<PAGE> 1
REGISTRATION NO. 333-
================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
------------------
FORM S-4
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 of (I.R.S. Employer Identification No.)
incorporation or organization)
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
CMS ENERGY CORPORATION
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
313-436-9200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
MICHAEL D. VAN HEMERT, ESQ.
ASSISTANT GENERAL COUNSEL
CMS ENERGY CORPORATION
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(313) 436-9200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: []
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. []
------------------
<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 unit(1) price(1) fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7 3/8% Unsecured Notes
Due 2000, Series B $300,000,000 100% $300,000,000 $88,500.00
===============================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(f) 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.
================================================================================
<PAGE> 2
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE
INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION IN THE PROSPECTUS
- ----------------------- --------------------------
<S> <C>
A. Information About the Transaction
1. Forepart of Registration Statement and
Outside Front Cover Page of the Prospectus . . . . . . Front Cover Page of the Registration Statement; Outside
Front Cover Page of the Prospectus
2. Inside Front and Outside Back Cover Pages of the
Prospectus . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page of the Prospectus; Outside Back Cover
Page of the Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Charges the
Charges and Other Information . . . . . . . . . . . . Prospectus Summary; Selected Consolidated Financial Data;
Ratio of Earnings to Fixed Charges; Incorporation of Certain
Documents by Reference
4. Terms of the Transaction . . . . . . . . . . . . . . . Prospectus Summary; Use of Proceeds; The Exchange Offer;
Description of Exchange Notes; Certain United States Federal
Income Tax Consequences; Plan of Distribution
5. Pro Forma Financial Information . . . . . . . . . . . Capitalization
6. Material Contracts with the Company Being
Acquired . . . . . . . . . . . . . . . . . . . . . . . *
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be Underwriters . . . *
8. Interests of Named Experts and Counsel . . . . . . . . Legal Matters; Independent Public Accountants
9. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . . *
B. Information About the Registrant
10. Information with Respect to S-3 Registrants . . . . . Available Information; Incorporation of Certain Documents by
Reference; Prospectus Summary; CMS Energy, Selected
Consolidated Financial Data; Use of Proceeds; Ratio of
Earnings to Fixed Charges; Capitalization;
11. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
12. Information With Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . . . . . . *
13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . . . . . . *
14. Information With Respect to Registrants Other
Than S-3 or S-2 Registrants . . . . . . . . . . . . . *
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
C. Information About the Company Being Acquired
15. Information With Respect to S-3 Companies . . . . . . *
16. Information With Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . . . . . . . . *
17. Information With Respect to Companies Other than
S-3 or S-2 Companies . . . . . . . . . . . . . . . . . *
D. Voting and Management Information
18. Information if Proxies, Consents or Authorizations are
to be Solicited . . . . . . . . . . . . . . . . . . . *
19. Information if Proxies, Consents or Authorizations are
not to be Solicited, or in an Exchange Offer . . . . . Directors and Executive Officers; Executive Compensation; The
Exchange Offer
</TABLE>
- -----------------
* Item is omitted because response is negative or item is inapplicable.
<PAGE> 4
PROSPECTUS
DATED JANUARY , 1998
OFFER TO EXCHANGE
7 3/8% UNSECURED NOTES DUE 2000, SERIES B
FOR ANY AND ALL OUTSTANDING 7 3/8% UNSECURED NOTES DUE 2000, SERIES A OF
[CMS ENERGY LOGO]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED.
CMS Energy Corporation, a Michigan corporation ("CMS Energy"), hereby offers
(the "Exchange Offer"), upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal, to exchange up
to an aggregate principal amount of $300 million of its 7 3/8% Unsecured Notes
Due 2000, Series B (the "Exchange Notes") for an equal principal amount of its
7 3/8% Unsecured Notes Due 2000, Series A (the "Notes"). The Exchange Notes
will be substantially identical (including principal amount, interest rate,
maturity and redemption rights) to the Notes for which they may be exchanged
pursuant to the Exchange Offer, except for certain transfer restrictions,
registration rights and interest rate step-up provisions applicable only to the
Notes. The Notes have been, and the Exchange Notes will be, issued under the
Senior Debt Indenture (as defined herein). The Exchange Notes will bear
interest from November 7, 1997 (the date of issuance of the Notes for which the
Exchange Offer is being made) or from the most recent interest payment date to
which interest on the Notes has been paid, at a rate equal to 7 3/8% per annum.
Interest on the Exchange Notes will be payable semiannually on May 15 and
November 15, commencing May 15, 1998. The Exchange Notes will mature on
November 15, 2000. The Exchange Notes are redeemable at the option of CMS
Energy, in whole or in part, at any time or from time to time, on not less than
30 days' notice, at the redemption prices determined as described herein,
together with accrued interest to the date fixed for redemption. In the event
of any Change in Control (as defined herein), a Holder (as defined herein) may
require CMS Energy to purchase all or any part of such Holder's Notes at a
price equal to 101% of their principal amount, plus interest accrued thereon,
if any, to the date of purchase. See "Description of Exchange Notes" herein.
The Exchange Notes will be unsecured debt securities of CMS Energy. As of
September 30, 1997, CMS Energy had outstanding approximately $1.984 billion
aggregate principal amount of indebtedness, none of which was secured. None of
such indebtedness would be senior to the Exchange Notes and the Exchange Notes
will not be senior to such indebtedness, except as described herein. The
Exchange Notes will rank on a parity in right of payment with all other
unsecured and unsubordinated indebtedness of CMS Energy. See "Description of
Exchange Notes-General."
The Notes were sold by CMS Energy on November 7, 1997 to the Initial Purchasers
(as defined herein) who offered a portion of the Notes in the United States to
qualified institutional buyers in reliance on Rule 144A of the Securities Act
of 1933, as amended (the "Securities Act"), and the remainder of the Notes were
offered by the Initial Purchasers in reliance on Regulation S under the
Securities Act. See "The Exchange Offer." Accordingly, the Notes may not be
reoffered, resold or otherwise transferred in the United States unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available.
(Continued on next page)
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.
The date of this Prospectus is January , 1998.
<PAGE> 5
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of CMS Energy contained in the Registration Rights Agreement dated
as of November 7, 1997 (the "Registration Rights Agreement") by and among CMS
Energy and Donaldson, Lufkin & Jenrette Securities Corporation, Chase
Securities Inc., CIBC Oppenheimer Corp., Morgan Stanley & Co. Incorporated, and
Salomon Brothers Inc (the last five named entities collectively referred to
herein as the "Initial Purchasers"), with respect to the initial sale of the
Notes.
CMS Energy will not receive any proceeds from the Exchange Offer. CMS Energy
will pay all the expenses incident to the Exchange Offer. Tenders of Notes
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date (as defined) for the Exchange Offer. See "The Exchange Offer."
The Exchange Offer is being made in reliance on certain no-action positions
that have been published by the staff of the Securities and Exchange Commission
(the "Commission") which require each tendering noteholder to represent that it
is acquiring the Exchange Notes in the ordinary course of its business and that
such holder does not intend to participate and has no arrangement or
understanding with any person to participate in a distribution of the Exchange
Notes. Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of the Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities.
There has not previously been any public market for the Exchange Notes. CMS
Energy does not intend to list the Exchange Notes on any securities exchange or
to seek approval for quotation through any automated quotation system. There
can be no assurance that an active market for the Exchange Notes will develop.
To the extent that an active market for the Exchange Notes does develop, the
market value of the Exchange Notes will depend on market conditions, CMS
Energy's financial conditions and other factors. Such conditions might cause
the Exchange Notes, to the extent they are actively traded, to trade at a
significant discount from face value.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
1998, or such later date and time to which it may be extended by CMS Energy,
which in no event shall be later than 1998. The Exchange Offer is
not conditioned upon any minimum principal amount of Notes being tendered for
exchange pursuant to the Exchange Offer.
<PAGE> 6
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
Commission. CMS Energy has filed with the Commission a Registration Statement
on Form S-4 under the Securities Act for the registration of the Exchange
Notes offered hereby (the "Exchange Offer Registration Statement"). This
Prospectus, which constitutes a part of the Exchange Offer Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are contained in exhibits and schedules to
the Exchange Offer Registration Statement as permitted by the rules and
regulations of the Commission. For further information about CMS Energy and
the Exchange Notes offered hereby, reference is made to the Exchange Offer
Registration Statement, including the exhibits thereto, which may, along with
reports, proxy statements and other information filed by CMS Energy with the
Commission pursuant to the informational requirements of the Exchange Act, be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's regional offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60601; and copies of such material may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates, or through the World
Wide Web (http://www.sec.gov). The outstanding shares of CMS Energy common
stock are 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 the New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by CMS Energy (File No.
001-9513) are incorporated by reference in this Prospectus:
(a) CMS Energy's Annual Report on Form 10-K for the year ended December 31,
1996;
(b) CMS Energy's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30, and September 30, 1997; and
(c) CMS Energy's Current Reports on Form 8-K dated March 7, April 24, May 1,
June 5, June 11, July 1, August 21, and December 23, 1997.
All documents and reports subsequently filed by CMS Energy with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference into this Prospectus and 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").
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN. CMS ENERGY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN, OTHER THAN CERTAIN
EXHIBITS TO SUCH DOCUMENTS. REQUESTS 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. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUESTS SHOULD BE MADE BY , 1998.
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent any
statement contained herein or in any subsequently filed document, which is also
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
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.
1
<PAGE> 7
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Prospectus and is qualified in its entirety
by such more detailed information and consolidated financial statements,
including the notes thereto, incorporated by reference in this Prospectus.
THE NOTE OFFERING
THE NOTES . . . . . . . . . . . . . . . . . . . The Notes were sold by CMS
Energy on November 7, 1997
(the "Issue Date"), and were
subsequently offered to
qualified institutional
buyers pursuant to Rule 144A
and to institutional
investors that are accredited
investors in a manner exempt
from registration under the
Securities Act as well as to
purchasers pursuant to
Regulation S under the
Securities Act.
