cause to be furnished forthwith to such
Agent the written opinion or opinions of counsel to the Company or
such other counsel for the Company reasonably satisfactory to such
Agent, dated the date of such amendment, supplement, incorporation
or Settlement Date relating to such sale, as the case may be, in
form reasonably satisfactory to such Agent to the effect that such
Agent may rely on the opinion of such counsel as to the matters
referred to in Exhibit C hereof, which was last furnished to such
Agent to the same extent as though it was dated the date of such
letter authorizing reliance (except that the statements in such
last opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such
date or, in lieu of such opinion, an opinion of the same tenor as
the opinion of such counsel as to the matters referred to in
Exhibit C hereof but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such
date);
(j) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a
Pricing Supplement) and each time that a document filed under the
Act or the Exchange Act is incorporated by reference into the
Prospectus (other than (A) a Current Report pursuant to Section 13
or 15(d) of the Exchange Act on Form 8-K relating exclusively to
the previous issuance of Notes under the Registration Statement or
(B) a Quarterly Report on Form 10-Q under the Exchange Act,
unless, in the case of clause (B), the Agents shall otherwise
request), in either case to set forth financial information
included in or derived from the Company's consolidated financial
statements or accounting records, and each time the Company sells
Notes to the Purchasing Agent as principal and the applicable
Terms Agreement specifies the delivery of a letter under this
Section 4(j) as a condition to the purchase of Notes pursuant to
such Terms Agreement, the Company shall cause Arthur Andersen LLP
forthwith to furnish such Agent a letter, dated the date of such
amendment, supplement, incorporation or Settlement Date relating
to such sale, as the case may be, in form reasonably satisfactory
to such Agent, of the same tenor as the letter referred to in
Exhibit D hereof but modified to relate to the Registration
Statement and the Prospectus as amended or supplemented to the
date of such letter, with such changes as may be necessary to
reflect changes in the financial statements and other information
derived from the accounting records of the Company, to the extent
such financial statements and other information are available as
of a date not more than five business days prior to the date of
such letter; provided, however, that, with respect to any
financial information or other matter, such letter may reconfirm
as true and correct at such date as though made at and as of such
date, rather than repeat, statements with respect to such
financial information or other matter made in the letter referred
to in Exhibit D hereof which was last furnished to such Agent; and
(k) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a
Pricing Supplement), each time a document filed under the Act or
the Exchange Act is incorporated by reference into the Prospectus
(other than a Current Report pursuant to Section 13 or 15(d) of
the Exchange Act on Form 8-K relating exclusively to the previous
issuance of Notes under the Registration Statement), and each time
the Company sells Notes to the Purchasing Agent as principal and
the applicable Terms Agreement specifies the delivery of a
certificate under this Section 4(k) as a condition to the purchase
of Notes pursuant to such Terms Agreement, the Company shall
furnish or cause to be furnished forthwith to such Agent a
certificate, dated the date of such supplement, amendment,
incorporation or Settlement Date, as the case may be, in such form
and executed by such officers of the Company as shall be
reasonably satisfactory to such Agent (or, in the case of
certificates delivered pursuant to Section 6(B)(b) hereof, by such
other employees authorized by the Board of Directors of the
Company to execute and deliver such certificates), to the effect
that the statements contained in the certificate referred to in
Section 6 hereof which was last furnished to such Agent are true
and correct at such date as though made at and as of such date
(except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such certificate,
certificates of the same tenor as the certificates referred to in
said Section 6 but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such
date.
5. PAYMENT OF EXPENSES. The Company covenants and agrees
with each Agent that the Company will pay or reimburse all expenses
incident to this Agreement, including the following: (i) the reasonable
fees and expenses of one counsel for the Agents in connection with the
preparation of a blue sky survey of qualifications and exemptions to offer
and sell notes in the various states in the United States, the District of
Colombia, Puerto Rico and Guam; (ii) to the extent the Company has agreed
to print any of the following, the cost of printing any Terms Agreement,
any Indenture, any blue sky survey and any other documents in connection
with the offering, purchase, sale and delivery of the Notes; (iii) any
filing fees in connection with the qualification of the Notes for offering
and sale under state securities laws as provided in Section 4(b) hereof;
(iv) any fees charged by securities rating services for rating the Notes;
(v) any filing fees incident to any required review by the National
Association of Securities Dealers, Inc. ("NASD") of the terms of the sale
of the Notes; (vi) the cost of preparing the Notes; (vii) the fees and
expenses of any Trustee and any agent of any Trustee and any transfer or
paying agent of the Company and the fees and disbursements of counsel for
any Trustee or such agent in connection with any Indenture and the Notes;
and (viii) taxes (other than transfer taxes on sales by the Agents or
Dealers) in connection with the issuance and delivery of the Notes.
Except as provided in this Section, Section 7 and Section 8 hereof, each
Agent shall pay all other costs and expenses it incurs.
6. CONDITIONS TO THE OBLIGATIONS OF THE AGENTS. (A) The
obligations of each Agent to solicit offers to purchase the Notes pursuant
to Section 1 hereof will, unless waived by such Agent expressly in
writing, be subject to the accuracy of the representations and warranties
on the part of the Company made herein as of the date hereof and as of the
Commencement Date, to the accuracy of the statements of the Company's
officers made in each certificate furnished pursuant to the provisions
hereof, to the performance and observance by the Company of all covenants
and agreements herein contained on its part to be performed and observed
and to the following additional conditions precedent:
(a) (i) The Prospectus as amended or supplemented
(including the Pricing Supplement) with respect to such Notes
shall have been filed with the Commission pursuant to Rule 424(b)
under the Act within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in
accordance with Section 4(a) hereof; (ii) no stop order suspending
the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and (iii) all requests
for additional information on the part of the Commission shall
have been complied with.
(b) The Company shall have furnished to such Agent an
opinion or opinions of the counsel to the Company, dated the
Commencement Date, substantially to the effect set forth in
Exhibit C hereto. Any of the opinions set forth therein may be
delivered by another counsel for the Company who is reasonably
satisfactory to the Agents.
(c) Such Agent shall have received from Reid & Priest
LLP, counsel for the Agent, an opinion, dated the Commencement
Date, with respect to the issuance and sale of the Notes, the
Indenture, the Registration Statement, as amended as of the
Commencement Date, the Prospectus, as amended and supplemented as
of the Commencement Date, and other related matters as such Agent
may reasonably require; and the Company shall have furnished to
such counsel such documents as they may reasonably request for the
purpose of enabling them to pass on such matters.
(d) The Company shall have furnished to such Agent a
certificate of the Company, signed by any of the Chairman of the
Board, the President or the Chief Financial Officer, dated the
Commencement Date, to the effect that to the best of such person's
knowledge after reasonable investigation:
(i) this Agreement is substantially in the form
presented to and approved by the Board of Directors of the
Company;
(ii) The representations and warranties of the
Company in this Agreement are true and correct in all
material respects on and as of the date of such
certificate with the same effect as if made on the date of
such certificate, and the Company has complied with all
the agreements and satisfied all the conditions on its
part to be performed or satisfied as a condition to the
obligations of such Agent under this Agreement;
(iii) since the date of the most recent
financial statements included or incorporated by reference
in the Prospectus, as amended and supplemented, there has
been no material adverse change in the business,
properties, financial condition or results of operations
of the Company and its consolidated subsidiaries, taken as
a whole, other than those changes reflected in or
contemplated by the Prospectus, as amended and
supplemented as of the date of the certificate;
(iv) no stop order suspending the effectiveness
of the Registration Statement is in effect, and no
proceedings for such purposes are pending before or
threatened by the Commission; and
(v) since the date of the Prospectus, as amended
and supplemented, no downgrading shall have occurred in
the rating accorded the Company's debt securities by
Standard & Poor's Corporation ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), Duff & Phelps Credit Rating Co.
("Duff & Phelps") or Fitch Investors Service, L.P.
("Fitch") and none of S&P, Moody's, Duff & Phelps or Fitch
has placed on "credit watch" or "credit review" with
negative implications the Company's debt securities.
(e) Arthur Andersen LLP shall have furnished to such
Agent a letter or letters, dated the Commencement Date, in form
and substance satisfactory to such Agent, confirming that they are
independent public accountants within the meaning of the Act and
the Exchange Act and the respective applicable published rules and
regulations thereunder.
(f) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, as amended and supplemented, there shall not have been
(i) any downgrade or placement on "credit watch" or "credit
review" as described in the certificate referred to in paragraph
(A)(d)(v) of this Section 6 or (ii) any material adverse change in
the business, properties, financial condition or results of
operations of the Company and its consolidated subsidiaries, taken
as a whole, the effect of which, in the reasonable judgment of
such Agent after reasonable inquiry, is to impair the
marketability of the Notes.
(g) There shall not have occurred: (i)(A) a
suspension or material limitation in trading in securities
generally on the New York Stock Exchange, (B) a suspension in
trading in any securities of the Company on any exchange or over-
the-counter market, or (C) a general moratorium on commercial
banking activities in New York declared by either Federal or New
York State authorities, if the effect of any such occurrence is
such as to impair, in the reasonable judgment of such Agent, after
reasonable inquiry, the marketability of the Notes; or (ii) the
outbreak or material escalation of hostilities involving the
United States or the declaration by the United States of a
national emergency or war, if the effect of any such occurrence on
the financial markets of the United States is such as to impair,
in the reasonable judgment of such Agent, after reasonable
inquiry, the marketability of the Notes.
(h) The Company shall have furnished to such Agent
such further information, certificates and documents as such Agent
may reasonably request from time to time. Any certificate signed
by any officer of the Company and delivered to such Agent or its
counsel and delivered explicitly pursuant to the terms of this
Agreement shall be deemed a representation and a warranty by the
Company to such Agent as to matters covered thereby, as if set
forth herein.
(B) The obligations of the Purchasing Agent to purchase Notes
pursuant to any Terms Agreement entered into by it pursuant to Section 1
hereof will be subject to the accuracy of the representations and
warranties on the part of the Company herein as of the date of such Terms
Agreement and as of the Settlement Date thereunder, to the accuracy of the
statements of the Company's officers made in each certificate furnished
pursuant to the provisions hereof, to the performance and observance by
the Company of all covenants and agreements contained herein and in such
Terms Agreement on its part to be performed and observed and to the
following additional conditions precedent (which cannot be waived by the
Purchasing Agent in any respect without the consent of each other Agent):
(a) (i) The Prospectus as amended or supplemented
(including the Pricing Supplement) with respect to such Notes
shall have been filed with the Commission pursuant to Rule 424(b)
under the Act within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in
accordance with Section 4(a) hereof; (ii) no stop order suspending
the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and (iii) all requests
for additional information on the part of the Commission shall
have been complied with.
(b) Upon the request of any Agent, such Agent shall
have received, appropriately updated and modified, (i) a
certificate of the Company, dated as of the Settlement Date, to
the effect set forth in Section 6(A)(d), (ii) the opinion or
opinions of the counsel to the Company or such other counsel
satisfactory to such Agent, dated as of the Settlement Date, to
the effect set forth in Section 6(A)(b), (iii) the opinion of Reid
& Priest LLP, counsel for the Agent, dated as of the Settlement
Date, to the effect set forth in Section 6(A)(c) and/or (iv) the
letter or letters of Arthur Andersen LLP, dated as of the
Settlement Date, to the effect set forth in Section 6(A)(e).
(c) The conditions set forth in Sections 6(A)(f) and
6(A)(g) shall have been satisfied.
(d) Prior to the Settlement Date, the Company shall
have furnished to any Agent such further information, certificates
and documents as such Agent may reasonably request.
If any of the conditions specified in this Section 6(B) shall not have
been fulfilled in all material respects when and as provided in this
Agreement and in such Terms Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement and in such
Terms Agreement shall not be in all material respects reasonably
satisfactory in form and substance to such Agent and its counsel, such
Terms Agreement and all obligations of any Agent thereunder may be
cancelled at, or at any time prior to, the Settlement Date by such Agent.
Notice of such cancellation shall be given to the Company in writing or by
telephone or telegraph confirmed in writing.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will
indemnify and hold harmless each Agent against any losses, claims, damages
or liabilities, joint or several, to which such Agent may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus or any amendment or supplement to any of the foregoing, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Agent for
any legal or other expenses reasonably incurred by such Agent in
connection with investigating or defending any such action or claim;
provided, however, that the Company shall not be liable to provide any
indemnity hereunder in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in any Preliminary Prospectus, the Registration Statement, the Prospectus,
or any amendment or supplement to any of the foregoing in reliance upon
and in conformity with written information furnished to the Company by any
Agent expressly for use in any Preliminary Prospectus, the Registration
Statement, the Prospectus or any amendment or supplement to any of the
foregoing and provided further that the Company will not be liable to
provide any indemnity hereunder to any Agent with respect to any loss,
claim, damage or liability arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission to
state a material fact in any Preliminary Prospectus which had been
corrected in the Prospectus as amended or supplemented if the person
asserting any such loss, claim, liability, charge or damage purchased
Notes from an Agent but was not sent or given a copy of the Prospectus as
so amended or supplemented at or prior to the written confirmation of the
sale of such Notes to such person.