REGISTRATION RIGHTS AGREEMENT . . . . . . . . . . In connection with the
offering of the Notes, CMS
Energy entered into the
Registration Rights
Agreement, which granted
holders of the Notes certain
exchange and registration
rights. The Exchange Offer is
intended to satisfy the
obligations of CMS Energy
with respect to such exchange
and registration rights
which, except for limited
instances involving the
Initial Purchasers (as
defined in the Registration
Rights Agreement) or Holders
(as defined in the
Registration Rights
Agreement) who are not
eligible to participate in
the Exchange Offer, terminate
upon the consummation of the
Exchange Offer. See "The
Exchange Offer."
THE EXCHANGE OFFER
SECURITIES OFFERED . . . . . . . . . . . . . . . $300 million aggregate
principal amount of 7 3/8%
Unsecured Notes due 2000,
Series B.
THE EXCHANGE OFFER . . . . . . . . . . . . . . . The Exchange Notes are
being offered in exchange for
an equal principal amount of
Notes. As of the date
hereof, $300 million
aggregate principal amount of
Notes are outstanding. The
Notes may be tendered only
in integral multiples of
$1,000.
RESALE OF EXCHANGE NOTES . . . . . . . . . . . . Based on interpretations
by the Staff of the
Commission as set forth in no
action letters issued to
third parties, CMS Energy
believes that the Exchange
Notes issued pursuant to the
Exchange Offer may be offered
for resale, resold or
otherwise transferred by any
holder thereof (other than
any such holder that is a
broker-dealer or an
"affiliate" of CMS Energy
within the meaning of Rule
405 under the Securities Act)
without compliance with the
registration and prospectus
delivery provisions of the
Securities Act, provided that
(i) such Exchange Notes are
acquired in the ordinary
course of business, (ii) at
the time of the commencement
of the Exchange Offer, such
holder has no arrangement
with any person to
participate in a distribution
of the Exchange Notes and
(iii) such holder is not
engaged in, and does not
intend to engage in, a
distribution of the Exchange
Notes. By tendering the Notes
in exchange for the Exchange
Notes, each holder will
represent to CMS Energy
that: (i) it is not such an
affiliate of CMS Energy, (ii)
any Exchange Notes to be
received by it will be
acquired in the ordinary
course of business and (iii)
at the time of the
commencement of the Exchange
Offer it is not engaged in,
and does not intend to engage
in, and has no arrangement or
understanding with any person
to participate in, a
distribution of the Exchange
Notes. If a holder of Notes
is unable to make the
foregoing representations,
such holder
2
<PAGE> 8
may not rely on the applicable
interpretations of the Staff
of the Commission and must
comply with the registration
and prospectus delivery
requirements of the
Securities Act in connection
with any secondary resale
transaction.
Each broker-dealer that
receives Exchange Notes for
its own account pursuant to
the Exchange Offer must
acknowledge that it will
deliver a prospectus in
connection with any resale of
such Exchange Notes. The
Letter of Transmittal states
that, by so acknowledging and
by delivering a prospectus, a
broker-dealer will not be
deemed to admit that it is an
"underwriter" within the
meaning of the Securities
Act. This Prospectus, as it
may be amended or
supplemented from time to
time, may be used by a
broker-dealer in connection
with resales of the Exchange
Notes received in exchange
for the Notes where such
Exchange Notes were acquired
by such broker-dealer as a
result of market-making
activities or other trading
activities. CMS Energy has
agreed that, starting on the
Expiration Date and ending on
the close of business on the
first anniversary of the
Expiration Date, it will make
this Prospectus available to
any broker-dealer for use in
connection with any such
resale. See "Plan of
Distribution."
To comply with the securities
laws of certain
jurisdictions, it may be
necessary to qualify for sale
or to register the
Exchange Notes prior to
offering or selling such
Exchange Notes. CMS Energy
has agreed, pursuant to the
Registration Rights Agreement
and subject to certain
specified limitations
therein, to cooperate with
selling Holders or
underwriters in connection
with the registration and
qualification of the Exchange
Notes for offer or sale under
the securities or "blue sky"
laws of such jurisdictions as
may be necessary to permit
the holders of Exchange Notes
to trade the Exchange Notes
without any restrictions or
limitations under the
securities laws of the
several states of the United
States.
CONSEQUENCES OF FAILURE TO
EXCHANGE NOTES . . . . . . . . . . . . . . . . . Upon consummation of the
Exchange Offer, subject to
certain limited exceptions,
holders of Notes who do not
exchange their Notes for
Exchange Notes in the
Exchange Offer will no longer
be entitled to registration
rights and will not be able
to offer or sell their Notes,
unless such Notes are
subsequently registered
under the Securities Act
(which, subject to certain
limited exceptions, CMS
Energy will have no
obligation to do), except
pursuant to an exemption
from, or in a transaction not
subject to, the Securities
Act and applicable state
securities laws. See "The
Exchange Offer -
Consequences of Failure to
Exchange."
EXPIRATION DATE . . . . . . . . . . . . . . . . 5:00 p.m., New York City
time, on ,
1998, unless the Exchange
Offer is extended, in which
case the term "Expiration
Date" means the latest date
and time to which the
Exchange Offer is extended.
CONDITIONS TO THE EXCHANGE OFFER . . . . . . . . The Exchange Offer is not
conditioned upon any minimum
principal amount of Notes
being tendered for exchange.
However, the Exchange Offer
is subject to certain
customary conditions, which
may be waived by CMS Energy.
See "The Exchange Offer-
Conditions." Except for the
requirements of applicable
United States federal and
state securities laws, there
are no United States federal
or state regulatory
requirements to be complied
with or obtained by CMS
Energy in connection with the
Exchange Offer.
3
<PAGE> 9
PROCEDURES FOR TENDERING
NOTES . . . . . . . . . . . . . . . . . . . . . . Each holder of Notes
wishing to accept the
Exchange Offer must complete,
sign and date the Letter of
Transmittal, or a facsimile
thereof, in accordance with
the instructions contained
herein and therein, and mail
or otherwise deliver such
Letter of Transmittal, or
such facsimile, together with
any other required
documentation to the Exchange
Agent at the address set
forth herein and effect a
tender of Notes pursuant to
the procedures for book-entry
transfer as provided for
herein. See "The Exchange
Offer - Procedures for
Tendering" and "-Book-Entry
Transfer."
GUARANTEED DELIVERY PROCEDURES . . . . . . . . . Holders of Notes who wish
to tender their Notes and who
cannot deliver their Notes
and a properly completed
Letter of Transmittal or any
other documents required by
the Letter of Transmittal to
the Exchange Agent prior to
the Expiration Date may
tender their Notes according
to the guaranteed delivery
procedures set forth under
"The Exchange Offer -
Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS . . . . . . . . . . . . . . . . Tenders of Notes may be
withdrawn at any time prior
to 5:00 p.m., New York City
time, on the Expiration Date.
To withdraw a tender of
Notes, a written or facsimile
transmission notice of
withdrawal must be received
by the Exchange Agent at its
address set forth under "The
Exchange Offer-Exchange
Agent" prior to 5:00 p.m.,
New York City time, on the
Expiration Date.
ACCEPTANCE OF NOTES
AND DELIVERY OF EXCHANGE NOTES . . . . . . . . . Subject to certain
conditions, any and all Notes
that are properly tendered in
the Exchange Offer prior to
5:00 p.m., New York City
time, on the Expiration Date
will be accepted for
exchange. The Exchange Notes
issued pursuant to the
Exchange Offer will be
delivered promptly following
the Expiration Date. See "The
Exchange Offer - Acceptance
of Notes for Exchange;
Delivery of Exchange Notes."
CERTAIN UNITED STATES TAX CONSEQUENCES . . . . . The exchange of Notes for
Exchange Notes will not
constitute a taxable exchange
for United States federal
income tax purposes. See
"Certain United States
Federal Income Tax
Consequences."
EXCHANGE AGENT . . . . . . . . . . . . . . . . . NBD Bank is serving as
exchange agent (the "Exchange
Agent") in connection with
the Exchange Offer.
FEES AND EXPENSES . . . . . . . . . . . . . . . . All expenses incident to
CMS Energy's consummation of
the Exchange Offer and
compliance with the
Registration Rights Agreement
will be borne by CMS Energy.
See "The Exchange Offer- Fees
and Expenses."
USE OF PROCEEDS . . . . . . . . . . . . . . . . . There will be no cash
proceeds payable to CMS
Energy from the issuance of
the Exchange Notes pursuant
to the Exchange Offer. The
proceeds from the sale of the
Notes were used to repay $269
million of the outstanding
balance under CMS Energy's
revolving credit facility, to
repay $24 million of one of
CMS Energy's lines of credit,
and for general corporate
purposes. See "Use of
Proceeds."
4
<PAGE> 10
THE EXCHANGE NOTES
SECURITIES OFFERED . . . . . . . . . . . . . . . $300 million principal
amount of 7 3/8% Unsecured
Notes Due 2000, Series B
("Exchange Notes").
MATURITY . . . . . . . . . . . . . . . . . . . . November 15, 2000
INTEREST RATE . . . . . . . . . . . . . . . . . . The Exchange Notes will
bear interest from November
7, 1997, the date of issuance
of the Notes that are
tendered in exchange for the
Exchange Notes, at a rate of
7 3/8% per annum, payable
semiannually on May 15 and
November 15 of each year,
commencing May 15, 1998. See
"Description of Exchange
Notes - Payment and
Maturity."
OPTIONAL REDEMPTION . . . . . . . . . . . . . . . The Exchange Notes will be
redeemable at the option of
CMS Energy, in whole or in
part, at any time or from
time to time, on not less
than 30 days' notice, at the
redemption prices determined
as described herein, together
with accrued interest to the
date fixed for redemption.
See "Description of Exchange
Notes - Redemption."
CHANGE IN CONTROL . . . . . . . . . . . . . . . . Upon the occurrence of a
Change in Control, each
Holder of Exchange Notes may
require CMS Energy to
repurchase such Exchange
Notes, in whole or in part,
at a price equal to 101% of
the principal amount thereof,
plus accrued and unpaid
interest, if any. See
"Description of Exchange
Notes - Purchase of Exchange
Notes Upon Change in
Control."
RANKING . . . . . . . . . . . . . . . . . . . . . The Exchange Notes will be
unsecured debt securities of
CMS Energy. As of September
30, 1997, CMS Energy had
outstanding approximately
$1.984 billion aggregate
principal amount of
indebtedness, none of which
was secured. None of such
indebtedness would be senior
to the Exchange Notes and the
Exchange Notes will not be
senior to any such
indebtedness, except that the
Exchange Notes will be senior
to certain subordinated
debentures in aggregate
principal amount of $178
million issued in connection
with certain trust preferred
securities of a affiliated
trust. The Exchange Notes
will rank on a parity in
right of payment with all
other unsecured and
unsubordinated indebtedness
of CMS Energy. See
"Description of Exchange
Notes - General."
CERTAIN COVENANTS . . . . . . . . . . . . . . . . The Senior Debt Indenture
will contain certain
covenants that, among other
things, restrict the ability
of CMS Energy and its
Restricted Subsidiaries (as
defined) to: incur or
guarantee additional
indebtedness; make restricted
payments; create liens; sell
assets and consolidate, merge
or sell all or substantially
all of their assets. See
"Description of Exchange
Notes - Certain Restrictive
Covenants."
FORM AND DENOMINATION . . . . . . . . . . . . . . The Exchange Notes will be
fully registered under the
Securities Act and will be
issued in the form of one or
more Global Notes in fully
registered form, deposited
with a custodian for and
registered in the name of a
nominee of the Depositary.
Beneficial interests in the
Global Notes will be shown
on, and transfers thereof
will be effected through,
records maintained by the
Depositary and its
Participants. See
"Description of Exchange
Notes - General."
5
<PAGE> 11
EXCHANGE OFFER, REGISTRATION RIGHTS . . . . . . .Pursuant to a Registration
Rights Agreement among CMS
Energy and the Initial
Purchasers, CMS Energy agreed,
among other things: (i) to
file a registration statement
(the "Exchange Offer
Registration Statement") on or
prior to 60 days after the
closing of the offering (the
"Closing") with respect to an
offer to exchange the Notes
for Exchange Notes registered
under the Securities Act, with
terms substantially identical
to those of the Notes (the
"Exchange Offer") and (ii) to
use its best efforts to cause
the Exchange Offer
Registration Statement to be
declared effective by the
Commission on or prior to 120
days after Closing. In certain
circumstances, CMS Energy will
be required to provide a shelf
registration statement (the
"Shelf Registration
Statement") to cover resales
of the Notes by the Holders
thereof. If CMS Energy fails
to satisfy its registration
obligation under the
Registration Rights Agreement,
CMS Energy will be required to
pay liquidated damages
("Liquidated Damages") to the
Holders of Notes under certain
circumstances. See "The
Exchange Offer - Registration
Rights; Liquidated Damages."
6
<PAGE> 12
CMS ENERGY
CMS Energy, incorporated in Michigan 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
segment 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 utility, commercial and industrial
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 businesses both domestically and
internationally. Consideration for such transactions may involve the delivery
of cash and/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 majority of CMS Energy's total assets, revenue and income. The
unconsolidated share of non- utility electric generation and distribution and
gas transmission and storage revenue for 1996 was $557 million.
Consumers is a public utility serving almost six million of Michigan's nine and
one-half million residents in all of the 68 counties in Michigan's Lower
Peninsula. Consumers' service area includes automotive, metal, chemical, food
and wood products industries 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,
approximately 34% ($1,282 million) from its gas utility business and
approximately 1% ($42 million) from its non-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' businesses 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.
RECENT DEVELOPMENTS
On November 20, 1997, CMS Energy issued 4.142 million shares of CMS Energy
common stock, par value $.01 per share ("CMS Energy Common Stock") and used the
proceeds for general corporate purposes, including the repayment of long-term
debt.
On December 3, 1997, CMS Energy and CMS Energy X-TRAS(sm) Pass-Through Trust I,
a statutory business trust created under the Delaware Business Trust Act (the
"Trust"), filed a Form S-3 and Form S-1 Registration Statement under the
Securities Act to register $150 million of Pass-Through Certificates due 2005
(the "Certificates") and $150 million of Extendible Tenor Rate-Adjusted
Securities due 2005 ("X-TRAS(SM)") of CMS Energy. The Trust will use the
proceeds of the public offering of the Certificates, together with amounts
payable to it under a certain ISDA Master Agreement, to purchase the X-TRAS(sm)
from CMS Energy.
On December 4, 1997, CMS Energy and a privately held Brazilian utility,
Companhia Forca e luz Cataguazes-Leopoldina ("CFLCL"), announced that the
Brazilian State of Sergipe selected CFLCL as the winning bidder in the
privatization of the Energipe electric
7
<PAGE> 13
distribution utility. Energipe serves approximately 348,000 customers in
Sergipe, located in northeastern Brazil. CFLCL submitted the winning bid of
(US) $520.3 million for 86.4% of the ownership interest of Energipe. CMS
Electric and Gas Company, a subsidiary of CMS Energy, has agreed to acquire a
42.6% ownership interest in the CFLCL/Energipe combined company for a price of
approximately (US) $180 million and assume an active role in advising the
company on technical matters.
On December 19, 1997, the Michigan Public Service Commission issued an ex parte
order, responsive to a December 9, 1997 Consumers application, authorizing a
voluntary, experimental program that will allow up to 300,000 Michigan natural
gas customers to choose their own supplier over the next three years. The new
program will begin April 1, 1998, when 100,000 residential, commercial and
industrial retail gas sales customers of Consumers will be offered the
opportunity to participate on a first-come, first-served basis. An additional
100,000 customers will be allowed to participate in the program in each of the
following two years. During the program, Consumer's distribution service rates
for all retail gas customers will be frozen. In addition, the gas cost
recovery clause will be suspended and the gas commodity charge will be frozen
at the 1996-97 rate of $2.8364 per thousand cubic feet (Mcf) for customers who
remain full-service sales customers. Finally, an earnings sharing mechanism
will provide for refunds to customers in the event that Consumer's actual gas
utility business earnings exceed certain predetermined levels.
8
<PAGE> 14
SELECTED CONSOLIDATED FINANCIAL DATA
The following is a summary of certain financial information of CMS Energy and
its Consolidated Subsidiaries and is qualified in its entirety by, and should
be read in conjunction with, the detailed information and CMS Energy's
consolidated financial statements and notes thereto included in the
Incorporated Documents. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- -------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
(in millions, except per share amounts)
INCOME STATEMENT DATA:
<S> <C> <C>
Operating revenue $3,142 $3,476 $3,614 $3,890 $4,333 $3,150 $3,394
Pretax operating income 231 439 503 603 677 547 565
Operating expenses 2,911 3,037 3,111 3,287 3,656 2,603 2,829
Income taxes (146) 75 92 118 139 116 107
Net income $ (297) $ 155 $ 179 $204 $ 240 $ 196 $ 204
Net income (loss) attributable to
common stocks
CMS Energy (297) 155 $ 179 $ 201 $ 226 $ 186 $ 195
Class G -- -- -- 3 14 10 9
Average common shares outstanding
CMS Energy 80 81 86 89 92 92 95
Class G -- -- -- 8 8 8 8
Earnings (loss) per average
common share $ (3.72) $ 1.90 $ 2.09 $ 2.27 $ 2.45 $ 2.02 $ 2.04
CMS Energy Common Stock
Class G Common Stock -- -- -- 0.38 1.82 1.38 1.13
Dividends declared per
common share
CMS Energy .48 .60 .78 .90 1.02 .75 .84
Class G -- - - .56 1.15 .855 .90
BALANCE SHEET DATA:
Cash and cash equivalents $ 89 $ 28 $ 79 $ 56 $ 56 $ 55 $ 134
Net plant and property 4,326 4,583 4,814 5,074 5,280 5,177 5,415
Total assets 6,842 6,958 7,378 8,143 8,615 8,291 9,500
Long-term debt, excluding
current maturities 2,725 2,405 2,709 2,906 2,842 2,996 3,060
Non-current portion of capital
leases 98 115 108 106 103 92 82
Notes payable 215 259 339 341 333 341 394
Other liabilities $2,914 $3,050 $2,759 $2,965 $3,179 $2,787 $3,499
Company-obligated mandatorily
redeemable Trust Preferred
Securities of Consumers Power
Company Financing I -- -- -- -- 100 100 100
Company obligated mandatorily
redeemable Trust Preferred
Securities of Consumers Energy
Company Financing II -- -- -- -- -- -- 120
Company-obligated convertible Trust
Preferred Securities of
CMS Energy Trust I 163 163 356 356 356 356 238
Common stockholders' equity $ 727 $ 966 $1,107 $1,469 $1,702 $1,619 $1,834
</TABLE>
9
<PAGE> 15
USE OF PROCEEDS
There will be no cash proceeds payable to CMS Energy from the issuance of the
Exchange Notes pursuant to the Exchange Offer. The proceeds from the sale of
the Notes were used to repay $269 million of the outstanding balance under CMS
Energy's revolving credit facility, to repay $24 million of one of CMS Energy's
lines of credit, and for general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for the nine months ended September 30,
1997 and for each of the years ended December 31, 1992 through 1996 are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
Nine Months ------------------------------------------
1996 Ended September 30, 1997 1992(1) 1993 1994 1995 1996
- ---- ------------------------ ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges . . 2.01 --- 1.88 2.07 1.94 2.01
</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 Co.'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 ratio, earnings represent net income before
income taxes, net interest charges and estimated interest portion of lease
rentals.