(b) Each Agent, severally and not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus, or any
amendment or supplement to any of the foregoing, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the
Registration Statement, the Prospectus, or any such amendment or
supplement to any of the foregoing in reliance upon and in conformity with
written information furnished to the Company by such Agent expressly for
use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof, enclosing a
copy of all papers served; but the omission to so notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the
indemnifying party. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall assume the defense of
any such litigation or proceeding, including the employment of counsel and
the payment of all expenses. Such counsel shall be designated in writing
by such Agent in the case of parties indemnified pursuant to Section 7(b)
and by the Company in the case of parties indemnified pursuant to Section
7(a). Any indemnified party shall have the right to participate in such
litigation or proceeding and to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include (x) the
indemnifying party and (y) the indemnified party and, in the written
opinion of counsel to such indemnified party, representation of both
parties by the same counsel would be inappropriate due to actual or likely
conflicts of interest between them, in either of which cases the
reasonable fees and expenses of counsel (including disbursements) for such
indemnified party shall be reimbursed by the indemnifying party to the
indemnified party. If there is a conflict as described in clause (ii)
above, and the indemnified parties have participated in the litigation or
proceeding utilizing separate counsel whose fees and expenses have been
reimbursed by the indemnifying party and the indemnified parties, or any
of them, are found to be solely liable, such indemnified parties shall
repay to the indemnifying party such fees and expenses of such separate
counsel as the indemnifying party shall have reimbursed. It is understood
that the indemnifying party shall not, in connection with any litigation
or proceeding or related litigation or proceedings in the same
jurisdiction as to which the indemnified parties are entitled to such
separate representation, be liable under this Agreement for the reasonable
fees and out-of-pocket expenses of more than one separate firm (together
with not more than one appropriate local counsel) for all such indemnified
parties. Subject to the next paragraph, all such fees and expenses shall
be reimbursed by payment to the indemnified parties of such reasonable
fees and expenses of counsel promptly after payment thereof by the
indemnified parties. An indemnifying party will not be liable for any
settlement or any action or claim effected without its written consent
(which consent will not be unreasonably withheld).
In furtherance of the requirement above that fees and
expenses of any separate counsel for the indemnified parties shall be
reasonable, each Agent and the Company agree that the indemnifying party's
obligations to pay such fees and expenses shall be conditioned upon the
following:
(1) in case separate counsel is proposed to be
retained by the indemnified parties pursuant to clause (ii) of the
preceding paragraph, the indemnified parties shall in good faith
fully consult with the indemnifying party in advance as to the
selection of such counsel; and
(2) reimbursable fees and expenses of such separate
counsel shall be detailed and supported in a manner reasonably
acceptable to the indemnifying party (but nothing herein shall be
deemed to require the furnishing to the indemnifying party of any
information, including without limitation, computer print-outs of
lawyers' daily time entries, to the extent that, in the judgment
of such counsel, furnishing such information might reasonably be
expected to result in a waiver of any attorney-client privilege);
and
(3) the Company and such Agent shall cooperate in
monitoring and controlling the fees and expenses of separate
counsel for indemnified parties for which the indemnifying party
is liable hereunder, and the indemnified party shall use every
reasonable effort to cause such separate counsel to minimize the
duplication of activities as between themselves and counsel to the
indemnifying party.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and an Agent on the other from the offering of the Notes to
which such loss, claim, damage or liability (or action in respect thereof)
relates; if, and only if, contribution solely on the basis of relative
benefits is found to be unavailable, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the
one hand and such Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and such Agent on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and commissions received by such Agent, in each case as set forth in the
table on the cover page of the Prospectus as amended or supplemented to
relate to a particular offering of Notes. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or such Agent on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each Agent
agree that it would not be just and equitable if contribution pursuant to
this subsection (d) were determined by pro rata allocation (even if the
Agents were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Agent shall be required to
contribute any amount in excess of the amount by which the total price at
which the applicable Notes underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The obligations of
the Agents in this subsection (d) to contribute are several in proportion
to their respective underwriting obligations with respect to such Notes
and not joint. Any party entitled to contribution, promptly after receipt
of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 7(d), will
notify any such party or parties from whom contribution may be sought, but
the omission to so notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
under this Section 7(d). No party will be liable for contribution with
respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any,
who controls any Agent within the meaning of the Act; and the obligations
of each Agent under this Section 7 shall be in addition to any liability
which such Agent may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
8. TERMINATION.
This Agreement may be terminated at any time either by the Company
as to any of the Agents or by any of the Agents insofar as this Agreement
relates to such Agent upon the giving of written notice of such
termination to such Agent or Agents or to the Company, as the case may be;
provided that Section 10 shall survive only for the term provided therein
and only with respect to the parties covered thereby. In the event of
termination of this Agreement (other than with respect to section 10), no
terminating party or parties with respect to which this Agreement is
terminated shall have any liability to the other parties hereto, except as
follows: (a) as provided in the first sentence of the fourth paragraph of
Section 1 and Sections 4(c), 5, 7, 9 and 11; (b) (i) if at the time of
termination a Terms Agreement is in effect between the Purchasing Agent
and the Company but the time of delivery to any Agent of the Note or Notes
relating thereto has not occurred or (ii) if the Agent or Agents shall
then own any Note or Notes purchased pursuant to a Terms Agreement, then
the Company's representations and warranties stated in Section 3 and its
obligations under the sixth paragraph of Section 1 and Sections 4(a),
4(b), 4(d), 4(e), 4(f), 4(i), 4(j) and 4(k), with respect to clause (i)
above, shall remain in full force and effect and not be terminated and,
with respect to clause (ii) above, shall remain in full force and effect
and not be terminated until the earlier of the date on which such Notes
are resold or the expiration of 90 days from such termination; provided,
however that with respect to clause (ii) above, the Company may repurchase
any such Notes from the Agents at the net price sold to the Agents on
original issuance and thereby terminate its obligations hereunder; and (c)
if the Company shall terminate this Agreement within six months of the
date hereof, other than as a result of a breach hereof by an Agent, the
Company shall be obligated, in addition to any matters covered by clauses
(a) and (b) of this Section 8, to reimburse the Agents for the reasonable
out-of-pocket expenses incurred by the Agents in connection with the
execution of this Agreement and the offering and sale of Notes including,
but not limited to, the reasonable fees and expenses of one counsel for
the Agents in connection with the establishment of the program
contemplated hereby.
9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers and of the Agents set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Agents or the
Company or any of the officers, directors or controlling persons referred
to in section 7 hereof, and will survive delivery of and payment for the
Notes, and the indemnity agreement contained in Section 7 hereof shall
survive any termination of this Agreement.
10. GRANT OF LICENSE.
(a) Grant of Non-Exclusive License. Upon the terms and
conditions hereinafter set forth, the Purchasing Agent hereby grants to
the Company and to each other Agent (for purposes of this Section 10, each
such party is referred to as a "Licensee") and each Licensee hereby
accepts a non-exclusive, non-transferable (except as provided under
paragraph (f) hereunder) license to use the service marks owned by the
Purchasing Agent in respect of the names "General Term Notes" and "GTN"
that it has used in connection with its business activities, and in which
the Purchasing Agent asserts common law interests (hereinafter referred to
collectively as "Marks") in connection with such Licensee's furtherance of
this Agreement, including use of such Marks as part of such Licensee's
marketing materials or other similar uses. No Licensee shall have any
interest in or right to use the Marks except as set forth herein.
(b) Non-Exclusivity of License. Nothing in this Section 10
shall prevent the Purchasing Agent from granting any other license for the
use of the Marks or from utilizing the Marks or permitting the Marks to be
utilized by others in any manner whatsoever.
(c) Term. The term of this license shall continue in force as
to the Purchasing Agent and (without regard to any other Licensee) (i)
with respect to the Company, for so long as the Notes shall be outstanding
and (ii) with respect to each other Agent, for as long as this Agreement
or that Co-Agent Agreement between the Purchasing Agent and such Agent
with respect to the Notes issued under this Agreement shall be in effect,
in each case subject to earlier termination in accordance with the
provisions of either this Agreement or any such Co-Agent Agreement, as the
case may be.
(d) Ownership of Marks. Each Licensee specifically
acknowledges the Purchasing Agent's ownership rights in the Marks. In
connection with the use of the Marks, no Licensee shall in any manner
represent that it has any ownership in the Marks or any registrations
thereof and agrees that nothing in this Agreement shall give such Licensee
any ownership interest in any of the Marks other than the right to use the
Marks in accordance with this Section 10.
No Licensee will, during the term of this Section 10 or at any
time thereafter, attack the validity of any of the Marks or the Purchasing
Agent's interests therein, nor will any Licensee attack any application
for registration of any of the Marks, or take any position contrary to
that of the Purchasing Agent in any proceedings pertaining to registration
of any of the Marks.
Each Licensee shall, whether during or after the term of this
Agreement, execute and deliver to the Purchasing Agent such documents as
the Purchasing Agent may reasonably request to establish or confirm the
Purchasing Agent's ownership interest in the Marks.
(e) Quality Control and Regulatory Compliance. Each Licensee
agrees that it will make no use of the Marks that would tend to reflect
adversely upon the Purchasing Agent, its business reputation, the GTN
business and/or market, or would violate or reflect adversely upon the
Purchasing Agent with regard to the Commission, the NASD or any other
governmental authority or securities association or other regulatory
matters. The common law understanding of the reasonable man standard,
given the facts and circumstances then facing such Licensee, its agents
and employees, shall apply when making a determination pursuant to this
paragraph (e). Any proposed use of the Marks outside of the terms
contemplated by this Paragraph shall be submitted to the Purchasing Agent
for its written approval prior to said proposed use.
(f) Assignment of Sublicense by Licensee. This Section 10 and
all rights and duties in and with respect to the Marks hereunder are
personal to each Licensee and shall not, without the prior written consent
of the Purchasing Agent, which consent may not be unreasonably withheld,
be assigned, mortgaged, sublicensed or otherwise encumbered or transferred
by such Licensee, except by operation of law. The Purchasing Agent may
assign its rights under this Section 10 to any person or entity without
the consent of any Licensee and upon such assignment the Purchasing Agent
shall be relieved from any further liability under this Agreement. The
Purchasing Agent shall furnish prior written notice of any such assignment
to each Licensee.
(g) Unauthorized Use. Each Licensee will notify the
Purchasing Agent in writing of any unauthorized use of any of the Marks
which come to such Licensee's attention.
(h) Indemnification; Infringement.
(I) The Purchasing Agent hereby indemnifies each Licensee and
holds it harmless from and against any loss, liability,
penalty, deficiency, damage or out-of-pocket expense
(including, without limitation, reasonable legal fees and
expenses) which such Licensee may suffer, sustain or
become subject to resulting from, arising out of or caused
by any suit, action or proceeding brought by a third party
claiming or alleging in any manner that the use of any of
the Marks by such Licensee has infringed upon the rights
of others; provided, however, that the Purchasing Agent
shall not be liable or responsible to indemnify a Licensee
if the claimed or alleged infringement results from such
Licensee's violation of this Section 10 or bad faith,
willful misfeasance or gross negligence.
(II) Each Licensee will notify the Purchasing Agent promptly in
writing of any claim that the use of any of the Marks
infringes the rights of others, or of the institution of
any legal actions or suits predicated upon such claimed
infringement, and any such suit or action will be
diligently defended at the sole expense of and under the
sole control of the Purchasing Agent.
(i) Termination.
(I) This Section 10 shall remain in effect throughout the term
stated in paragraph (c) above until and unless it is
earlier terminated pursuant to the terms of paragraph
(i)(II) below.
(II) This Section 10 may be terminated as to the Purchasing
Agent and any Licensee (without regard to another
Licensee) as follows:
A. By the Purchasing Agent in the event that such
Licensee shall fail to perform any obligation imposed upon
such Licensee by this Section 10 or violate any terms of
this Section 10. The Purchasing Agent will give such
Licensee written notice setting forth the particulars of
any such breach and, unless such Licensee has cured such
breach or is in the process of curing such breach, this
Section 10 will terminate ten (10) days after receipt by
such Licensee of such written notice. With respect to the
Company, nothing in this paragraph shall be construed to
require such Licensee to retire, redeem or repurchase any
Notes issued by it pursuant to this Distribution
Agreement, or successor Distribution Agreements, otherwise
left outstanding in the event of termination hereunder.
B. With respect to each other Agent (and not as to the
Company), in the event that any Co-Agent Agreement between
the Purchasing Agent and such Agent/Licensee terminates
for any reason, or in the event of its expiration, this
Section 10 shall immediately and automatically terminate.
(j) Effect of Termination or Expiration. On termination or
expiration of this Section 10 all rights and licenses granted to each
Licensee hereunder shall immediately and automatically terminate. In such
event, each Licensee agrees to discontinue all uses of the Marks and any
words confusingly similar thereto within ten (10) days of such termination
or expiration. After such termination, no Licensee nor any affiliate of
any Licensee shall allude in any public statement or advertisement to the
Marks. Each Licensee agrees that it will at no future time adopt or use,
without the Purchasing Agent's prior written consent, a word or mark which
is reasonably likely to be similar to or confused with any of the Marks.
The Purchasing Agent shall retain sole authority and control over all of
the Marks, and all rights in the Marks shall remain the property of the
Purchasing Agent.
(k) Royalty. The license granted herein shall be royalty-
free.
(l) Reservation of Rights in the Marks. Rights in the Marks,
other than those specifically granted herein, are reserved by the
Purchasing Agent for its own use. Upon the termination of this Section 10
for any reason whatsoever, all rights to the Marks shall revert to the
Purchasing Agent without the necessity of any act on its part.
(m) Unenforceable Provisions. If any provision or part of
this Section 10 is declared unenforceable by a court of competent
jurisdiction, each and every other provision, or part hereof, shall
continue in full force and effect.
(n) Waiver. The failure or delay of the Purchasing Agent or
any Licensee to insist upon the performance of any of the terms and
conditions of this Section 10 or to exercise or enforce any right or
obligation herein conferred, shall not be construed to be a waiver of any
such terms, conditions, rights or obligations and either party may, within
the time provided by applicable law, take measures to enforce any or all
such rights and obligations.