10
<PAGE> 16
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of CMS
Energy at September 30, 1997, and as adjusted to reflect the sale of the
Exchange Notes offered hereby, the application of the estimated net proceeds
from such sale and certain other items referred to below. See "Use of
Proceeds." The table should be read in conjunction with CMS Energy's
consolidated financial statements and notes thereto included in the
Incorporated Documents. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------
AS
ACTUAL ADJUSTED
------ --------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Non-current portion of capital leases ......................................... $ 82 $ 82
Long-term debt:
Other long-term debt (excluding current maturities)(1)(2)(3)................ 3,060 2,945
Extendible Tenor Rate-Adjusted Securities Due 2005(4)....................... -- 150
Total long-term debt ..................................................... 3,060 3,095
------ ------
Company-obligated mandatorily redeemable Trust Preferred
Securities of Consumers Power Company Financing I(5)........................ 100 100
Company-obligated mandatorily redeemable Trust Preferred
Securities of Consumers Energy Company Financing II(5) ..................... 120 120
Company-obligated convertible Trust Preferred Securities
of CMS Energy Trust I(5) ................................................... 173 173
Total stockholders' equity:
Preferred stock of subsidiary .............................................. 238 238
Common stockholders' equity(2) ............................................... 1,834 1,986
------- ------
Total stockholders' equity .............................................. 2,070 2,224
------- ------
Total capitalization ................................................ $ 5,607 $5,794
======= ======
</TABLE>
- ---------
(1)Adjusted to reflect the issuance on November 7, 1997 of $300 million
principal amount of 7 3/8% Senior Unsecured Notes due 2000 and the concurrent
repayment of $269 million of the outstanding balance under CMS Energy's
revolving credit facility and repayment of $24 million under one of CMS
Energy's lines of credit with the proceeds from the issuance of such Senior
Unsecured Notes.
(2)Adjusted to reflect net proceeds of $152 million from the issuance of 4.142
million shares of CMS Energy Common Stock on November 20, 1997, which proceeds
were used for general corporate purposes including the repayment of long-term
debt.
(3)Adjusted to reflect the December 8, 1997 borrowing of $180 million under the
Company's revolving credit facility to fund a CMS Energy subsidiary's
acquisition of an ownership interest in a Brazilian electric distribution
company, and the anticipated repayment of $150 million of such borrowings with
the proceeds of the issuance of the Extendible Tenor Rate-Adjusted Securities
due 2005.
(4)Adjusted to reflect the proposed issuance of $150 million principal amount
of X-TRAS(sm) as filed on December 3, 1997 by CMS Energy and the Trust on a
combined Form S-3 and Form S-1 Registration Statement. See "Recent
Developments."
(5)The primary asset of Consumers Power Company Financing I is approximately
$103 million principal amount of 8.36% subordinated deferrable interest notes
due 2015 from Consumers Energy Company. The primary asset of Consumers Energy
Company Financing II is approximately $124 million principal amount of 8.20%
subordinated deferrable interest notes due 2027 from Consumers Energy Company.
The primary asset of CMS Energy Trust I is approximately $178 million principal
amount of 7.75% convertible subordinated debentures due 2027 from CMS Energy.
11
<PAGE> 17
DESCRIPTION OF EXCHANGE NOTES
The Exchange Notes will be issued as a series of debt securities under the
Indenture dated as of September 15, 1992, as previously supplemented (the
"Indenture") and as further supplemented by a Fifth Supplemental Indenture
establishing the Exchange Notes (the "Supplemental Indenture") dated as of
November 4, 1997, between CMS Energy and NBD Bank, as Trustee (the "Trustee").
The Indenture and the Supplemental Indenture are hereinafter referred to
collectively as the "Senior Debt Indenture." The following summaries of certain
provisions of the Senior Debt Indenture, the Exchange Notes and the
Registration Rights Agreement (as defined herein) do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
provisions of the respective documents, including the definitions therein of
certain terms. Certain capitalized terms used in this "Description of Exchange
Notes" shall have the meanings respectively set forth in the Senior Debt
Indenture or Registration Rights Agreement, as applicable. Wherever particular
defined terms of the Senior Debt Indenture are referred to, such defined terms
are incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. Section references
below are references to sections of the Senior Debt Indenture. Copies of the
Senior Debt Indenture are available from the Trustee upon request.
The Exchange Notes will be limited to an aggregate principal amount of $300
million. The Senior Debt Indenture does not limit the aggregate principal
amount of debt securities that may be issued thereunder and provides that debt
securities may be issued thereunder, from time to time, in one or more series.
The Exchange Notes and all other debt securities hereafter issued under the
Senior Debt Indenture are collectively referred to herein as the "Senior Debt
Securities."
GENERAL
The Exchange Notes will be unsecured debt securities of CMS Energy. As of
September 30, 1997, CMS Energy had outstanding approximately $1.984 billion
aggregate principal amount of indebtedness, none of which was secured. None of
such indebtedness would be senior to the Exchange Notes and the Exchange Notes
will not be senior to any such indebtedness, except that the Exchange Notes
will be senior to certain subordinated debentures in aggregate principal amount
of $178 million, issued in connection with certain preferred securities of a
subsidiary trust. The Exchange Notes will rank on a parity in right of payment
with all other unsecured and unsubordinated indebtedness of CMS Energy.
CMS Energy is a holding company and its assets consist primarily of investments
in its subsidiaries. The Exchange Notes will be obligations exclusively of CMS
Energy. CMS Energy's ability to service its indebtedness, including the
Exchange Notes, is dependent primarily upon the earnings of its subsidiaries
and the distribution or other payment of such earnings to CMS Energy in the
form of dividends, loans or advances, and repayment of loans and advances from
CMS Energy. The subsidiaries are separate and distinct legal entities and have
no obligation, contingent or otherwise, to pay any amounts due pursuant to the
Exchange Notes or to make any funds available therefor, whether by dividends,
loans or other payments.
A substantial portion of the consolidated liabilities of CMS Energy have been
incurred by its subsidiaries. Therefore, CMS Energy's rights and the rights of
its creditors, including Holders of Exchange Notes, 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 CMS Energy may itself be a
creditor with recognized claims against the subsidiary (in which case the
claims of CMS Energy 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 September 30,
1997, CMS Energy's subsidiaries had total indebtedness for borrowed money
(excluding intercompany indebtedness) of approximately $2,780 million.
The Exchange Notes will be issued in the form of one or more Global Exchange
Notes, in registered form, without coupons, in denominations of $1,000 or an
integral multiple thereof as described under "Description of Exchange
Notes - Book-Entry; Delivery; Form and Transfer." The Global Exchange Notes will
be registered in the name of a nominee of DTC. Each Global Exchange Note (and
any Note issued in exchange therefor) will be subject to certain restrictions
on transfer set forth therein as described under "- Book-Entry; Delivery; Form
and Transfer - Transfers of Interests in Global Exchange Notes for
Certificated Exchange Notes." Except as set forth herein under "- Book-Entry;
Delivery; Form and Transfer - Transfers of Interests in Global Exchange Notes
for Certificated Exchange Notes," owners of beneficial interests in a Global
Exchange Note will not be entitled to have Exchange Notes 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 Senior
Debt Indenture.
12
<PAGE> 18
PAYMENT AND MATURITY
The Exchange Notes will mature on November 15, 2000, unless redeemed earlier by
CMS Energy as described below, and will bear interest at the rate of 7 3/8% per
annum.
Each Exchange Note will bear interest from the Issue Date, payable semiannually
on May 15 and November 15, commencing May 15, 1998, and at maturity. So long as
Exchange Notes are held in the form of one or more Global Exchange Notes,
payments of principal, premium, interest and Liquidated Damages (as defined
herein), if any, will be payable through the facilities of DTC.
In any case where any interest payment date, repurchase date or maturity of any
Exchange Note shall not be a Business Day (as hereinafter defined) at any place
of payment, then payment of interest or principal (and premium, if any) need
not be made 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, repurchase date or at maturity; and no interest shall
accrue on the amount so payable for the period from and after such interest
payment date, redemption date, repurchase date or maturity, as the case may be,
to such Business Day.
REDEMPTION
The Exchange Notes will be redeemable at CMS Energy's option, in whole or in
part, at any time or from time to time, at a redemption price equal to 100% of
the principal amount of such Exchange Notes being redeemed plus the Applicable
Premium, if any, thereon at the time of redemption, together with accrued
interest, if any, thereon to the redemption date. In no event will the
redemption price ever be less than 100% of the principal amount of the Exchange
Notes plus accrued interest to the redemption date.
The following definitions are used to determine the Applicable Premium:
"Applicable Premium" means, with respect to an Exchange Note (or portion
thereof) being redeemed at any time, the excess of (A) the present value at
such time of the principal amount of such Exchange Note (or portion thereof)
being redeemed plus all interest payments due on such Note (or portion
thereof), which present value shall be computed using a discount rate equal
to the Treasury Rate plus 50 basis points, over (B) the principal amount of
such Exchange Note (or portion thereof) being redeemed at such time. For
purposes of this definition, the present values of interest and principal
payments will be determined in accordance with generally accepted principles
of financial analysis.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
(the "Statistical Release") which has become publicly available at least two
Business Days prior to the redemption date or, in the case of defeasance,
prior to the date of deposit (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most
nearly equal to the then remaining average life to stated maturity of the
Exchange Notes; provided, however, that if the average life to stated
maturity of the Exchange Notes is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given,
the Treasury Rate shall be obtained by linear interpolation (calculated to
the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given.