(o) Remedies. In the event of the breach or default in the
terms of this Section 10 by the Purchasing Agent or any Licensee, the
non-breaching or non-defaulting party shall be entitled to all legal and
equitable remedies provided by law.
The Purchasing Agent and each Licensee agree that damages may be
insufficient to compensate the Purchasing Agent in the event that any of
the terms of this Section 10 are not complied with, and therefore, agree
that in such event, the Purchasing Agent may seek injunctive relief and
specific performance of the terms hereof, in addition to all other rights
or remedies, and that to obtain such an injunction the Purchasing Agent
shall not be required to show any actual damage or to post any bond or
other security.
11. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Company, will be mailed
or delivered or sent by facsimile transmission or telegraph and confirmed
to it at CMS Energy Corporation, Fairlane Plaza South, 330 Town Center
Drive, Suite 1000, Dearborn, Michigan 48126, attention: Alan M. Wright,
Senior Vice President, Chief Financial Officer and Treasurer, facsimile
transmission number (313) 436-9258, and if sent to any of the Agents, will
be mailed or delivered or sent by facsimile transmission or telegraph and
confirmed to them at their respective addresses and facsimile transmission
numbers, as follows: if to J. W. Korth & Company, to it at 32841
Middlebelt Road, Suite 400, Farmington Hills, Michigan 48334, attention:
Robert W. Haun, facsimile transmission number (810) 855-0805. Any party
hereto may change its address or facsimile number set out in this Section
11 by a notice given to the other parties in accordance herewith.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section
7 hereof, and no other person will have any right or obligation hereunder.
The term "successors" as used in this Agreement shall not include a
purchaser, as such purchaser, of Notes from any Agent or from any selected
dealer acting through such Agent.
13. Applicable Law. This Agreement and each Terms Agreement
will be governed by and construed in accordance with the laws of the State
of New York applicable to agreements made and to be performed wholly
within such jurisdiction, except that Section 10 of this Agreement will be
governed by and construed in accordance with the laws of the State of
Michigan.
14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and
the same agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement between the Company and you.
Very truly yours,
CMS Energy Corporation
By: __________________________
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
J. W. KORTH & COMPANY
By: __________________________
Title: _____________________
Exhibit 4(a)(v)
FOURTH SUPPLEMENTAL INDENTURE
dated as of ___________, 1997
____________________
This Fourth Supplemental Indenture, dated as of the ___ day of
________, 1997 between CMS Energy Corporation, a corporation duly
organized and existing under the laws of the State of Michigan
(hereinafter called the "Company") and having its principal office at
Fairlane Plaza South, Suite 1100, 330 Town Center Drive, Dearborn,
Michigan 48126, and The Chase Manhattan Bank, a New York banking
corporation (hereinafter called the "Trustee") and having its principal
Corporate Trust Office at 450 West 33rd Street, 15th Floor, New York, New
York 10001.
WITNESSETH:
WHEREAS, the Company and the Trustee entered into an Indenture,
dated as of January 15, 1994 (the "Original Indenture"), pursuant to which
one or more series of debt securities of the Company (the "Securities")
may be issued from time to time; and
WHEREAS, Section 301 of the Original Indenture permits the terms of
any series of Securities to be established in an indenture supplemental to
the Original Indenture; and
WHEREAS, Section 901(7) of the Original Indenture provides that a
supplemental indenture may be entered into by the Company and the Trustee
without the consent of any Holders of the Securities to establish the form
and terms of the Securities of any series; and
WHEREAS, the Company has requested the Trustee to join with it in
the execution and delivery of this Fourth Supplemental Indenture in order
to supplement and amend the Original Indenture by, among other things,
establishing the form and terms of a series of Securities to be known as
the Company's "General Term Notes (R), Series D (the "General Term
Notes"), providing for the issuance of the General Term Notes and amending
and adding certain provisions thereof for the benefit of the Holders of
the General Term Notes; and
WHEREAS, the Company and the Trustee desire to enter into this
Fourth Supplemental Indenture for the purposes set forth in Sections 301
and 901(7) of the Original Indenture as referred to above; and
WHEREAS, all things necessary to make this Fourth Supplemental
Indenture a valid agreement of the Company and the Trustee and a valid
supplement to the Original Indenture have been done,
___________________________
(R) Registered servicemark of J. W. Korth & Company
<PAGE>
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
General Term Notes to be issued hereunder by holders thereof, the Company
and the Trustee mutually covenant and agree, for the equal and
proportionate benefit of the respective holders from time to time of the
General Term Notes, as follows:
ARTICLE I
STANDARD PROVISIONS; DEFINITIONS
SECTION 101. STANDARD PROVISIONS. The Original Indenture together
with this Fourth Supplemental Indenture and all indentures supplemental
thereto entered into pursuant to the applicable terms thereof are
hereinafter sometimes collectively referred to as the "Indenture." All of
the terms, conditions, covenants and provisions contained in the Original
Indenture as heretofore supplemented are incorporated herein by reference
in their entirety and, except as specifically noted herein or unless the
context otherwise requires, shall be deemed to be a part hereof to the
same extent as if such provisions had been set forth in full herein. All
capitalized terms which are used herein and not otherwise defined herein
are defined in the Indenture and are used herein with the same meanings as
in the Indenture.
SECTION 102. DEFINITIONS. Section 101 of the Indenture is amended
to insert the new definitions applicable to the General Term Notes, in the
appropriate alphabetical sequence, as follows:
"Amortization Expense" means, for any period, amounts recognized
during such period as amortization of capital leases, depletion, nuclear
fuel, goodwill and assets classified as intangible assets in accordance
with generally accepted accounting principles.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (i) the sum of the
products of (x) the number of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness
and (y) the amount of such principal payment by (ii) the sum of all such
principal payments.
"Capital Lease Obligation" of a Person means any obligation that is
required to be classified and accounted for as a capital lease on the face
of a balance sheet of such Person prepared in accordance with generally
accepted accounting principles; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with generally
accepted accounting principles; the stated maturity thereof shall be the
date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty; and such obligation shall be deemed
secured by a Lien on any property or assets to which such lease relates.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock, including any Preferred
Stock or Letter Stock.
"Change in Control" means an event or series of events by which (i)
the Company ceases to own beneficially, directly or indirectly, at least
80% of the total voting power of all classes of Capital Stock then
outstanding of Consumers (whether arising from issuance of securities of
the Company or Consumers, any direct or indirect transfer of securities by
the Company or Consumers, any merger, consolidation, liquidation or
dissolution of the Company or Consumers or otherwise); (ii) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the "beneficial owner" (as such term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or
group shall be deemed to have "beneficial ownership" of all shares that
such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 30% of the Voting Stock of the Company; or (iii)
the Company consolidates with or merges into another corporation or
directly or indirectly conveys, transfers or leases all or substantially
all of its assets to any Person, or any corporation consolidates with or
merges into the Company, in either event pursuant to a transaction in
which the outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities, or other property, other than any such
transaction in which (A) the outstanding Voting Stock of the Company is
changed into or exchanged for Voting Stock of the surviving corporation
and (B) the holders of the Voting Stock of the Company immediately prior
to such transaction retain, directly or indirectly, substantially
proportionate ownership of the Voting Stock of the surviving corporation
immediately after such transaction.
"Consolidated Assets" means, at any date of determination, the
aggregate assets of the Company and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Capital" means, at any date of determination, the sum
of (a) Consolidated Indebtedness, (b) consolidated equity of the common
stockholders of the Company and the Consolidated Subsidiaries, (c)
consolidated equity of the preference stockholders of the Company and the
Consolidated Subsidiaries and (d) consolidated equity of the preferred
stockholders of the Company and the Consolidated Subsidiaries, in each
case determined at such date in accordance with generally accepted
accounting principles.
"Consolidated Coverage Ratio" with respect to any period means the
ratio of (i) the aggregate amount of Operating Cash Flow for such period
to (ii) the aggregate amount of Consolidated Interest Expense for such
period.
"Consolidated Indebtedness" means, at any date of determination,
the aggregate Indebtedness of the Company and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Interest Expense" means, for any period, the total
interest expense in respect of Indebtedness of the Company and its
Consolidated Subsidiaries, including, without duplication, (i) interest
expense attributable to capital leases, (ii) amortization of debt
discount, (iii) capitalized interest, (iv) cash and noncash interest
payments, (v) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (vi) net
costs under Interest Rate Protection Agreements (including amortization of
discount) and (vii) interest expense in respect of obligations of other
Persons deemed to be Indebtedness of the Company or any Consolidated
Subsidiaries under clause (v) or (vi) of the definition of Indebtedness,
provided, however, that Consolidated Interest Expense shall exclude any
costs otherwise included in interest expense recognized on early
retirement of debt.
"Consolidated Leverage Ratio" means, at any date of determination,
the ratio of Consolidated Indebtedness to Consolidated Capital.
"Consolidated Net Income" means, for any period, the net income of
the Company and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles;
provided, however, that there shall not be included in such Consolidated
Net Income:
(i) any net income of any Person if such Person is
not a Subsidiary, except that (A) the Company's equity in
the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during
such period to the Company or a Consolidated Subsidiary as a
dividend or other distribution and (B) the Company's equity
in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income;
(ii) any net income of any Person acquired by the
Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such
acquisition; and
(iii) any gain or loss realized upon the sale or other
disposition of any property, plant or equipment of the Company or
its Consolidated Subsidiaries which is not sold or otherwise
disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of
any Person.
"Consolidated Net Worth" of any Person means the total of the
amounts shown on the consolidated balance sheet of such Person and its
consolidated subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles, as of any date
selected by such Person not more than 90 days prior to the taking of any
action for the purpose of which the determination is being made (and
adjusted for any material events since such date), as (i) the par or
stated value of all outstanding Capital Stock plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained
earnings or earned surplus less (A) any accumulated deficit, (B) any
amounts attributable to Redeemable Stock and (C) any amounts attributable
to Exchangeable Stock.
"Consolidated Subsidiary" means, any Subsidiary whose accounts are
or are required to be consolidated with the accounts of the Company in
accordance with generally accepted accounting principles.
"Consumers" means Consumers Energy Company, a Michigan corporation,
all of whose common stock is on the date hereof owned by the Company.
"Enterprises" means CMS Enterprises Company, a Michigan
corporation.
"Event of Default" with respect to the General Term Notes has the
meaning specified in Article VI of this Fourth Supplemental Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchangeable Stock" means any Capital Stock of a corporation that
is exchangeable or convertible into another security (other than Capital
Stock of such corporation that is neither Exchangeable Stock, or
Redeemable Stock).
"Indebtedness" of any Person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
(iii) all obligations of such Person issued or assumed as
the deferred purchase price of property, all conditional sale
obligations and all obligations under any title retention agreement
(but excluding trade accounts payable arising in the ordinary
course of business);
(iv) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, bankers' acceptance or
similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations
described in clauses (i) through (iii) above) entered into in the
ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the third Business
Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit);
(v) all obligations of the type referred to in clauses (i)
through (iv) of other Persons and all dividends of other Persons
for the payment of which, in either case, such Person is
responsible or liable as obligor, guarantor or otherwise; and
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the
obligation so secured.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Letter Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
intended to reflect the separate performance of certain of the businesses
or operations conducted by such corporation or any of its subsidiaries.
"Lien" means any lien, mortgage, pledge, security interest,
conditional sale, title retention agreement or other charge or encumbrance
of any kind.
"Net Proceeds" means, with respect to any issuance or sale or
contribution in respect of Capital Stock, the aggregate proceeds of such
issuance, sale or contribution, including the fair market value (as
determined by the Board of Directors and net of any associated debt and of
any consideration other than Capital Stock received in return) of property
other than cash, received by the Company, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts, or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as
a result thereof, provided, however, that if such fair market value as
determined by the Board of Directors of property other than cash is
greater than $25 million, the value thereof shall be based upon an opinion
from an independent nationally recognized firm experienced in the
appraisal or similar review of similar types of transactions.
"NOMECO" means, CMS NOMECO Oil & Gas Co., a Michigan corporation
and wholly-owned subsidiary of the Company.
"Non-Convertible Capital Stock" means, with respect to any
corporation, any non-convertible Capital Stock of such corporation and any
Capital Stock of such corporation convertible solely into non-convertible
Capital Stock other than Preferred Stock of such corporation; provided,
however, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"Operating Cash Flow" means, for any period, with respect to the
Company and its Consolidated Subsidiaries, the aggregate amount of
Consolidated Net Income after adding thereto Consolidated Interest Expense
(adjusted to include costs recognized on early retirement of debt), income
taxes, depreciation expense, Amortization Expense and any noncash
amortization of debt issuance costs, any nonrecurring, noncash charges to
earnings and any negative accretion recognition.
"Other Rating Agency" means any of Duff & Phelps Credit Rating Co.,
Fitch Investors Service, L.P. or Moody's Investors Service, Inc., and any
successor to any of these organizations which is a nationally recognized
statistical rating organization.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) that is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such corporation, over shares of Capital Stock of any other
class of such corporation.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed prior to the first anniversary of the
Maturity of any Outstanding General Term Notes or is redeemable at the
option of the holder thereof at any time prior to the first anniversary of
the Maturity of any Outstanding General Term Notes.
"Restricted Subsidiary" means any Subsidiary (other than Consumers
and its subsidiaries) of the Company which, as of the date of the
Company's most recent quarterly consolidated balance sheet, constituted at
least 10% of the total Consolidated Assets of the Company and its
Consolidated Subsidiaries and any other Subsidiary which from time to time
is designated a Restricted Subsidiary by the Board of Directors provided
that no Subsidiary may be designated a Restricted Subsidiary if,
immediately after giving effect thereto, an Event of Default or event
that, with the lapse of time or giving of notice or both, would constitute
an Event of Default would exist or the Company and its Restricted
Subsidiaries could not incur at least $1 of additional Indebtedness under
Section 510, and (i) any such Subsidiary so designated as a Restricted
Subsidiary must be organized under the laws of the United States or any
State thereof, (ii) more than 80% of the Voting Stock of such Subsidiary
must be owned of record and beneficially by the Company or a Restricted
Subsidiary, (iii) such Restricted Subsidiary must be a Consolidated
Subsidiary, and (iv) such Subsidiary must not theretofore have been
designated as a Restricted Subsidiary.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a
division of McGraw Hill Inc., and any successor thereto which is a
nationally recognized statistical rating organization, or if such entity
shall cease to rate the General Term Notes or shall cease to exist and
there shall be no such successor thereto, any other nationally recognized
statistical rating organization selected by the Company which is
acceptable to the Trustee.
"Support Obligations" means, for any person, without duplication,
any financial obligation, contingent or otherwise, of such person
guaranteeing or otherwise supporting any debt or other obligation of any
other person in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such debt or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such debt, (ii) to
purchase property, securities or services for the purpose of assuring the
owner of such debt of the payment of such debt, (iii) to maintain working
capital, equity capital, available cash or other financial statement
condition of the primary obligor so as to enable the primary obligor to
pay such debt, (iv) to provide equity capital under or in respect of
equity subscription arrangements (to the extent that such obligation to
provide equity capital does not otherwise constitute debt), or (v) to
perform, or arrange for the performance of, any non-monetary obligations
or non-funded debt payment obligations of the primary obligor.
"Tax-Sharing Agreement" means the Amended and Restated Agreement
for the Allocation of Income Tax Liabilities and Benefits, dated
January 1, 1994, as amended or supplemented from time to time, by and
among Company, each of the members of the Consolidated Group (as defined
therein), and each of the corporations that become members of the
Consolidated Group.
Certain terms, used principally in Articles Three, Four and Seven
of this Fourth Supplemental Indenture, are defined in those Articles.
ARTICLE II
DESIGNATION AND TERMS OF THE GENERAL TERM NOTES; FORMS
SECTION 201. ESTABLISHMENT OF SERIES. There is hereby created a
series of Securities to be known and designated as the "General Term Notes
(R), Series D" and limited in aggregate principal amount (except as
contemplated in Section 301(2) of the Indenture) to $200,000,000.
Each General Term Note will be dated and issued as of the date of
its authentication by the Trustee. Each General Term Note shall also bear
an Original Issue Date (as hereinafter defined) which, with respect to any
General Term Note (or any portion thereof), shall mean the date of its
original issue, as specified in such General Term Note (the "Original
Issue Date"), and such Original Issue Date shall remain the same if such
General Term Note is subsequently issued upon transfer, exchange, or
substitution of such General Term Note regardless of its date of
authentication. Principal on any General Term Note shall become due and
payable from nine months to twenty-five years from the Original Issue Date
of such General Term Note, as specified on such General Term Note.
Each General Term Note will bear interest from the Original Issue
Date, or from the most recent date to which interest has been paid or duly
provided for, at the rate per annum stated therein until the principal
thereof is paid or made available for payment. Interest will be payable
either monthly, quarterly or semi-annually on each Interest Payment Date
and at Maturity, as specified below and in each General Term Note.
Interest will be payable to the person in whose name a General Term Note
is registered at the close of business on the Regular Record Date next
preceding each Interest Payment Date; provided, however, interest payable
at Maturity will be payable to the person to whom principal shall be
payable. Interest on the General Term Notes will be computed on the basis
of a 360-day year of twelve 30-day months.
The Interest Payment Dates for a General Term Note that provides
for monthly interest payments shall be the fifteenth day of each calendar
month; provided, however, that in the case of a General Term Note issued
between the first and fifteenth day of a calendar month, interest
otherwise payable on the fifteenth day of such calendar month will be
payable on the fifteenth day of the next succeeding calendar month. In
the case of a General Term Note that provides for quarterly interest
payments, the Interest Payment Dates shall be the fifteenth day of each of
the months specified in such General Term Note, commencing on the day that
is three months from (i) the day on which such General Term Note is
issued, if such General Term Note is issued on the fifteenth day of a
calendar month, or (ii) the fifteenth day of the calendar month
immediately preceding the calendar month in which such General Term Note
is issued, if such General Term Note is issued prior to the fifteenth day
of a calendar month, or (iii) the fifteenth day of the calendar month in
which such General Term Note is issued, if such General Term Note is
issued after the fifteenth day of a calendar month. In the case of a
General Term Note that provides for semi-annual interest payments, the
Interest Payment Dates shall be the fifteenth day of each of the months
specified in such General Term Note, commencing on the day that is six
months from (i) the day on which such General Term Note is issued, if such
General Term Note is issued on the fifteenth day of a calendar month, or
(ii) the fifteenth day of the calendar month immediately preceding the
calendar month in which such General Term Note is issued, if such General
Term Note is issued prior to the fifteenth day of a calendar month, or
(iii) the fifteenth day of the calendar month in which such General Term
Note is issued, if such General Term Note is issued after the fifteenth
day of a calendar month.
Payment of principal of the General Term Notes (and premium, if
any) and, unless otherwise paid as hereinafter provided, any interest
thereon will be made at the office or agency of the Company in New York,
New York; provided, however, that payment of interest (other than interest
at Maturity) may be made at the option of the Company by check or draft
mailed to the Person entitled thereto at such Person's address appearing
in the Security Register or by wire transfer to an account designated by
such Person not later than ten days prior to the date of such payment.
The Regular Record Date referred to in Section 301 of the Indenture
for the payment of the interest on any General Term Note payable on any
Interest Payment Date (other than at Maturity) shall be the first day
(whether or not a Business Day) of the calendar month in which such
Interest Payment Date occurs as is specified in such General Term Note,
and, in the case of interest payable at Maturity, the Regular Record Date
shall be the date of Maturity. Unless otherwise specified in such General
Term Notes, the cities of New York, New York and Chicago, Illinois shall
be the reference cities for determining a Business Day.
The General Term Notes may be issued only as registered notes,
without coupons, in denominations of $1,000 and any larger denomination
which is in an integral multiple of $1,000.
Upon the execution of this Fourth Supplemental Indenture, or from
time to time thereafter, General Term Notes may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said General Term Notes in accordance
with the procedures set forth in or upon a Company Order complying with
Sections 301 and 303 of the Indenture.
SECTION 202. FORMS GENERALLY. The General Term Notes shall be in
substantially the form set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by the Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
General Term Notes, as evidenced by their execution thereof.
The definitive General Term Notes shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such General Term Notes, as
evidenced by their execution thereof.
SECTION 203. FORM OF FACE OF GENERAL TERM NOTE.
[Insert any legend required by the Internal Revenue
Code and the regulations thereunder.]
CMS ENERGY CORPORATION
GENERAL TERM NOTE(R), SERIES D
No. ________ $__________
[Initial Redemption Date]
CMS Energy Corporation, a corporation duly organized and existing
under the laws of the State of Michigan (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to____________,
or registered assigns, the principal sum of ____________________ Dollars
on __________________________ and to pay interest thereon from ________
(the "Original Issue Date") or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, [choose one of the
following -- monthly/quarterly/semi-annually [insert as applicable -- on
___________ [________, ____________] and _________ in each [year/month],
commencing ______________, and at Maturity at the rate of ____% per annum,
until the principal hereof is paid or made available for payment [if
applicable, insert --, and at the rate of ___% per annum on any overdue
principal and premium and on any overdue installment of interest]. The
interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this General Term Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest, which shall be the first day of the calendar month
in which such Interest Payment Date occurs (whether or not a Business Day)
next preceding such Interest Payment Date except that the Regular Record
Date for interest payable at Maturity shall be the date of Maturity. Any
such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this General Term Note (or one
or more Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of General
Term Notes not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the General Term Notes
may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture.
[If the General Term Note is not to bear interest prior to
Maturity, insert -- The principal of this General Term Note shall not bear
interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the
overdue principal of this General Term Note shall bear interest at the
rate of ___% per annum, which shall accrue from the date of such default
in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of ____% per annum, which shall
accrue from the date of such demand for payment to the date payment of
such interest has been made or duly provided for, and such interest shall
also be payable on demand.]
Payment of the principal of (and premium, if any) and interest, if
any, on this General Term Note will be made at the office or agency of the
Company maintained for that purpose in New York, New York (the "Place of
Payment"), in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of
interest (other than interest payable at Maturity) may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register or by wire transfer to an account
designated by such Person not later than ten days prior to the date of
such payment.
Reference is hereby made to the further provisions of this General
Term Note set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
General Term Note shall not be entitled to any benefit under the Indenture
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
CMS ENERGY CORPORATION
By____________________________
Attest:
_________________________
SECTION 204. FORM OF REVERSE OF GENERAL TERM NOTE.
This General Term Note (R), Series D is one of a duly authorized
issue of securities of the Company (herein called the "General Term
Notes"), issued and to be issued in one or more series under an Indenture,
dated as of January 15, 1994, as supplemented by certain supplemental
indentures, including the Fourth Supplemental Indenture, dated as of
________, 1997 (herein collectively referred to as the "Indenture"),
between the Company and The Chase Manhattan Bank, a New York banking
corporation, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the Holders of the General Term
Notes and of the terms upon which the General Term Notes are, and are to
be, authenticated and delivered. This General Term Note is one of the
series designated on the face hereof, limited in aggregate principal
amount to $200,000,000.
[If applicable, insert -- The General Term Notes of this series are
subject to redemption upon not more than 60 nor less than 30 days' notice
as provided in the Indenture, at any time [on or after __________, _____,]
as a whole or in part from time to time, at the election of the Company,
at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [on or before _____________, ___%, and if
redeemed] during the 12-month period beginning ____________ of the years
indicated,
Redemption Redemption
Year Price Year Price
____ __________ ____ __________
and thereafter at a Redemption Price equal to ___% of the principal
amount, together in the case of any such redemption with accrued interest
to the Redemption Date, but interest installments whose Stated Maturity is
on or prior to such Redemption Date will be payable to the Holders of such
General Term Notes, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
__________, redeem this General Term Note as a part of, or in anticipation
of, any refunding operation by the application, directly or indirectly, of
moneys borrowed having an effective interest cost to the Company
(calculated in accordance with generally accepted financial practice) of
less than the effective interest cost to the Company (similarly
calculated) of this General Term Note.]
[If the General Term Note is subject to redemption, insert -- In
the event of redemption of this General Term Note in part only, a new
General Term Note or Notes of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.]
If a Change in Control occurs, the Company shall notify the Holder
of this General Term Note of such occurrence and such Holder shall have
the right to require the Company to make a Required Repurchase of all or
any part of this General Term Note at a Change in Control Purchase Price
equal to 101% of the principal amount of this General Term Note to be so
purchased as more fully provided in the Indenture and subject to the terms
and conditions set forth therein. In the event of a Required Repurchase
of only a portion of this General Term Note, a new General Term Note or
Notes for the unrepurchased portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
[If this General Term Note is subject to redemption upon exercising
a Survivor's Option, insert -- As more fully provided in the Indenture and
subject to the terms and conditions set forth therein, the Company will
repay this General Term Note (or portion thereof) properly tendered for
repayment by or on behalf of the person (the "Representative") that has
authority to act on behalf of a deceased owner of the beneficial interest
in this General Term Note under the laws of the appropriate jurisdiction
(including, without limitation, the personal representative or executor of
such deceased beneficial owner) at a price equal to 100% of the principal
amount hereof plus accrued interest to the date of such repayment. The
Company may, in its sole discretion, limit the aggregate principal amount
of all outstanding General Term Notes as to which exercises of this option
(the "Survivor's Option") will be accepted in any calendar year to one
percent (1%) of the outstanding principal amount of all General Term Notes
as of the end of the most recent fiscal year, but not less than $500,000
in any such calendar year, or such greater amount as the Company in its
sole discretion may determine for any calendar year, and may limit to
$100,000, or such greater amount as the Company in its sole discretion may
determine for any calendar year, the aggregate principal amount of General
Term Notes (or portions thereof) as to which exercise of the Survivor's
Option will be accepted in such calendar year with respect to any
individual deceased owner of beneficial interests in such General Term
Notes. Notwithstanding the foregoing, the Survivor's Option will not be
available to persons who are surviving joint tenants or surviving tenants
by the entirety.
[If the General Term Note is not an Original Issue Discount
Security, insert -- If an Event of Default with respect to this General
Term Note shall occur and be continuing, the principal of this General
Term Note may be declared due and payable in the manner and with the
effect provided in the Indenture.]
In any case where any Interest Payment Date, Redemption Date,
Repayment Date, Stated Maturity or Maturity of any General Term Note shall
not be a Business Day at any Place of Payment, then (notwithstanding any
other provision of the Indenture or this General Term Note), payment of
interest or principal (and premium, if any) need not be made at such Place
of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on
the Interest Payment Date, Redemption Date or Repayment Date or at the
Stated Maturity or Maturity; provided that no interest shall accrue on the
amount so payable for the period from and after such Interest Payment
Date, Redemption Date, Repayment Date, Stated Maturity or Maturity, as the
case may be, to such Business Day.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of all Outstanding Securities
under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than a majority in principal amount of
all Outstanding Securities affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal
amount of all Outstanding Securities, on behalf of the Holders of all
Outstanding Securities, to waive compliance by the Company with certain
provisions of the Indenture. Any such consent or waiver by the Holder of
this General Term Note shall be conclusive and binding upon such Holder
and upon all future Holders of this General Term Note and of any General
Term Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this General Term Note.