If less than all of the Exchange Notes are to be redeemed, the Trustee shall
select, in such manner as it shall deem appropriate and fair, the particular
Exchange Notes or portions thereof to be redeemed. Notice of redemption shall
be given by mail not less than 30 nor more than 60 days prior to the date fixed
for redemption to the Holders of Exchange Notes to be redeemed (which, as long
as the Exchange Notes are held in the book-entry only system, will be DTC (or
its nominee) or a successor depositary (the "Depositary")); provided, however,
that the failure to duly give such notice by mail, or any defect therein, shall
not affect the validity of any proceedings for the redemption of Exchange Notes
as to which there shall have been no such failure or defect. On and after the
date fixed for redemption (unless CMS Energy shall default in the payment of
the Exchange Notes or portions thereof to be redeemed at the applicable
redemption price, together with interest accrued thereon to such date),
interest on the Exchange Notes or the portions thereof so called for redemption
shall cease to accrue.
No sinking fund is provided for the Exchange Notes.
13
<PAGE> 19
PURCHASE OF EXCHANGE NOTES UPON CHANGE IN CONTROL
In the event of any Change in Control (as defined below) each Holder of an
Exchange Note will have the right, at such Holder's option, subject to the
terms and conditions of the Senior Debt Indenture, to require CMS Energy to
repurchase all or any part of such Holder's Exchange Note on a date selected by
CMS Energy 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 CMS Energy of
the occurrence of such Change in Control at a repurchase price payable in cash
equal to 101% of the principal amount of such Exchange 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 Date, CMS Energy is obligated to
mail to each Holder of an Exchange 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 CMS
Energy to repurchase all or any part of such Holder's Exchange 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
Exchange Notes to be repurchased.
To exercise this right, a Holder must deliver a written notice (the "Change in
Control Purchase Notice") to the Paying Agent at its corporate trust office in
Detroit, Michigan, 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 Exchange Notes to be repurchased, which must be $1,000
or an integral multiple thereof; (ii) that such Exchange Notes are to be
repurchased by CMS Energy pursuant to the applicable change-in-control
provisions of the Senior Debt Indenture; and (iii) unless the Exchange Notes
are represented by one or more Global Exchange Notes, the certificate numbers
of the Exchange 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 Exchange 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 an Exchange Note is represented by a Global Exchange Note, the Depositary or
its nominee will be the holder of such Exchange Note and therefore will be the
only entity that can require CMS Energy to repurchase Exchange Notes upon a
Change in Control. To obtain repayment with respect to such Exchange 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
Exchange 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
cause CMS Energy to repurchase such Exchange 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 Exchange Notes
by CMS Energy.
Payment of the Change in Control Purchase Price for an Exchange Note in
registered, 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 Certificated Exchange Note (together with necessary
endorsements) to the Paying Agent at its office in Detroit, Michigan, 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 Certificated Exchange Note will be made
promptly following the later of the Change in Control Purchase Date or the time
of delivery of such Certificated Exchange Note.
If the Paying Agent holds, in accordance with the terms of the Senior Debt
Indenture, money sufficient to pay the Change in Control Purchase Price of an
Exchange Note on the Business Day following the Change in Control Purchase Date
for such Exchange Note, then, on and after such date, interest on such Exchange
Note will cease to accrue, whether or not such Exchange 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 Exchange Note).
14
<PAGE> 20
Under the Senior Debt 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 CMS Energy 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 35% 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 Senior Debt Indenture requires CMS Energy to comply with the provisions of
Regulation 14E and any other tender offer rules under the Exchange Act which
may then be applicable in connection with any offer by CMS Energy to purchase
Exchange Notes at the option of Holders upon a Change in Control. The Change in
Control purchase feature of the Exchange 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 CMS Energy 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 term contained in many similar debt
offerings and the terms of such feature result from negotiations between CMS
Energy and the Initial Purchasers. 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 Exchange Note may be repurchased by CMS Energy 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 Exchange Notes). In
addition, CMS Energy's ability to purchase Exchange 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.
CERTAIN RESTRICTIVE COVENANTS
The Senior Debt Indenture contains the covenants described below. Certain
capitalized terms used below are defined herein under the heading "Certain
Definitions."
Limitation on Restricted Payments
Under the terms of the Senior Debt Indenture, so long as any of the Exchange
Notes are Outstanding and until the Exchange Notes are rated BBB-- or above (or
an equivalent rating) by Standard & Poor's and one Other Rating Agency, at
which time CMS Energy will be permanently released from the provisions of this
"Limitation on Restricted Payments," CMS Energy 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 CMS Energy to
the direct or indirect holders of its Capital Stock (except dividends or
distributions payable solely in its Non-Convertible Capital Stock or in
options, warrants or other rights to purchase such Non-Convertible Capital
Stock and except dividends or distributions payable to CMS Energy or a
Subsidiary), (ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of CMS Energy, or (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled maturity or scheduled
repayment thereof, any Subordinated Indebtedness (any such dividend,
distribution, purchase, redemption, repurchase, defeasing, other acquisition or
retirement being hereinafter referred to as a "Restricted Payment") if at the
time CMS Energy 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 May 6, 1997
would exceed the sum of: (a) $100,000,000 plus 100% of Consolidated Net Income
from May 6, 1997 to the end of the most recent fiscal quarter ending
15
<PAGE> 21
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
Cash Proceeds received by CMS Energy from the issue or sale of or contribution
with respect to its Capital Stock after May 6, 1997.
The foregoing provisions will not prohibit: (i) dividends or other
distributions paid in respect of any class of Capital Stock issued by CMS
Energy in connection with the acquisition of any business or assets by CMS
Energy 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
CMS Energy made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of CMS Energy (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.
Limitation on Certain Liens
Under the terms of the Senior Debt Indenture, so long as any of the Exchange
Notes are Outstanding, CMS Energy shall not create, incur, assume or suffer to
exist any Lien upon or with respect to any of its property of any character,
including without limitation any shares of Capital Stock of Consumers or
Enterprises, without making effective provision whereby the Exchange Notes
shall be (so long as any such other creditor shall be so secured) equally and
ratably secured. The foregoing restrictions shall not apply to (a) Liens
securing Indebtedness of CMS Energy, provided that on the date such Liens are
created, and after giving effect to such Indebtedness, the aggregate principal
amount at maturity of all the secured Indebtedness of CMS Energy at such date
shall not exceed 5% of Consolidated Net Tangible Assets or (b) certain liens
for taxes, pledges to secure workman's compensation, other statutory
obligations and Support Obligations, certain materialmen's, mechanic's and
similar liens and certain purchase money liens.
Limitation on Asset Sales
Under the terms of the Senior Debt Indenture, so long as any of the Exchange
Notes are outstanding, CMS Energy may not sell, transfer or otherwise dispose
of any property or assets of CMS Energy, including Capital Stock of any
Consolidated Subsidiary, in one transaction or a series of transactions in an
amount which exceeds $50,000,000 (an "Asset Sale") unless CMS Energy shall (i)
apply an amount equal to such excess Net Cash Proceeds to permanently repay
Indebtedness of a Consolidated Subsidiary or Indebtedness of CMS Energy which
is pari passu with the Exchange Notes or (ii) invest an equal amount not so
used in clause (i) in property or assets of related business within 24 months
after the date of the Asset Sale (the "Application Period") or (iii) apply such
excess Net Cash Proceeds not so used in (i) or (ii) (the "Excess Proceeds") to
make an offer, within 30 days after the end of the Application Period, to
purchase from the Holders on a pro rata basis an aggregate principal amount of
Exchange Notes on the relevant purchase date equal to the Excess Proceeds on
such date, at a purchase price equal to 100% of the principal amount of the
Exchange Notes on the relevant purchase date and unpaid interest, if any, to
the purchase date. CMS Energy shall only be required to make an offer to
purchase Exchange Notes from Holders pursuant to subsection (iii) if the Excess
Proceeds equal or exceed $25,000,000 at any given time.
The procedures to be followed by CMS Energy in making an offer to purchase
Exchange Notes from the Holders with Excess Proceeds, and for the acceptance of
such offer by the Holders, shall be the same as those set forth above in
"Purchase of Exchange Notes Upon Change of Control" with respect to a Change in
Control.
Limitation on Consolidation, Merger, Sale or Conveyance
The Senior Debt Indenture provides that CMS Energy may consolidate with or
merge into, or sell, lease or convey its property as an entirety or
substantially as an entirety to, any other corporation if such corporation
assumes the obligations of CMS Energy under the Exchange Notes and the Senior
Debt Indenture and is organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia. (Section 9.1)
The Senior Debt Indenture further provides that so long as any of the Exchange
Notes are Outstanding and until the Exchange Notes are rated BBB-- or above (or
an equivalent rating) by Standard & Poor's and one Other Rating Agency, at
which time CMS Energy will be permanently released from the provisions of this
"Limitation on Consolidation, Merger, Sale or Conveyance," CMS Energy shall not
consolidate with or merge into any other Person or sell, lease or convey the
property of CMS Energy 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 CMS Energy immediately prior
16
<PAGE> 22
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) pursuant to the first
paragraph under "--Limitation on Consolidated Indebtedness" below.
Notwithstanding the foregoing provisions, such a transaction may constitute a
Change of Control as described in "--Purchase of Exchange Notes Upon Change in
Control" above and give rise to the right of a Holder to require CMS Energy to
repurchase all or part of such Holder's Exchange Notes.
Limitation on Consolidated Indebtedness
Under the terms of the Senior Debt Indenture, so long as any of the Exchange
Notes are Outstanding and until the Exchange Notes are rated BBB-- or above (or
an equivalent rating) by Standard & Poor's and one Other Rating Agency, at
which time CMS Energy will be permanently released from the provisions of this
"Limitation on Consolidated Indebtedness," CMS Energy will not, and will not
permit any of its Consolidated Subsidiaries to, issue, create, assume,
guarantee, incur or otherwise become liable for (collectively, "issue"),
directly or indirectly, any Indebtedness unless the Consolidated Coverage Ratio
of CMS Energy 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 CMS Energy 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 CMS Energy 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 1.7 to 1.0.