The Indenture permits the Holders of not less than a majority in
principal amount of all Outstanding Securities of any series thereunder to
waive on behalf of the Holders of all Outstanding Securities of such
series any past default by the Company, provided that no such waiver may
be made with respect to a default in the payment of the principal of or
premium, if any, or the interest on any Security of such series or the
default by the Company in respect of certain covenants or provisions of
the Indenture, the modification or amendment of which must be consented to
by the Holder of each Outstanding Security of each series affected.
As set forth in, and subject to, the provisions of the Indenture,
no Holder of any General Term Note will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder,
unless such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default, the Holders of not less than 25%
in principal amount of the Outstanding General Term Notes shall have made
written request, and offered satisfactory indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in principal amount of the
Outstanding General Term Notes a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days;
provided, however, that such limitations do not apply to a suit instituted
by the Holder hereof for the enforcement of payment of the principal of
(and premium, if any) or any interest on this General Term Note on or
after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
General Term Note or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal
of and any premium and interest on this General Term Note at the times,
place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this General Term Note is registerable
in the Security Register, upon surrender of this General Term Note for
registration of transfer at the office or agency of the Company in any
place where the principal of and any premium and interest on this General
Term Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new General Term
Notes of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The General Term Notes of this series are issuable only in
registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, General Term Notes of this series
are exchangeable for a like aggregate principal amount of General Term
Notes of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.
[If this General Term Note is redeemable at the option of the
Company, insert -- The Company shall not be required (i) to issue,
register the transfer of or exchange this General Term Note if this
General Term Note may be among those selected for redemption during a
period beginning at the opening of business 15 days before selection of
the General Term Notes to be redeemed under Section 1103 of the Indenture
and ending at the close of business on the day of the mailing of the
relevant notice of redemption, (ii) to register the transfer of or
exchange any General Term Note so selected for redemption in whole or in
part, except, in the case of any General Term Note to be redeemed in part,
the portion thereof not to be redeemed, or (iii) to issue, register the
transfer of or exchange any General Term Note which has been surrendered
for repayment at the option of the Holder, except the portion, if any, of
such General Term Note not to be so repaid.]
______________________________
(R) Registered servicemark of J. W. Korth & Company
<PAGE>
Prior to due presentment of this General Term Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this General Term Note is
registered as the owner hereof for all purposes, whether or not this
General Term Note be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
All terms used in this General Term Note without definition which
are defined in the Indenture shall have the meanings assigned to them in
the Indenture.
SECTION 205. FORM OF LEGEND FOR GLOBAL NOTES. Any Global Note (as
defined in Article VII below) authenticated and delivered hereunder shall
bear a legend in substantially the following form:
"This Security is a Global Note within the meaning of the
Indenture hereinafter referred to and is registered in the name of
a Depositary or a nominee of a Depositary. This General Term Note
is not exchangeable for General Term Notes registered in the name
of a Person other than the Depositary or its nominee except in the
limited circumstances described in the Indenture, and no transfer
of this General Term Note (other than a transfer of this General
Term Note as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in the
limited circumstances described in the Indenture."
SECTION 206. FORM OF TRUSTEE'S CERTIFICATE OF
AUTHENTICATION. The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the General Term Notes of the series
designated therein referred to in the within-mentioned Indenture.
________________________________________,
as Trustee
By______________________________________
Authorized Officer
ARTICLE III
REDEMPTION OF GENERAL TERM NOTES; CHANGE OF CONTROL
SECTION 301. REDEMPTION OF GENERAL TERM NOTES. (a) Each General
Term Note may be redeemed by the Company in whole or in part if so
provided in, and in accordance with, the terms of such General Term Note
issued by the Company. The Company may redeem any General Term Note which
by its terms is redeemable prior to Stated Maturity without also redeeming
any other General Term Note which is redeemable prior to Stated Maturity.
(b) Change of Control. Upon the occurrence of a Change in
Control (the effective date of such Change in Control being the "Change in
Control Date"), each Holder of a General Term Note shall have the right to
require that the Company repurchase (a "Required Repurchase") all or any
part of such Holder's General Term Note at a repurchase price payable in
cash equal to 101% of the principal amount of such General Term Note plus
accrued interest to the Purchase Date (the "Change in Control Purchase
Price").
(1) Within 30 days following the Change in Control Date,
the Company shall mail a notice (the "Required Repurchase Notice")
to each Holder with a copy to the Trustee stating:
(i) that a Change in Control has occurred and that
such Holder has the right to require the Company to
repurchase all or any part of such Holder's General Term
Notes at the Change of Control Purchase Price;
(ii) the Change of Control Purchase Price;
(iii) the date on which any Required Repurchase
shall be made (which shall be no earlier than 60 days nor
later than 90 days from the date such notice is mailed) (the
"Purchase Date");
(iv) the name and address of the Paying Agent; and
(v) the procedures that Holders must follow to cause
the General Term Notes to be repurchased, which shall be
consistent with this Section and the Indenture.
(2) Holders electing to have a General Term Note
repurchased must deliver a written notice (the "Change in Control
Purchase Notice") to the Paying Agent (initially the Trustee) at
its office in The City of New York, or any other office of the
Paying Agent maintained for such purposes, not later than 30 days
prior to the Purchase Date. The Change in Control Purchase Notice
shall state: (i) the portion of the principal amount of any General
Term Notes to be repurchased, which portion must be $1,000 or an
integral multiple thereof; (ii) that such General Term Notes are to
be repurchased by the Company pursuant to the change in control
provisions of the Indenture; and (iii) unless the General Term
Notes are represented by one or more Global Notes, the certificate
numbers of the General Term Notes to be delivered by the Holder
thereof for repurchase by the Company. Any Change in Control
Purchase Notice may be withdrawn by the Holder by a written notice
of withdrawal delivered to the Paying Agent not later than three
Business Days prior to the Purchase Date. The notice of withdrawal
shall state the principal amount and, if applicable, the
certificate numbers of the General Term Notes as to which the
withdrawal notice relates and the principal amount of such General
Term Notes, if any, which remains subject to a Change in Control
Purchase Notice.
If a General Term Note is represented by a Global Note (as
described in Article VII below), the Depositary or its nominee will
be the Holder of such General Term Note and therefore will be the
only entity that can elect a Required Repurchase of such General
Term Note. To obtain repayment pursuant to this Section 301(b)
with respect to such General Term Note, the beneficial owner of
such General Term Note must provide to the broker or other entity
through which it holds the beneficial interest in such General Term
Note (i) the Change in Control Purchase Notice signed by such
beneficial owner, and such signature must be guaranteed by a member
firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial
bank or trust company having an office or correspondent in the
United States, and (ii) instructions to such broker or other entity
to notify the Depositary of such beneficial owner's desire to
obtain repayment pursuant to this Section 301(b). Such broker or
other entity will provide to the Paying Agent (i) the Change of
Control Purchase Notice received from such beneficial owner and
(ii) a certificate satisfactory to the Paying Agent from such
broker or other entity stating that it represents such beneficial
owner. Such broker or other entity will be responsible for
disbursing any payments it receives pursuant to this Section 301(b)
to such beneficial owner.
(3) Payment of the Change of Control Purchase Price for a
General Term Note for which a Change in Control Purchase Notice has
been delivered and not withdrawn is conditioned (except in the case
of a General Term Note represented by one or more Global Notes)
upon delivery of such General Term Note (together with necessary
endorsements) to the Paying Agent at its office in The City of New
York, or any other office of the Paying Agent maintained for such
purpose, at any time (whether prior to, on or after the Purchase
Date) after the delivery of such Change in Control Purchase Notice.
Payment of the Change of Control Purchase Price for such General
Term Note will be made promptly following the later of the Purchase
Date or the time of delivery of such General Term Note. If the
Paying Agent holds, in accordance with the terms of the Indenture,
money sufficient to pay the Change in Control Purchase Price of
such General Term Note on the Business Day following the Purchase
Date, then, on and after such date, interest will cease accruing,
and, if applicable, amounts will no longer accrue on any such
General Term Note that is an Original Issue Discount Security,
whether or not such General Term Note is delivered to the Paying
Agent, and all other rights of the Holder shall terminate (other
than the right to receive the Change of Control Purchase Price upon
delivery of the General Term Note).
(4) The Company shall comply with the provisions of Rule
13e-4 and any other tender offer rules under the Exchange Act,
which may then be applicable and shall file Schedule 13E-4 or any
other schedule required thereunder in connection with any offer by
the Company to repurchase General Term Notes at the option of
Holders upon a Change in Control.
(5) No General Term Note may be repurchased by the
Company as a result of a Change in Control if there has occurred
and is continuing an Event of Default (other than a default in the
Payment of the Change in Control Purchase Price with respect to the
General Term Notes).
ARTICLE IV
REPAYMENT UPON DEATH
If so specified in any General Term Note, the Holder of such
General Term Note will have the option (the "Survivor's Option") to elect
repayment of such General Term Note prior to its Stated Maturity in the
event of the death of the beneficial owner of such General Term Note.
Pursuant to exercise of the Survivor's Option, if applicable, the
Company will repay any General Term Note (or portion thereof) properly
tendered for repayment by or on behalf of the person (the
"Representative") that has authority to act on behalf of the deceased
beneficial owner of such General Term Note under the laws of the
appropriate jurisdiction (including, without limitation, the personal
representative or executor of such deceased beneficial owner) at a price
equal to one-hundred percent (100%) of the principal amount of the
beneficial interest of the deceased owner of such General Term Note plus
accrued interest to the date of such payment, subject to the following
limitations. Notwithstanding the foregoing, the Survivor's Option will
not be available to persons who are surviving joint tenants or surviving
tenants by the entirety. The Company may, in its sole discretion, limit
the aggregate principal amount of General Term Notes as to which exercises
of the Survivor's Option will be accepted in any calendar year (the
"Annual Put Limitation") to one percent (1%) of the outstanding principal
amount of the General Term Notes as of the end of the most recent fiscal
year, but not less than $500,000 in any such calendar year, or such
greater amount as the Company in its sole discretion may determine for any
calendar year, and may limit to $100,000, or such greater amount as the
Company in its sole discretion may determine for any calendar year, the
aggregate principal amount of General Term Notes (or portions thereof) as
to which exercise of the Survivor's Option will be accepted in such
calendar year with respect to any individual deceased owner of beneficial
interests in such General Term Notes (the "Individual Put Limitation").
Moreover, the Company will not make principal repayments pursuant to
exercise of the Survivor's Option in amounts that are less that $1,000,
and, in the event that the limitations described in the preceding sentence
would result in the partial repayment of any General Term Note, the
principal amount of such General Term Note remaining outstanding after
repayment must be at least $1,000 (the minimum authorized denomination of
the General Term Notes). Any General Term Note (or portion thereof)
tendered pursuant to exercise of the Survivor's Option may be withdrawn by
a written request of its Holder received by the Trustee prior to its
repayment.
Each General Term Note (or portion thereof) that is tendered
pursuant to a valid exercise of the Survivor's Option will be accepted
promptly in the order all such General Term Notes are tendered, except for
any General Term Note (or portion thereof) the acceptance of which would
contravene (i) the Annual Put Limitation, if applied, or (ii) the
Individual Put Limitation, if applied, with respect to the relevant
individual deceased owner of beneficial interests therein. If, as of the
end of any calendar year, the aggregate principal amount of General Term
Notes (or portions thereof) that have been accepted pursuant to exercise
of the Survivor's Option for such year has not exceeded the Annual Put
Limitation, if applied, for such year, any exercise(s) of the Survivor's
Option with respect to General Term Notes (or portions thereof) not
accepted during such calendar year because such acceptance would have
contravened the Individual Put Limitation, if applied, with respect to an
individual deceased owner of beneficial interests therein will be accepted
in the order all such General Term Notes (or portions thereof) were
tendered, to the extent that any such exercise would not exceed the Annual
Put Limitation, if applied, for such calendar year. Any General Term Note
(or portion thereof) accepted for repayment pursuant to exercise of the
Survivor's Option will be repaid no later than the first Interest Payment
Date that occurs 20 or more calendar days after the date of such
acceptance. Each General Term Note (or any portion thereof) tendered for
repayment that is not accepted in any calendar year because of the
application of the Annual Put Limitation will be deemed to be tendered in
the following calendar year in the order in which all such General Term
Notes (or portions thereof) were originally tendered, unless any such
General Term Note (or portion thereof) is withdrawn by the Representative
for the deceased owner prior to its repayment. In the event that a
General Term Note (or any portion thereof) tendered for repayment pursuant
to valid exercise of the Survivor's Option is not accepted, the Trustee
will deliver a notice by first-class mail to the registered Holder thereof
at its last known address as indicated in the Security Register that
states the reasons such General Term Note (or portion thereof) has not
been accepted for repayment.
Subject to the foregoing, in order for a Survivor's Option to be
validly exercised with respect to any General Term Note (or portion
thereof), the Trustee must receive from the Representative of the
individual deceased owner of beneficial interests therein (i) a written
request for payment signed by the Representative, and such signature must
be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, (ii) if any such General Term Note is not represented by a
Global Note (as described in Article VII below), tender of the General
Term Note (or portion thereof) to be repaid, (iii) appropriate evidence
satisfactory to the Company and the Trustee that (A) the Representative
has authority to act on behalf of the individual deceased beneficial
owner, (B) the death of such beneficial owner has occurred and (C) the
deceased individual was the owner of a beneficial interest in such General
Term Note at the time of death, (iv) if applicable, a properly executed
assignment or endorsement, and (v) if the beneficial interest in such
General Term Note is held by a nominee of the deceased beneficial owner, a
certificate satisfactory to the Trustee from such nominee attesting to the
deceased's ownership of a beneficial interest in such General Term Note.
All questions as to the eligibility or validity of any exercise of the
Survivor's Option will be determined by the Company, in its sole
discretion, which determinations will be final and binding on all parties.