The foregoing limitation is subject to exceptions for: (i) Indebtedness of CMS
Energy to banks not to exceed $1 billion in aggregate outstanding principal
amount at any time; (ii) Indebtedness outstanding on the date of the
Supplemental Indenture and certain refinancings thereof; (iii) certain
refinancings and Indebtedness of CMS Energy to a Subsidiary or by a Subsidiary
to CMS Energy; (iv) Indebtedness of a Consolidated Subsidiary issued to
acquire, develop, improve, construct or to provide working capital for a gas,
oil or electric generation, exploration, production, distribution, storage or
transmission facility and related assets provided that such Indebtedness is
without recourse to any assets of CMS Energy, Consumers, Enterprises, CMS
Generation, NOMECO, CMS Electric and Gas, CMS Gas Transmission and Storage, CMS
MST or any other Designated Enterprises Subsidiary; (v) Indebtedness of a
Person existing at the time at which such Person became a Subsidiary and not
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary; (vi) Indebtedness issued by CMS Energy not to exceed $150,000,000
in aggregate outstanding principal amount at any time; and (vii) Indebtedness
of a Consolidated Subsidiary in respect of rate reduction bonds issued to
recover electric restructuring transition costs of Consumers provided that such
Indebtedness is without recourse to the assets of Consumers.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the Senior Debt
Indenture. Reference is made to the Senior Debt Indenture for a full definition
of all terms as well as any other capitalized terms used herein and not
otherwise defined.
"Business Day" means a day on which banking institutions in New York, New York
or Detroit, Michigan are not authorized or required by law or regulation to
close.
"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; provided that Hybrid Preferred Securities are not considered Capital
Stock for purposes of this definition.
17
<PAGE> 23
"CMS Electric and Gas" means CMS Electric and Gas Company, a Michigan
corporation and wholly-owned subsidiary of Enterprises.
"CMS Gas Transmission and Storage" means CMS Gas Transmission and Storage
Company, a Michigan corporation and wholly-owned subsidiary of Enterprises.
"CMS Generation" means CMS Generation Co., a Michigan corporation and
wholly-owned subsidiary of Enterprises.
"CMS MST" means CMS Marketing, Services and Trading Company, a Michigan
corporation and wholly-owned subsidiary of Enterprises.
"Consolidated Assets" means, at any date of determination, the aggregate assets
of CMS Energy and its Consolidated Subsidiaries determined on a consolidated
basis 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 Current Liabilities" means, for any period, the aggregate amount
of liabilities of CMS Energy and its Consolidated Subsidiaries which may
properly be classified as current liabilities (including taxes accrued as
estimated), after (i) eliminating all inter-company items between CMS Energy
and any Consolidated Subsidiary and (ii) deducting all current maturities of
long-term Indebtedness, all as determined in accordance with generally accepted
accounting principles.
"Consolidated Indebtedness" means, at any date of determination, the aggregate
Indebtedness of CMS Energy and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided that Consolidated Indebtedness shall not include any subordinated debt
owned by any Hybrid Preferred Securities Subsidiary.
"Consolidated Interest Expense" means, for any period, the total interest
expense in respect of Consolidated Indebtedness of CMS Energy 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 CMS Energy
or any Consolidated Subsidiaries under clause (v) or (vi) of the definition of
Indebtedness, provided, however, that Consolidated Interest Expense shall
exclude (a) any costs otherwise included in interest expense recognized on
early retirement of debt and (b) any interest expense in respect of any
Indebtedness of any Subsidiary of Consumers, CMS Generation, NOMECO, CMS
Electric and Gas, CMS Gas Transmission and Storage, CMS MST or any other
Designated Enterprises Subsidiary provided that such Indebtedness is without
recourse to any assets of CMS Energy, Consumers, Enterprises, CMS Generation,
NOMECO, CMS Electric and Gas, CMS Gas Transmission and Storage, CMS MST or any
other Designated Enterprises Subsidiary.
"Consolidated Net Income" means, for any period, the net income of CMS Energy
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) CMS
Energy'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 CMS Energy or a
Consolidated Subsidiary as a dividend or other distribution and (B) CMS
Energy'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 CMS Energy or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (iii) any
gain or loss realized upon the sale or other disposition of any property, plant
or equipment of CMS Energy 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; and (iv) any net income of any Subsidiary of Consumers, CMS Generation,
NOMECO, CMS Electric and Gas, CMS Gas Transmission and Storage, CMS MST or any
other Designated Enterprises Subsidiary whose interest expense is excluded from
Consolidated Interest Expense, provided, however, that for purposes of this
subsection (iv), any cash, dividends or distributions of any such Subsidiary to
CMS Energy shall be included in calculating Consolidated Net Income.
18
<PAGE> 24
"Consolidated Net Tangible Assets" means, for any period, the total amount of
assets (less accumulated depreciation or amortization, allowances for doubtful
receivables, other applicable reserves and other properly deductible items) as
set forth on the most recently available quarterly or annual consolidated
balance sheet of CMS Energy and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with generally accepted accounting principles,
and after giving effect to purchase accounting and after deducting therefrom,
to the extent otherwise included, the amounts of: (i) Consolidated Current
Liabilities; (ii) minority interests in Consolidated Subsidiaries held by
Persons other than CMS Energy or a Restricted Subsidiary; (iii) excess of cost
over fair value of assets of businesses acquired, as determined in good faith
by the Board of Directors as evidenced by Board resolutions; (iv) any
revaluation or other write-up in value of assets subsequent to December 31,
1996, as a result of a change in the method of valuation in accordance with
generally accepted accounting principles; (v) unamortized debt discount and
expenses and other unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, copyrights, licenses organization or developmental
expenses and other intangible items; (vi) treasury stock; and (vii) any cash
set apart and held in a sinking or other analogous fund established for the
purpose of redemption or other retirement of Capital Stock to the extent such
obligation is not reflected in Consolidated Current Liabilities.
"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 CMS Energy 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 CMS Energy.
"Designated Enterprises Subsidiary" means any wholly-owned subsidiary of
Enterprises formed after the date of the Supplemental Indenture which is
designated a Designated Enterprises Subsidiary by the Board of Directors.
"Enterprises" means CMS Enterprises Company, a Michigan corporation and
wholly-owned subsidiary of CMS Energy.
"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).
"Holder" means the Person in whose name a Note is registered in the security
register kept by CMS Energy for that purpose.
"Hybrid Preferred Securities" means any preferred securities issued by a Hybrid
Preferred Securities Subsidiary, where such preferred securities have the
following characteristics: (i) such Hybrid Preferred Securities Subsidiary
lends substantially all of the proceeds from the issuance of such preferred
securities to CMS Energy or Consumers in exchange for subordinated debt issued
by CMS Energy or Consumers, respectively; (ii) such preferred securities
contain terms providing for the deferral of distributions corresponding to
provisions providing for the deferral of interest payments on such subordinated
debt; and (iii) CMS Energy or Consumers (as the case may be) makes periodic
interest payments on such subordinated debt, which interest payments are in
turn used by the Hybrid Preferred Securities Subsidiary to make corresponding
payments to the holders of the Hybrid Preferred Securities.
"Hybrid Preferred Securities Subsidiary" means any business trust (or similar
entity) (i) all of the common equity interest of which is owned (either
directly or indirectly through one or more wholly-owned Subsidiaries of CMS
Energy or Consumers) at all times by CMS Energy or Consumers, (ii) that has
been formed for the purpose of issuing Hybrid Preferred Securities and (iii)
substantially all of the assets of which consist at all times solely of
subordinated debt issued by CMS Energy or Consumers (as the case may be) and
payments made from time to time on such subordinated debt.
"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 Exchange Notes, debentures, bonds or
other similar instruments
19
<PAGE> 25
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.
"Lien" means any lien, mortgage, pledge, security interest, conditional sale,
title retention agreement or other charge or encumbrance of any kind.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the aggregate
proceeds of such Asset Sale 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 CMS Energy, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes (whether or not such
taxes will actually be paid or are payable) as a result of such Asset Sale
without regard to the consolidated results of operations of CMS Energy and its
Restricted Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required to be paid as a result of such sale and (iv) appropriate amounts to be
provided by CMS Energy or any Restricted Subsidiary of CMS Energy as a reserve
against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity
with generally accepted accounting principles and (b) 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 CMS Energy, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees 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 $25,000,000, 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 Enterprises.
"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.
"Other Rating Agency" shall mean 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.
"Operating Cash Flow" means, for any period, with respect to CMS Energy 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.
"Paying Agent" means any person authorized by CMS Energy to pay the principal
of (and premium, if any) or interest on any of the Exchange Notes on behalf of
CMS Energy. Initially, the Paying Agent is the Trustee.
20
<PAGE> 26
"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; provided that
Hybrid Preferred Securities are not considered Preferred Stock for purposes of
this definition.
"Redeemable Stock" means any Capital Stock that by its terms or otherwise is
required to be redeemed prior to the first anniversary of the stated maturity
of the Outstanding Exchange Notes or is redeemable at the option of the holder
thereof at any time prior to the first anniversary of the stated maturity of
the Outstanding Exchange Notes.
"Restricted Subsidiary" means any Subsidiary (other than Consumers and its
subsidiaries) of CMS Energy which, as of the date of CMS Energy's most recent
quarterly consolidated balance sheet, constituted at least 10% of the total
Consolidated Assets of CMS Energy 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 CMS Energy and its
Restricted Subsidiaries could not incur at least one dollar of additional
Indebtedness pursuant to the first paragraph under "Description of Exchange
Notes -- Certain Restrictive Covenants -- Limitation on Consolidated
Indebtedness," 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 CMS Energy or a Restricted Subsidiary and
(iii) such Restricted Subsidiary must be a Consolidated Subsidiary.
"Standard & Poor's" shall mean Standard & Poor's Ratings 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
Exchange Notes or shall cease to exist and there shall be no such successor
thereto, any other nationally recognized statistical rating organization
selected by CMS Energy which is acceptable to the Trustee.
"Subordinated Indebtedness" means any Indebtedness of CMS Energy (whether
outstanding on the date of the Supplemental Indenture or thereafter incurred)
which is contractually subordinated or junior in right of payment to the
Exchange Notes.
"Subsidiary" means a corporation more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by CMS Energy or by one or more
other Subsidiaries, or by CMS Energy and one or more other Subsidiaries. For
the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"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 CMS Energy, 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).
21
<PAGE> 27
EVENTS OF DEFAULT
The occurrence of any of the following events with respect to the Exchange
Notes will constitute an "Event of Default" with respect to the Exchange Notes:
(a) default for 30 days in the payment of any interest on, or Liquidated
Damages (as defined herein), if any, with respect to, any of the Exchange
Notes; (b) default in the payment when due of any of the principal of or the
premium, if any, on any of the Exchange Notes, whether at maturity, upon
redemption, acceleration, purchase by CMS Energy at the option of the Holders
or otherwise; (c) default for 60 days by CMS Energy in the observance or
performance of any other covenant or agreement contained in the Senior Debt
Indenture relating to the Exchange Notes after written notice thereof as
provided in the Senior Debt Indenture; (d) certain events of bankruptcy,
insolvency or reorganization relating to CMS Energy or Consumers; (e) entry of
final judgments against CMS Energy or Consumers aggregating in excess of
$25,000,000 which remain undischarged or unbonded for 60 days; or (f) a default
resulting in the acceleration of indebtedness of CMS Energy or Consumers in
excess of $25,000,000, which acceleration has not been rescinded or annulled
within 10 days after written notice of such default as provided in the Senior
Debt Indenture.
If an Event of Default on the Exchange Notes shall have occurred and be
continuing, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Exchange Notes then Outstanding may declare the
principal of all the Exchange Notes and the premium thereon and interest, if
any, accrued thereon to be due and payable immediately. (Section 5.1)
Upon certain conditions, any such declaration may be rescinded and annulled if
all Events of Default, other than the nonpayment of accelerated principal, with
respect to the Senior Debt Securities of all affected series then Outstanding
shall have been cured or waived as provided in the Senior Debt Indenture by the
holders of a majority in aggregate principal amount of the Senior Debt
Securities of the affected series then Outstanding. (Section 5.1)
The Senior Debt Indenture provides that the Trustee will be under no obligation
to exercise any of its rights or powers under the Senior Debt Indenture at the
request, order or direction of the Holders of the Exchange Notes, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Sections 6.1
and 6.2(d)) Subject to such provisions for indemnity and certain other
limitations contained in the Senior Debt Indenture, the Holders of a majority
in aggregate principal amount of the Senior Debt Securities of each affected
series then Outstanding (voting as one class) will have the right to 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, with
respect to the Senior Debt Securities of such affected series. (Sections 5.9
and 6.2)
The Senior Debt Indenture provides that no holder of Senior Debt Securities,
including the Exchange Notes, may institute any action against CMS Energy under
the Senior Debt Indenture (except actions for payment of overdue principal,
premium or interest) unless such holder previously shall have given to the
Trustee written notice of default and continuance thereof and unless the
holders of not less than 25% in aggregate principal amount of Senior Debt
Securities of the affected series then Outstanding (voting as one class) shall
have requested the Trustee to institute such action and shall have offered the
Trustee reasonable indemnity, the Trustee shall not have instituted such action
within 60 days of such request and the Trustee shall not have received
direction inconsistent with such request by the holders of a majority in
aggregate principal amount of the Senior Debt Securities of the affected series
then Outstanding (voting as one class). (Sections 5.6, 5.7 and 5.9)
The Senior Debt Indenture requires CMS Energy to furnish to the Trustee
annually a statement as to CMS Energy's compliance with all conditions and
covenants under the Senior Debt Indenture. (Section 4.3(d)) The Senior Debt
Indenture provides that the Trustee may withhold notice to the Holders of the
Exchange Notes of any default affecting such Exchange Notes (except defaults as
to payment of principal, premium or interest on the Exchange Notes) if it
considers such withholding to be in the interests of the Holders of the
Exchange Notes. (Sections 5.11)
DEFEASANCE, COVENANT DEFEASANCE AND DISCHARGE
The Senior Debt Indenture provides that, at the option of CMS Energy: (a) CMS
Energy will be discharged from any and all obligations in respect of the
Exchange Notes (except for certain obligations to register the transfer of or
exchange of the Exchange Notes, to replace stolen, lost or mutilated Exchange
Notes, to maintain paying agencies and to maintain the trust described below),
or (b) CMS Energy need not comply with certain restrictive covenants of the
Senior Debt Indenture (including those described under "Limitation on
Consolidation, Merger or Sale of Assets"), in each case if CMS Energy
irrevocably deposits in trust with the Trustee
22
<PAGE> 28
money, and/or securities backed by the full faith and credit of the United
States which, through the payment of the principal thereof and the interest
thereon 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
Exchange Notes on the stated maturity of such Exchange Notes (which may include
one or more redemption dates designated by CMS Energy) in accordance with the
terms thereof. To exercise such option, CMS Energy is required, among other
things, to deliver to the Trustee an opinion of independent counsel to the
effect that the exercise of such option would not cause the Holders of the
Exchange Notes to recognize income, gain or loss for United States Federal
income tax purposes as a result of such defeasance, and such Holders will be
subject to United States 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 had
not occurred, and, in the case of a discharge as described in clause (a) of the
preceding sentence, such opinion is to be accompanied by a private letter
ruling to the same effect received from the Internal Revenue Service, a revenue
ruling to such effect pertaining to a comparable form of transaction published
by the Internal Revenue Service or appropriate evidence that since the date of
the Senior Debt Indenture there has been a change in the applicable Federal
income tax law. (Section 10.1)
In the event CMS Energy exercises its option to effect a covenant defeasance
with respect to the Exchange Notes as described in the preceding paragraph and
the Exchange Notes are thereafter declared due and payable because of the
occurrence of any Event of Default other than an Event of Default caused by
failing to comply with the covenants which are defeased, and the amount of
money and securities on deposit with the Trustee would be insufficient to pay
amounts due on the Exchange Notes at the time of the acceleration resulting
from such Event of Default, CMS Energy would remain liable for such amounts.
CMS Energy may also obtain a discharge of the Senior Debt Indenture with
respect to all Senior Debt Securities then Outstanding (except for certain
obligations to register the transfer of or exchange such Senior Debt
Securities, to replace stolen, lost or mutilated Senior Debt Securities, to
maintain paying agencies and to maintain the trust described below) by
irrevocably depositing in trust with the Trustee money, and/or securities
backed by the full faith and credit of the United States which, through the
payment of the principal thereof and the interest thereon 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 Senior Debt Securities on
the stated maturities thereof (including one or more redemption dates),
provided that such Senior Debt Securities are by their terms due and payable,
or are to be called for redemption, within one year. (Section 10.1)
For United States Federal income tax purposes any deposit contemplated in the
preceding paragraph would be treated as an exchange of the Exchange Notes
outstanding for other property. Accordingly, Holders may be required to
recognize a gain or loss for United States Federal income tax purposes upon
such exchange. In addition, such Holders thereafter may be required to
recognize income from such property which could be different from the amount
that would be includable in the absence of such deposit. Prospective investors
are urged to consult their own tax advisors as to the specific consequences to
them of such deposit.
MODIFICATION OF THE SENIOR DEBT INDENTURE
The Senior Debt Indenture permits CMS Energy and the Trustee to enter into
supplemental indentures thereto without the consent of the holders of any
Senior Debt Securities, including the Exchange Notes, to: (a) secure the Senior
Debt Securities of one or more series, (b) evidence the assumption by a
successor corporation of the obligations of CMS Energy under the Senior Debt
Indenture and the Senior Debt Securities then Outstanding, (c) add covenants
for the protection of the holders of the Senior Debt Securities, (d) cure any
ambiguity or correct any defect or inconsistency in the Senior Debt Indenture
or to make such other provisions as CMS Energy deems necessary or desirable
with respect to matters or questions arising under the Senior Debt Indenture,
provided that no such action adversely affects the interests of any holders of
Senior Debt Securities, (e) establish the form and terms of any series of
securities under the Senior Debt Indenture and (f) evidence the acceptance of
appointment by a successor Trustee. (Section 8.1)
The Senior Debt Indenture also permits CMS Energy and the Trustee, with the
consent of the holders of not less than a majority in aggregate principal
amount of the Senior Debt Securities of all series then Outstanding and
affected (voting as one class), to enter into supplemental indentures, to add
any provisions to, or change in any manner or eliminate any of the provisions
of, the Senior Debt Indenture or modify in any manner the rights of the holders
of the Senior Debt Securities of each such affected series; provided, however,
that CMS Energy and the Trustee may not, without the consent of the holders of
each Senior Debt Security then outstanding and affected thereby, enter in to
any supplemental indenture to: (a) change the time of payment of the principal
(or any installment of principal) of any Senior Debt Security, or reduce the
principal amount thereof, or reduce the rate or change the time or payment of
interest thereon, or reduce the amount payable on any Original Issue Discount
Securities upon acceleration or provable in
23
<PAGE> 29
bankruptcy, or impair the right to institute suit for the enforcement of any
payment on any Senior Debt Security when due; or (b) reduce the percentage in
principal amount of the Senior Debt Securities of the affected series, the
consent of whose holders is required for any such modification or for any
waiver provided for in the Senior Debt Indenture. (Section 8.2)
Prior to the acceleration of the maturity of any Senior Debt Security, the
holders of a majority in aggregate principal amount of the Senior Debt
Securities of all series at the time Outstanding with respect to which a
default or an Event of Default shall have occurred and be continuing (voting as
one class) may on behalf of the holders of all such affected Senior Debt
Securities waive any past default of Event of Default and its consequences,
except a default or an Event of Default in respect of a covenant or provision
of the Senior Debt Indenture or of any Senior Debt Security which cannot be
modified or amended without the consent of the holder of each Senior Debt
Security affected. (Section 5.10)
GOVERNING LAW
The Senior Debt Indenture and the Exchange Notes will be governed by, and
construed in accordance with, the laws of the State of Michigan unless the laws
of another jurisdiction shall mandatorily apply.