If a General Term Note is represented by a Global Note (as
described in Article VII below), the Depositary or its nominee will be the
Holder of such General Term Note and therefore will be the only entity
that can exercise the Survivor's Option for such General Term Note. To
obtain repayment pursuant to exercise of the Survivor's Option with
respect to such General Term Note, the Representative must provide to the
broker or other entity through which the beneficial interest in such
General Term Note is held by the deceased owner (i) the documents
described in clauses (i) and (iii) of the preceding paragraph and (ii)
instructions to such broker or other entity to notify the Depositary of
such Representative's desire to obtain repayment pursuant to exercise of
the Survivor's Option. Such broker or other entity shall provide to the
Trustee (i) the documents received from the Representative referred to in
clause (i) of the preceding sentence and (ii) a certificate satisfactory
to the Trustee from such broker or other entity stating that it represents
the deceased beneficial owner. Such broker or other entity will be
responsible for disbursing any payments it receives pursuant to exercise
of the Survivor's Option to the appropriate Representative.
ARTICLE V
ADDITIONAL COVENANTS OF THE COMPANY
WITH RESPECT TO THE GENERAL TERM NOTES
SECTION 501. STATEMENT BY OFFICERS AS TO DEFAULT. (a) The
Company will deliver to the Trustee, within 120 days after the end of each
fiscal year a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or
her knowledge of the Company's compliance with all conditions and
covenants under this Fourth Supplemental Indenture. For such purposes,
such compliance shall be determined without regard to any period of grace
or requirement of notice provided hereunder and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof
of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible
and in any event within 10 days after the Company becomes aware of the
occurrence of an Event of Default or an event which, with notice or the
lapse of time or both, would constitute an Event of Default, an Officers'
Certificate setting forth the details of such Event of Default or default,
and the action which the Company proposes to take with respect thereto.
SECTION 502. EXISTENCE. So long as any of the General Term Notes
are Outstanding, subject to Article 8 of the Indenture, the Company will
do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and all rights (charter and
statutory) and franchises other than rights or franchises the loss of
which would not be disadvantageous in any material respect to the Holders
of the General Term Notes.
SECTION 503. MAINTENANCE OF PROPERTIES. So long as any of the
General Term Notes are Outstanding, the Company will cause all properties
used or useful in the conduct of its business to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business and not disadvantageous in any
material respect to the Holders.
SECTION 504. PAYMENT OF TAXES AND OTHER CLAIMS. So long as any of
the General Term Notes are Outstanding, the Company will pay or discharge
or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien
upon the property of the Company or any Subsidiary; provided, however,
that the Company shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim the amount of
which, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 505. INSURANCE. So long as any of the General Term Notes
are Outstanding, the Company shall, and each of its Restricted
Subsidiaries and Consumers shall, keep insured by financially sound and
reputable insurers all property of a character usually insured by entities
engaged in the same or similar businesses similarly situated against loss
or damage of the kinds and in the amounts customarily insured against by
such entities and carry such amounts of other insurance as is usually
carried by such entities.
SECTION 506. COMPLIANCE WITH LAWS. So long as any of the General
Term Notes are Outstanding, the Company shall, and each of its Restricted
Subsidiaries and Consumers shall, comply in all material respects with all
laws applicable to the Company or such Restricted Subsidiary or Consumers,
as the case may be, its respective business and properties.
SECTION 508. LIMITATION OF CERTAIN LIENS. (a) So long as any of
the General Term Notes are outstanding, the Company shall not create,
incur, assume or suffer to exist any Lien intended or having the effect of
conferring upon a creditor of the Company or any Subsidiary a preferential
interest (hereinafter in this Section referred to as a "Lien") upon or
with respect to the Capital Stock of Consumers, Enterprises or NOMECO
without making effective provision whereby the General Term Notes shall
(so long as any such other creditor shall be so secured) be equally and
ratably secured (along with any other creditor similarly entitled to be
secured) by a direct Lien on all property subject to such Lien, provided,
however, that the foregoing restrictions shall not apply to:
(i) Liens for taxes, assessments or governmental charges or levies
to the extent not past due;
(ii) pledges or deposits to secure (a) obligations under workmen's
compensation laws or similar legislation, (b) statutory obligations of the
Company or (c) Support Obligations not to exceed $30 million at any one
time outstanding;
(iii) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens arising
in the ordinary course of business securing obligations which are not
overdue or which have been fully bonded and are being contested in good
faith;
(iv) purchase money Liens upon or in property acquired and held by
the Company in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness incurred solely for the
purpose of financing the acquisition of any such property to be subject to
such Liens, or Liens existing on any such property at the time of
acquisition, or extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount, provided that no such Lien
shall extend to or cover any property other than the property being
acquired and no such extension, renewal or replacement shall extend to or
cover property not theretofore subject to the Lien being extended, renewed
or replaced, and provided, further, that the aggregate principal amount of
the Indebtedness at any one time outstanding secured by Liens permitted by
this clause (iv) shall not exceed $10,000,000; and
(v) Liens not otherwise permitted by clauses (i) through (iv) of
this Section securing Indebtedness of the Company; provided that on the
date such Liens are created, and after giving effect to such Indebtedness,
the aggregate principal amount at maturity of all of the secured
Indebtedness of the Company at such date shall not exceed 10% of
Consolidated Assets at such date.
SECTION 509. LIMITATION ON CONSOLIDATION, MERGER, SALE OR
CONVEYANCE. In addition to the limitations set forth in Article 8 of the
Indenture, so long as the General Term Notes are Outstanding and until the
General Term Notes are rated BBB- or above (or an equivalent rating) by
Standard & Poor's and one Other Rating Agency (or if Standard & Poor's
shall change its rating system, an equivalent of such rating then employed
by such organization) at which time the Company shall be permanently
released from the following provisions the Company shall not consolidate
with or merge into any other Person or sell, lease or convey the property
of the Company in the entirety or substantially as an entirety unless (i)
immediately after giving effect to such transaction the Consolidated Net
Worth of the surviving entity is at least equal to the Consolidated Net
Worth of the Company immediately prior to the transaction, and (ii) after
giving effect to such transaction, the surviving entity would be entitled
to incur at least one dollar of additional Indebtedness (other than
revolving Indebtedness to banks) without violation of the limitations in
Section 510 hereof.
SECTION 510. LIMIATION ON CONSOLIDATED INDEBTEDNESS. (a) So long
as any of the General Term Notes are Outstanding and until the General
Term Notes are rated BBB- or above (or an equivalent rating) by Standard &
Poor's and one Other Rating Agency (or if Standard & Poor's shall change
its rating system, an equivalent of such rating then employed by such
organization) at which time the Company shall be permanently released from
the provision of this Section 510, the Company shall not, and shall not
permit any Restricted Subsidiary of the Company to, issue, create, assume,
guarantee, incur or otherwise become liable for (collectively, "issue"),
directly or indirectly, any Indebtedness unless (i) the Consolidated
Coverage Ratio of the Company and its Consolidated Subsidiaries for the
four consecutive fiscal quarters immediately preceding the issuance of
such Indebtedness (as shown by a pro forma consolidated income statement
of the Company and its Consolidated Subsidiaries for the four most recent
fiscal quarters ending at least 30 days prior to the issuance of such
Indebtedness after giving effect to (i) the issuance of such Indebtedness
and (if applicable) the application of the net proceeds thereof to
refinance other Indebtedness as if such Indebtedness was issued at the
beginning of the period, (ii) the issuance and retirement of any other
Indebtedness since the first day of the period as if such Indebtedness was
issued or retired at the beginning of the period and (iii) the acquisition
of any company or business acquired by the Company or any Subsidiary since
the first day of the period (including giving effect to the pro forma
historical earnings of such company or business), including any
acquisition which will be consummated contemporaneously with the issuance
of such Indebtedness, as if in each case such acquisition occurred at the
beginning of the period) exceeds a ratio of 1.6 to 1.0 and (ii),
immediately after giving effect to the issuance of such Indebtedness and
(if applicable) the application of the net proceeds thereof to refinance
other Indebtedness, the Consolidated Leverage Ratio is equal to or less
than a ratio of 0.75 to 1.0.
(b) Notwithstanding the foregoing paragraph, the Company or any
Restricted Subsidiary may issue, directly or indirectly, the following
Indebtedness:
(1) Revolving Indebtedness to banks not to exceed
$1,000,000,000 in the aggregate outstanding principal amount
at any time;
(2) Indebtedness (other than Indebtedness described in
clause (1) of this Subsection) outstanding on the date of the
original Indenture, as set forth on Schedule 510(b)(2) attached
hereto and made a part hereof, and Indebtedness issued in exchange
for, or the proceeds of which are used to refund or refinance, any
Indebtedness permitted by this clause (2); provided, however, that
(i) the principal amount (or accreted value in the case of
Indebtedness issued at a discount) of the Indebtedness so issued
shall not exceed the principal amount (or accreted value in the
case of Indebtedness issued at a discount) of, premium, if any, and
accrued but unpaid interest on, the Indebtedness so exchanged,
refunded or refinanced and (ii) the Indebtedness so issued (A)
shall not mature prior to the stated maturity of the Indebtedness
so exchanged, refunded or refinanced, (B) shall have an Average
Life equal to or greater than the remaining Average Life of the
Indebtedness so exchanged, refunded or refinanced and (C) if the
Indebtedness to be exchanged, refunded or refinanced is
subordinated to the General Term Notes, the Indebtedness is
subordinated to the General Term Notes in right of payment;
(3) Indebtedness of the Company owed to and held by a
Subsidiary and Indebtedness of a Subsidiary owed to and held by the
Company; provided, however, that, in the case of Indebtedness of
the Company owed to and held by a Subsidiary, (i) any subsequent
issuance or transfer of any Capital Stock that results in any such
Subsidiary ceasing to be a Subsidiary or (ii) any transfer of such
Indebtedness (except to the Company or a Subsidiary) shall be
deemed for the purposes of this Subsection to constitute the
issuance of such Indebtedness by the Company;
(4) Indebtedness of the Company issued in exchange for, or
the proceeds of which are used to refund or refinance, Indebtedness
of the Company issued in accordance with Subsection (a) of this
Section, provided that (i) the principal amount (or accreted value
in the case of Indebtedness issued at a discount) of the
Indebtedness so issued shall not exceed the principal amount (or
accreted value in the case of Indebtedness issued at a discount)
of, premium, if any, and accrued but unpaid interest on, the
Indebtedness so exchanged, refunded or refinanced and (ii) the
Indebtedness so issued (A) shall not mature prior to the stated
maturity of the Indebtedness so exchanged, refunded or refinanced,
(B) shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so exchanged, refunded
or refinanced and (C) if the Indebtedness to be exchanged, refunded
or refinanced is subordinated to the General Term Notes, the
Indebtedness so issued is subordinated to the General Term Notes in
right of payment; and
(5) Indebtedness of a Restricted Subsidiary issued in
exchange for, or the proceeds of which are used to refund or
refinance, Indebtedness of a Restricted Subsidiary issued in
accordance with Subsection (a) of this Section, provided that (i)
the principal amount (or accreted value in the case of Indebtedness
issued at a discount) of the Indebtedness so issued shall not
exceed the principal amount (or accreted value in the case of
Indebtedness issued at a discount) of, premium, if any, and accrued
but unpaid interest on, the Indebtedness so exchanged, refunded or
refinanced and (ii) the Indebtedness so issued (A) shall not mature
prior to the stated maturity of the Indebtedness so exchanged,
refunded or refinanced and (B) shall have an Average Life equal to
or greater than the remaining Average Life of the Indebtedness so
exchanged, refunded or refinanced.
SECTION 511. LIMITATION ON RESTRICTED PAYMENTS. (a) So long as the
General Term Notes are Outstanding and until the General Term Notes are
rated BBB- or above (or an equivalent rating) by Standard & Poor's and one
Other Rating Agency (or if Standard & Poor's shall change its rating
system, an equivalent of such rating then employed by such organization)
at which time the Company shall be permanently released from the provision
of this Section 511 the Company shall not, and shall not permit any
Restricted Subsidiary of the Company, directly or indirectly, to (i)
declare or pay any dividend or make any distribution on the Capital Stock
of the Company to the direct or indirect holders of the Capital Stock of
the Company (except dividends or distributions payable solely in Non-
Convertible Capital Stock of the Company or in options, warrants or other
rights to purchase such Non-Convertible Capital Stock and except dividends
or distributions payable to the Company or a Subsidiary), (ii) purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the
Company (any such dividend, distribution, purchase, redemption, other
acquisition or retirement being hereinafter referred to as a "Restricted
Payment") if at the time the Company or such Subsidiary makes such
Restricted Payment:
(1) an Event of Default, or an event that with the
lapse of time or the giving of notice or both would constitute an
Event of Default, shall have occurred and be continuing (or would
result therefrom); or
(2) the aggregate amount of such Restricted Payment
and all other Restricted Payments made since September 30, 1993,
would exceed the sum of:
(A) $120,000,000;
(B) 100% of Consolidated Net Income, accrued during
the period (treated as one accounting period) from September
30, 1993 to the end of the most recent fiscal quarter ending
at least 45 days prior to the date of such Restricted
Payment (or, in case such sum shall be a deficit, minus 100%
of the deficit); and
(C) the aggregate Net Proceeds received by the
Company from the issue or sale of or contribution with
respect to its Capital Stock subsequent to September 30,
1993.
For the purpose of determining the amount of any Restricted Payment not in
the form of cash, the amount shall be the fair value of such Restricted
Payment as determined in good faith by the Board of Directors, provided
that if the value of the non-cash portion of such Restricted Payment as
determined by the Board of Directors is in excess of $25 million, such
value shall be based on the opinion from a nationally recognized firm
experienced in the appraisal of similar types of transactions.
(b) The provisions of Section 511(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of
the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the
Company (other than Redeemable Stock or Exchangeable Stock);
provided, however, that such purchase or redemption shall be
excluded from the calculation of the amount of Restricted
Payments;
(ii) dividends or other distributions paid in
respect of any class of the Company's Capital Stock issued
in respect of the acquisition of any business or assets by
the Company or a Restricted Subsidiary if the dividends or
other distributions with respect to such Capital Stock are
payable solely from the net earnings of such business or
assets;
(iii) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such
dividend would have complied with this Section; provided,
however, that at the time of payment of such dividend, no
Event of Default shall have occurred and be continuing (or
result therefrom), and provided further, however, that such
dividends shall be included (without duplication) in the
calculation of the amount of Restricted Payments; or
(iv) payments pursuant to the Tax-Sharing Agreement.
SECTION 512. LIMITATION ON TRANSACTIONS WITH AFFILIATES. So long
as any of the General Term Notes are Outstanding, the Company shall not
directly or indirectly, conduct any business or enter into any transaction
or series of related transactions (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with an
Affiliate unless the terms of such business, transaction or series of
transactions are as favorable to the Company as terms that could be
obtainable at the time for a comparable transaction or series of related
transactions in arm's-length dealings with an unrelated third Person.
This Section shall not apply to (x) compensation paid to officers and
directors of the Company which has been approved by the Board of Directors
of the Company or (y) loans to the Company or an Affiliate pursuant to a
global cash management program, which loans mature within one year from
the date thereof.
ARTICLE VI
ADDITIONAL EVENTS OF DEFAULT
WITH RESPECT TO THE GENERAL TERM NOTES
SECTION 601. DEFINITION. All of the events specified in Section
501 of the Indenture and the events specified in Section 602 of this
Article shall be "Events of Default" with respect to the General Term
Notes.
SECTION 602. ADDITIONAL EVENTS OF DEFAULT. As contemplated by
Sections 301(15) and 501(7) of the Indenture, any one of the following
events (whatever the reason for such Event of Default and whether or not
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body) shall be an
Event of Default with respect to the General Term Notes for all purposes
of the Indenture:
(a) a default or event of default in respect of any
Indebtedness of the Company having an aggregate outstanding principal
amount at the time of such default in excess of $25,000,000 shall occur
which results in the acceleration of such Indebtedness or Indebtedness of
the Company having an outstanding principal amount at maturity in excess
of $25,000,000 shall not be paid at maturity thereof, which default shall
not have been waived by the holder or holders of such Indebtedness within
30 days of such default; or
(b) the entry of a final judgment or judgments against the
Company aggregating in excess of $25,000,000 which remain undischarged or
unbonded for a period (during which execution shall not be effectively
stayed) of 60 days.
ARTICLE VII
GLOBAL NOTES
The General Term Notes will be issued initially in the form of
Global Notes. "Global Note" means a registered General Term Note
evidencing one or more General Term Notes issued to a depositary (the
"Depositary") or its nominee, in accordance with this Article and bearing
the legend prescribed in this Article. A single Global Note will
represent all General Term Notes issued on the same date and having the
same terms, including, but not limited to, the same Interest Payment
Dates, rate of interest, Stated Maturity, and redemption provisions (if
any). The Company shall execute and the Trustee shall, in accordance with
this Article and the Company Order with respect to the General Term Notes,
authenticate and deliver one or more Global Notes in temporary or
permanent form that (i) shall represent and shall be denominated in an
aggregate amount equal to the aggregate principal amount of the General
Term Notes to be represented by such Global Note or Notes, (ii) shall be
registered in the name of the Depositary for such Global Note or Notes or
the nominee of such Depositary, (iii) shall be delivered by the Trustee to
such Depositary or pursuant to such Depositary's instructions and (iv)
shall bear a legend substantially to the following effect: "Unless this
Global Note is presented by an authorized representative of the Depositary
to the Company or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of the Depositary
or in such other name as is requested by the Depositary, any transfer,
pledge or other use hereof for value or otherwise by or to any person
shall be wrongful inasmuch as the registered owner hereof, the Depositary,
has an interest herein."
Notwithstanding Section 305 of the Indenture, unless and until it
is exchanged in whole or in part for General Term Notes in definitive
form, a Global Note representing one or more General Term Notes may not be
transferred except as a whole by the Depositary, to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by such Depositary or any such
nominee to a successor Depositary for General Term Notes or a nominee of
such successor Depositary.
If at any time the Depositary for the General Term Notes is
unwilling or unable to continue as Depositary for the General Term Notes,
the Company shall appoint a successor Depositary with respect to the
General Term Notes. If a successor Depositary for the General Term Notes
is not appointed by the Company by the earlier of (i) 90 days from the
date the Company receives notice to the effect that the Depositary is
unwilling or unable to act, or the Company determines that the Depositary
is unable to act or (ii) the effectiveness of the Depositary's resignation
or failure to fulfill its duties as Depositary, the Company will execute,
and the Trustee, upon receipt of a Company Order for the authentication
and delivery of definitive General Term Notes, will authenticate and
deliver General Term Notes in definitive form in an aggregate principal
amount equal to the principal amount of the Global Note or Notes
representing such General Term Notes in exchange for such Global Note or
Notes.
The Company may at any time and in its sole discretion determine
that the General Term Notes issued in the form of one or more Global Notes
shall no longer be represented by such Global Note or Notes. In such
event the Company will execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive General Term
Notes, will authenticate and deliver General Term Notes in definitive form
in an aggregate principal amount equal to the principal amount of the
Global Note or Notes representing such General Term Notes in exchange for
such Global Note or Notes.
The Depositary for such General Term Notes may surrender a Global
Note or Notes for such General Term Notes in exchange in whole or in part
for General Term Notes in definitive form on such terms as are acceptable
to the Company and such Depositary. Thereupon, the Company shall execute,
and the Trustee shall authenticate and deliver, without service charge:
(i) to each Person specified by such Depositary a
new General Term Note or Notes, of any authorized
denomination as requested by such Person in aggregate
principal amount equal to and in exchange for such Person's
beneficial interest in the Global Note; and
(ii) to such Depositary a new Global Note in a
denomination equal to the difference, if any, between the
principal amount of the surrendered Global Note and the
aggregate principal amount of General Term Notes in
definitive form delivered to Holders thereof.
In any exchange provided for in this Article, the Company will
execute and the Trustee will authenticate and deliver General Term Notes
in definitive registered form in authorized denominations.
Upon the exchange of a Global Note for General Term Notes in
definitive form, such Global Note shall be canceled by the Trustee.
General Term Notes in definitive form issued in exchange for a Global Note
pursuant to this Article shall be registered in such names and in such
authorized denominations as the Depositary for such Global Note, pursuant
to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee or Security Registrar. The Trustee shall
deliver such General Term Notes to the persons in whose names such General
Term Notes are so registered.
ARTICLE VIII
DEFEASANCE
All of the provisions of Article Fourteen of the Original Indenture
shall be applicable to the General Term Notes. Upon satisfaction by the
Company of the requirements of Section 1404 of the Indenture, in
connection with any covenant defeasance (as provided in Section 1403 of
the Indenture), the Company shall be released from its obligations under
Article Eight of the Original Indenture and under Articles III and V of
this Fourth Supplemental Indenture with respect to the General Term Notes.
ARTICLE IX
SUPPLEMENTAL INDENTURES
This Fourth Supplemental Indenture is a supplement to the Original
Indenture. As supplemented by this Fourth Supplemental Indenture, the
Original Indenture is in all respects ratified, approved and confirmed,
and the Original Indenture and this Fourth Supplemental Indenture shall
together constitute one and the same instrument.
The Company may, by supplemental indenture, amend this Fourth
Supplemental Indenture to provide for additional definitions, terms and
provisions relating to General Term Notes. Any such supplemental
indenture shall not adversely affect the rights and privileges of Holders
of General Term Notes issued prior to such supplemental indenture. Any
such supplemental indenture may include, but is not limited to including,
additional provisions permitting payment of General Term Notes prior to
Stated Maturity at the option of the Holders, issuance of General Term
Notes in currencies other than Dollars, and special provisions relating to
interest rate provisions.
TESTIMONIUM
This Fourth Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year
first written above.
CMS ENERGY CORPORATION
By:___________________
Attest:
___________________ (Corporate Seal)
THE CHASE MANHATTAN BANK
as Trustee
By:_____________________________
Attest:
_______________________ (Corporate Seal)
<PAGE>
Schedule 510(b)(2)
Indebtedness of CMS Energy Corporation outstanding on January 20, 1994:
1. $146,000,000 of Series A Senior Deferred Coupon Notes due 1997; and
2. $248,000,000 of Series B Senior Deferred Coupon Notes due 1999.
August 15, 1997
CMS Energy Corporation
Fairlane Plaza South
330 Town Center Drive
Suite 1100
Dearborn, MI 48126
Ladies and Gentlemen:
I am the Assistant General Counsel of CMS Energy
Corporation, a Michigan corporation (the "Company"), and have acted as
such in connection with the Registration Statement on Form S-3 (the
"Registration Statement") being filed by the Company with the Securities
and Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Securities Act"), relating to the registration of
$200,000,000 aggregate principal amount of General Term Notes, Series D
(the "Debt Securities"). Capitalized terms not otherwise defined herein
have the respective meanings specified in the Registration Statement.
In rendering this opinion, I have examined and relied upon a
copy of the Registration Statement. I have also examined, or have
arranged for the examination by an attorney or attorneys under my general
supervision, originals, or copies of originals certified to my
satisfaction, of such agreements, documents, certificates and other
statements of governmental officials and other instruments, and have
examined such questions of law and have satisfied myself as to such
matters of fact, as I have considered relevant and necessary as a basis
for this opinion. I have assumed the authenticity of all documents
submitted to me as originals, the genuineness of all signatures, the legal
capacity of all natural persons and the conformity with the original
documents of any copies thereof submitted to me for examination.
Based on the foregoing, it is my opinion that:
1. The Company is duly incorporated and validly
existing under the laws of the State of Michigan.
2. The Indenture dated as of January 15, 1994, as
supplemented (the "Indenture") between the Company
and the Chase Manhattan Bank, a New York banking
corporation, as trustee ("Trustee"), has been duly
authorized, executed and delivered and the Company
has the corporate power and authority to execute and
deliver the Fourth Supplemental Indenture to the
Indenture (the "Supplemental Indenture") between the
Company and the Chase Manhattan Bank, a New York
banking corporation, as Trustee, to be filed as
Exhibit (4)(a)(v) to the Registration Statement,
under which the Debt Securities are to be issued,
and to authorize and sell the Debt Securities.
3. The Debt Securities will be legally issued and
binding obligations of the Company (except to the
extent enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally and
by the effect of general principles of equity,
regardless of whether enforceability is considered
in a proceeding in equity or at law) when: (i) the
Registration Statement, as finally amended
(including any necessary post-effective amendments),
shall have become effective under the Securities Act
and the Indenture (including any necessary
supplemental indentures) shall have been qualified
under the Trust Indenture Act of 1939, as amended,
and duly executed and delivered by the Company and
the Trustee; (ii) an appropriate Pricing Supplement
with respect to the particular Debt Securities then
being sold by the Company shall have been filed with
the Commission pursuant to Rule 424 under the
Securities Act; (iii) the Company's Board of
Directors or a duly authorized committee thereof
shall have duly adopted final resolutions
authorizing the issuance and sale of the particular
Debt Securities then being sold by the Company as
contemplated by the Registration Statement and the
Indenture; and (iv) the Supplemental Indenture under
which the Debt Securities are to be issued shall
have been duly authorized, executed and delivered
and the particular Debt Securities then being sold
by the Company shall have been duly executed and
authenticated as provided in the Indenture and such
resolutions, and shall have been duly delivered to
the purchasers thereof against payment of the agreed
consideration therefor.
For purposes of this opinion, I have assumed that there will
be no changes in the laws currently applicable to the Company and that
such laws will be the only laws applicable to the Company.
I do not find it necessary for the purposes of this opinion
to cover, and accordingly I express no opinion as to, the application of
the securities or blue sky laws of the various states to the sale of the
Debt Securities.
I am a member of the bar of the State of Michigan and I
express no opinion as to the laws of any jurisdiction other than the State
of Michigan and the federal law of the United States of America.
I hereby consent to the filing of this opinion as an exhibit
to the Company's Registration Statement on Form S-3 relating to the Debt
Securities and to all references to me included in or made a part of the
Registration Statement.
Very truly yours,
/s/ Michael D. Van Hemert
Exhibit (12)
<TABLE>
CMS ENERGY CORPORATION
Ratio of Earnings to Fixed Charges and Preferred Securities Dividends and Distributions
(Millions of Dollars)
<CAPTION>
Six Months
Ended Years Ended December 31
June 30, 1997 1996 1995 1994 1993 1992
(b)
<S> <C> <C> <C> <C> <C> <C>
Earnings as defined (a)
Consolidated net income (loss) $ 138 $ 240 $ 204 $ 179 $ 155 $(297)
Income taxes 79 139 118 92 75 (146)
Exclude equity basis subsidiaries (36) (85) (57) (18) (6) 10
Fixed charges as defined, adjusted to
exclude capitalized interest of $7, $8,
$8, $6, $5, and $3 million for the six
months ended June 30, 1997 and for the
years ended December 31, 1996, 1995,
1994, 1993 and 1992, respectively 165 310 295 249 253 236
----- ----- ----- ----- ----- -----
Earnings as defined $ 346 $ 604 $ 560 $ 502 $ 477 $(197)
===== ===== ===== ===== ===== =====
Fixed charges as defined (a)
Interest on long-term debt $ 126 $ 230 $ 224 $ 193 $ 204 $ 169
Estimated interest portion of lease rental 5 10 9 9 11 16
Other interest charges 22 43 42 30 32 43
Preferred securities dividends and
distributions 29 54 42 36 17 16
----- ----- ----- ----- ----- -----
Fixed charges as defined $ 182 $ 337 $ 317 $ 268 $ 264 $ 244
===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges and
preferred securities dividends
and distributions 1.90 1.79 1.77 1.87 1.81 -
===== ===== ===== ===== ===== =====
<FN>
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K.
(b) For the year ended December 31, 1992, fixed charges exceeded earnings by $441 million. Earnings as defined
include a $520 million pretax loss on the settlement of MCV Power Purchases, $(15) million for potential customer
refunds and other reserves related to 1992 but recorded in 1991, and $6 million relating to CMS Generation
Company's reduction in its investment in The Oxford Energy Company. The ratio of earnings to fixed charges and
preferred securities dividends and distributions would have been 1.29 excluding these amounts.
</TABLE>
<PAGE>
ARTHUR ANDERSEN LLP
Exhibit (15)
To CMS Energy Corporation:
We are aware that CMS Energy Corporation has incorporated by
reference in this registration statement its Form 10-Q for the quarter
ended March 31, 1997 and its Form 10-Q for the quarter ended June 30,
1997, which include our reports dated May 9, 1997 and August 11, 1997,
respectively, covering the unaudited interim financial information
contained therein. Pursuant to Regulation C of the Securities Act of
1933, this report is not considered a part of the registration statement
prepared or certified by our Firm or report prepared or certified by our
Firm within the meaning of Sections 7 and 11 of the Act.
/s/ Arthur Andersen LLP
Detroit, Michigan,
August 14, 1997.
<PAGE>
ARTHUR ANDERSEN LLP
Exhibit (23)(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated January 24, 1997, included or
incorporated by reference in CMS Energy Corporation's Form 10-K for the
year ended December December 31, 1996, and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
Detroit, Michigan,
August 14, 1997.
<PAGE>
Exhibit 24
CMS ENERGY
An International Energy Company
May 30, 1997
Mr. Alan M. Wright
Mr. Thomas A. McNish
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, MI 48126
We hereby appoint each of you lawful attorney for each of us and in each
of our names to sign and cause to be filed with the Securities and
Exchange Commission registration statement(s) and/or any amendment(s)
thereto, including post-effective amendment or amendments, to be
accompanied in each case by a prospectus or supplemental prospectus and
any necessary exhibits with respect to the issue and sale of up to $200
million of the Corporation's General Term Notes.
Yours very truly,
/s/ William T. McCormick, Jr. /s/ Michael G. Morris
______________________________ __________________________
William T. McCormick, Jr. Michael G. Morris
/s/ John Deutch /s/ W.U. Parfet
______________________________ __________________________
John M. Deutch William U. Parfet
/s/ James J. Duderstadt /s/ Percy Pierre
______________________________ __________________________
James J. Duderstadt Percy A. Pierre
/s/ K.R. Flaherty /s/ K. Whipple
______________________________ __________________________
Kathleen R. Flaherty Kenneth Whipple
/s/ Victor J. Fryling /s/ John B. Yasinsky
______________________________ __________________________
Victor J. Fryling John B. Yasinsky
/s/ Earl D. Holton
______________________________
Earl D. Holton
<PAGE>
Extract from minutes of a meeting of the Board of Directors of CMS Energy
Corporation (the "Corporation") held on May 27, 1997.
- - - - - - - -
Proposed Issue and Sale of General Term Notes
The officers of the Corporation recommended that the Corporation
issue and sell up to $200,000,000 aggregate principal amount of senior
unsecured debt in the form of General Term Notes (in addition to the
amount of General Term Notes remaining under Registration Statement No.
333-16793) to be distributed pursuant to the terms of a distribution
agreement at the prices and on the terms deemed desirable in the interest
of the Corporation as determined by the Chairman of the Board, a Vice
Chairman, the President or the Chief Financial Officer of the Corporation,
or certain persons designated as agents for the Corporation. The proceeds
will be used for general corporate purposes. The matter was discussed
fully.
Upon motion duly made and seconded, the following resolutions were
thereupon unanimously adopted:
RESOLVED: That the Board of Directors approves the issue
and sale of not more than $200,000,000 aggregate principal
amount of senior unsecured debt in the form of General
Term Notes (the "Notes") and the officers of the
Corporation, and each of them, are authorized in their
discretion, on its behalf, to execute and file with the
Securities and Exchange Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Act") with respect to the issue and sale of
not more than $200,000,000 aggregate principal amount of
the Notes, in such form as may be approved by the officers
executing the same, and to do all other things necessary
to make such registration effective, including the
execution and filing of any necessary or appropriate
amendments or supplements thereto; and
RESOLVED FURTHER: That the officers of the Corporation,
and each of them, are authorized in their discretion, on
its behalf, to take all actions necessary or advisable to
consummate the negotiation, registration, and sale of up
to $200,000,000 aggregate principal amount of the Notes,
which Notes shall be issued pursuant to an Indenture dated
as of January 15, 1994 entered into between the
Corporation and The Chase Manhattan Bank, as Trustee, to
be supplemented by a Fourth Supplemental Indenture (such
indenture as so supplemented, the "Indenture"); and
RESOLVED FURTHER: That the officers of the Corporation,
and each of them, are authorized to execute and deliver
the Fourth Supplemental Indenture, to be entered into
between the Corporation and The Chase Manhattan Bank, as
Trustee, on behalf of the Corporation in such form as may
be approved by the officers executing the same and as
counsel may advise; and
RESOLVED FURTHER: That any one of the following persons:
the Chairman of the Board, a Vice Chairman, the President
or Chief Financial Officer, or Doris F. Galvin, Martin R.
Walicki, or Janet Sanders, as agents for the Corporation,
are authorized in their discretion, to execute, issue,
deliver and sell from time to time up to $200,000,000
aggregate principal amount of the Notes pursuant to and in
accordance with the Indenture and a distribution agreement
hereinafter described and authorized, but subject to the
effectiveness of the Registration Statement under the Act;
and
RESOLVED FURTHER: That the officers of the Corporation,
and each of them, are authorized in their discretion, to
execute and deliver, on its behalf, a distribution
agreement relating to the sale of up to $200,000,000
aggregate principal amount of the Notes in such form as
may be approved by the officers executing the same and as
counsel may advise, and such officers are authorized to
perform all acts and things necessary to effect the
transaction contemplated by said distribution agreement;
and
RESOLVED FURTHER: That each Note issued by the
Corporation shall be sold at a price equal to 100% of the
principal amount thereof and have such terms (including,
without limitation, interest rate, maturity date,
redemption provisions (if any) and other terms permitted
or contemplated by the Indenture) as shall be set forth in
a certificate delivered to the Trustee pursuant to the
terms of the Indenture, and any one of the following
persons: the Chairman of the Board, a Vice Chairman, the
President or Chief Financial Officer, or Doris F. Galvin,
Martin R. Walicki, or Janet Sanders, as agents of the
Corporation, are empowered to approve and authorize such
terms and to execute and deliver such certificate setting
forth the same; and
RESOLVED FURTHER: That each Note issued by the
Corporation shall bear interest at such rate, pay interest
and principal on such dates, and have such other terms and
provisions (including, but not limited to, redemption
terms or a survivors's option), and shall be issued in
definitive registered form as a global note pursuant to
the terms of the Indenture, as determined by any one of
the following persons: the Chairman of the Board, a Vice
Chairman, the President or Chief Financial Officer of the
Corporation, or Doris F. Galvin, Martin R. Walicki or
Janet Sanders, as agents for the Corporation; and
RESOLVED FURTHER: That the officers of the Corporation,
and each of them, are authorized to take any and all
action that any of such officers may deem necessary or
advisable in order to effect the registration or
qualification, or to request an exemption from such
registration or qualification, of part or all of the Notes
for offer and sale under the securities or Blue Sky laws
of any of the States of the United States of America or
other jurisdiction, and, in connection therewith, to
execute, acknowledge, verify, deliver, file and publish
all such applications, reports, resolutions, consents and
other papers and instruments as may be required under such
laws, and to take any and all further action that any such
officer may deem necessary or advisable in order to
maintain any such registration or qualification, or
exemption therefrom, for as long as such officers may deem
to be in the best interests of the Corporation; and
RESOLVED FURTHER: That the officers of the Corporation,
and each of them, are authorized and empowered to sign,
seal and deliver such papers and documents, and to do or
cause to be done all acts and things which any of them may
consider necessary or advisable to carry out the intent
and purposes of all the foregoing resolutions with respect
to the issue and sale of up to $200,000,000 aggregate
principal amount of the Notes of the Corporation.
- - - - - - - -
I, Thomas A. McNish, Vice President and Secretary of CMS Energy
Corporation, CERTIFY that the foregoing is a true and correct copy of
resolutions duly and regularly adopted at a meeting of the Board of
Directors of CMS Energy Corporation duly held on May 27, 1997, at which a
quorum was in attendance and voting throughout, and that said resolutions
have not since been rescinded but are still in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
the Company this 30th day of July 1997.
(SEAL) /s/Thomas A. McNish
____________________________
Thomas A. McNish
Vice President and Secretary
<PAGE>
Exhibit 25
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
CMS ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
Michigan 38-2726431
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
330 Town Center Drive
Dearborn, Michigan 48126
(Address of principal executive offices) (Zip Code)
_______________________________________________________
General Term Notes, Series D
(Title of Indenture securities)
_____________________________________________________________________
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
<PAGE>
<PAGE>
ITEM 16. LIST OF EXHIBITS
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now
in effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996
(see Exhibit 1 to Form T-1 filed in connection with Registration Statement
No. 333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference.
On July 14, 1996, in connection with the merger of Chemical Bank and The
Chase Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4
to Form T-1 filed in connection with Registration Statement No. 333-06249,
which is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14,
1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or
examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 30th
day of July, 1997.
THE CHASE MANHATTAN BANK
By /s/James P. Freeman
_________________________________
James P. Freeman
Assistant Vice President
<PAGE>
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin . . . . . . . . . . . . . . . . . $ 11,721
Interest-bearing balances . . . . . . . . . . . . . 3,473
Securities: . . . . . . . . . . . . . . . . . . . . . .
Held to maturity securities . . . . . . . . . . . . . . 2,965
Available for sale securities . . . . . . . . . . . . . 35,903
Federal Funds sold and securities purchased under
agreements to resell. . . . . . . . . . . . . . . . 24,025
Loans and lease financing receivables:
Loans and leases, net of unearned income $123,957
Less: Allowance for loan and lease losses 2,853
Less: Allocated transfer risk reserve ... 13
________
Loans and leases, net of unearned income,
allowance, and reserve. . . . . . . . . . . . . . . 121,091
Trading Assets. . . . . . . . . . . . . . . . . . . 54,340
Premises and fixed assets (including capitalized
leases) . . . . . . . . . . . . . . . . . . . . . . 2,875
Other real estate owned . . . . . . . . . . . . . . . . 302
Investments in unconsolidated subsidiaries and
associated companies. . . . . . . . . . . . . . . . 139
Customer's liability to this bank on acceptances
outstanding . . . . . . . . . . . . . . . . . . . . 2,270
Intangible assets . . . . . . . . . . . . . . . . . . . 1,535
Other assets. . . . . . . . . . . . . . . . . . . . . . 10,283
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . $270,922
________
<PAGE>
LIABILITIES
Deposits
In domestic offices. . . . . . . . . . . . . . . . $84,776
Noninterest-bearing. . . $32,492
Interest-bearing 52,284
_______
In foreign offices, Edge and Agreement subsidiaries,
and IBF's. . . . . . . . . . . . . . . . . . . . . 69,171
Noninterest-bearing. . . . . . . . . . . . . . . . $ 4,181
Interest-bearing . . . . . . . . . . . . . . . . . 64,990
Federal funds purchased and securities sold under agree-
ments to repurchase. . . . . . . . . . . . . . . . 32,885
Demand notes issued to the U.S. Treasury . . . . . 1,000
Trading liabilities. . . . . . . . . . . . . . . . 42,538
Other Borrowed money (including mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less. . . 4,431
With a remaining maturity of more than one year. . 466
Bank's liability on acceptances executed and
outstanding. . . . . . . . . . . . . . . . . . . . 2,270
Subordinated notes and debentures . . . . . . . . . . . 5,911
Other liabilities . . . . . . . . . . . . . . . . . . . 11,575
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . 255,023
_______
EQUITY CAPITAL
Perpetual Preferred stock and related surplus. . . 0
Common stock . . . . . . . . . . . . . . . . . . . 1,211
Surplus (exclude all surplus related to
preferred stock) . . . . . . . . . . . . . . . . . 10,283
Undivided profits and capital reserves . . . . . . 4,941
Net unrealized holding gains (Losses)
on available-for-sale securities . . . . . . . . . (552)
Cumulative foreign currency translation
adjustments. . . . . . . . . . . . . . . . . . . . 16
TOTAL EQUITY CAPITAL. . . . . . . . . . . . . . . . . . 15,899
========
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL . . . . . . . . . . . . . $270,922
========
I, Joseph L. Sclafani, E.V.P. & Controller
of the above-named bank, do hereby declare
that this Report of Condition has been
prepared in conformance with the instructions
issued by the appropriate Federal regulatory
authority and is true to the best of my
knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the
correctness of this Report of Condition and
declare that it has been examined by us, and
to the best of our knowledge and belief has
been prepared in conformance with the in-
structions issued by the appropriate Federal
regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