CONCERNING THE TRUSTEE
NBD Bank, the Trustee under the Senior Debt Indenture, is one of a number of
banks with which CMS Energy and its subsidiaries maintain ordinary banking
relationships, including credit facilities.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The Exchange Notes will be issued initially in the form of one or more
registered global Exchange Notes without interest coupons (collectively, the
"Global Exchange Notes"). Upon issuance, the Global Exchange Notes will be
deposited with the Trustee, as custodian for DTC, and registered in the name of
DTC or its nominee, in each case for credit to the accounts of DTC's Direct and
Indirect Participants (as defined below).
The Global Exchange Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Exchange Notes may be
exchanged for Exchange Notes in certificated form in certain limited
circumstances. See "--Transfer of Interests in Global Exchange Notes for
Certificated Exchange Notes."
Depositary Procedures
DTC has advised CMS Energy that DTC is a limited-purpose trust company created
to hold securities for its participating organizations (collectively, the
"Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities that clear through or maintain
a direct or indirect, custodial relationship with a Direct Participant
(collectively, the "Indirect Participants"). DTC may hold securities
beneficially owned by other persons only through the Direct Participants or
Indirect Participants, and such other persons' ownership interest and transfer
of ownership interest will be recorded only on the records of the appropriate
Direct Participant and/or Indirect Participant, and not on the records
maintained by DTC.
DTC has also advised CMS Energy that, pursuant to DTC's procedures, (i) upon
deposit of the Global Exchange Notes, DTC will credit the accounts of the
Direct Participants designated by the Initial Purchasers with portions of the
principal amount of the Global Exchange Notes allocated by the Initial
Purchasers to such Direct Participants, and (ii) DTC will maintain records of
the ownership interests of such Direct Participants in the Global Exchange
Notes and the transfer of ownership interests by and between Direct
Participants. DTC will not maintain records of the ownership interests of, or
the transfer of ownership interests by and between, Indirect Participants or
other owners of beneficial interests in the Global Exchange Notes. Direct
Participants and Indirect Participants must maintain their own records of the
ownership interests of, and the transfer of ownership interests by and between,
Indirect Participants and other owners of beneficial interests in the Global
Exchange Notes.
24
<PAGE> 30
The laws of some states require that certain persons take physical delivery in
definitive, certificated form, of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in a Global Exchange Note
to such persons. Because DTC can act only on behalf of Direct Participants,
which in turn act on behalf of Indirect Participants and others, the ability of
a person having a beneficial interest in a Global Exchange Note to pledge such
interest to persons or entities that are not Direct Participants in DTC, or to
otherwise take actions in respect of such interests, may be affected by the
lack of physical certificates evidencing such interests. For certain other
restrictions on the transferability of the Exchange Notes see "--Transfers of
Interests in Global Exchange Notes for Certificated Exchange Notes."
EXCEPT AS DESCRIBED IN "- TRANSFERS OF INTERESTS IN GLOBAL EXCHANGE NOTES FOR
CERTIFICATED EXCHANGE NOTES," OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL
EXCHANGE NOTES WILL NOT HAVE EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT
RECEIVE PHYSICAL DELIVERY OF EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT
BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR
ANY PURPOSE.
Under the terms of the Senior Debt Indenture, CMS Energy and the Trustee will
treat the persons in whose names the Exchange Notes are registered (including
Exchange Notes represented by Global Exchange Notes) as the owners thereof for
the purpose of receiving payments and for any and all other purposes
whatsoever. Payments in respect of the principal, premium and interest on
Global Exchange Notes registered in the name of DTC or its nominee will be
payable by the Trustee to DTC or its nominee as the registered holder under the
Senior Debt Indenture. Consequently, neither CMS Energy, the Trustee nor any
agent of CMS Energy or the Trustee has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Direct Participant's or
Indirect Participant's records relating to or payments made on account of
beneficial ownership interests in the Global Exchange Notes or for maintaining,
supervising or reviewing any of DTC's records or any Direct Participant's or
Indirect Participant's records relating to the beneficial ownership interests
in any Global Exchange Note or (ii) any other matter relating to the actions
and practices of DTC or any of its Direct Participants or Indirect
Participants.
DTC has advised CMS Energy that its current payment practice (for payments of
principal, interest and the like) with respect to securities such as the
Exchange Notes is to credit the accounts of the relevant Direct Participants
with such payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Exchange Notes as
shown on DTC's records. Payments by Direct Participants and Indirect
Participants to the beneficial owners of the Exchange Notes will be governed by
standing instructions and customary practices between them and will not be the
responsibility of DTC, the Trustee or CMS Energy. Neither CMS Energy nor the
Trustee will be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of the Exchange
Notes, and CMS Energy and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee as the registered
owner of the Exchange Notes for all purposes.
The Global Exchange Notes will trade in DTC's Same-Day Funds Settlement System
and, therefore, transfers between Direct Participants in DTC will be effected
in accordance with DTC's procedures, and will be settled in immediately
available funds. Transfers between Indirect Participants who hold an interest
through a Direct Participant will be effected in accordance with the procedures
of such Direct Participant but generally will settle in immediately available
funds.
DTC has advised CMS Energy that it will take any action permitted to be taken
by a holder of Exchange Notes only at the direction of one or more Direct
Participants to whose account interests in the Global Exchange Notes are
credited and only in respect of such portion of the aggregate principal amount
of the Exchange Notes as to which such Direct Participant or Direct
Participants has or have given direction. However, if there is an Event of
Default with respect to the Exchange Notes, DTC reserves the right to exchange
Global Exchange Notes (without the direction of one or more of its Direct
Participants) for legended Exchange Notes in certificated form, and to
distribute such certificated forms of Exchange Notes to its Direct
Participants. See "- Transfers of Interests in Global Exchange Notes for
Certificated Exchange Notes."
Although DTC has agreed to the foregoing procedures to facilitate transfers of
interests in the Global Exchange Notes among Direct Participants, it is under
no obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of CMS Energy or the Trustee
will have any responsibility for the performance by DTC, or its respective
Direct and Indirect Participants of their respective obligations under the
rules and procedures governing any of their operations.
The information in this section concerning DTC and its book-entry systems has
been obtained from sources that CMS Energy believes to be reliable, but CMS
Energy takes no responsibility for the accuracy thereof.
25
<PAGE> 31
Transfers of Interests in Global Exchange Notes for Certificated Exchange Notes
An entire Global Note may be exchanged for Certificated Exchange Notes if
(i) (x) DTC notifies CMS Energy that it is unwilling or unable to continue as
Depositary for the Global Exchange Notes or CMS Energy determines that DTC is
unable to act as such Depositary and CMS Energy thereupon fails to appoint a
successor depositary within 90 days or (y) DTC has ceased to be a clearing
agency registered under the Exchange Act, (ii) CMS Energy, at its option,
notifies the Trustee in writing that it elects to cause the issuance of
Certificated Exchange Notes or (iii) there shall have occurred and be
continuing a Default or an Event of Default with respect to the Exchange Notes.
In any such case, CMS Energy will notify the Trustee in writing that, upon
surrender by the Direct and Indirect Participants of their interest in such
Global Note, Certificated Exchange Notes will be issued to each person that
such Direct and Indirect Participants and the DTC identify as being the
beneficial owner of the related Exchange Notes.
Beneficial interests in Global Exchange Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Exchange Notes upon request to
DTC, by such Direct Participant (for itself or on behalf of an Indirect
Participant), to the Trustee in accordance with customary DTC procedures.
Certificated Exchange Notes delivered in exchange for any beneficial interest
in any Global Note will be registered in the names, and issued in any approved
denominations, requested by DTC on behalf of such Direct or Indirect
Participants (in accordance with DTC's customary procedures).
Neither CMS Energy nor the Trustee will be liable for any delay by the holder
of the Global Exchange Notes or DTC in identifying the beneficial owners of
Exchange Notes, and CMS Energy and the Trustee may conclusively rely on, and
will be protected in relying on, instructions from the holder of the Global
Note or DTC for all purposes.
Certificated Exchange Notes may be exchangeable for other Certificated Exchange
Notes of any authorized denominations and of a like aggregate principal amount
and tenor. Certificated Exchange Notes may be presented for exchange, 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 Trustee in
Detroit, Michigan (the "Security Registrar"). The Security Registrar will not
charge a service charge for any registration of transfer or exchange of
Exchange Notes; however, CMS Energy may require payment by a Holder of a sum
sufficient to cover any tax, assessment or other governmental charge payable in
connection therewith, as described in the Senior Debt 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. CMS Energy may at any time designate
additional transfer agents with respect to the Exchange Notes.
CMS Energy shall not be required to (a) issue, exchange or register the
transfer of any Certificated Note for a period of 15 days next preceding the
mailing of notice of redemption of such Note or (b) exchange or register the
transfer of any Certificated Note or portion thereof selected, called or being
called for redemption, except in the case of any Certificated Note to be
redeemed in part, the portion thereof not so to be redeemed.
If a Certificated Note is mutilated, destroyed, lost or stolen, it may be
replaced at the office of the Security Registrar upon payment by the Holder of
such expenses as may be incurred by CMS Energy and the Security Registrar in
connection therewith and the furnishing of such evidence and indemnity as CMS
Energy and the Security Registrar may require. Mutilated Exchange Notes must be
surrendered before new Exchange Notes will be issued. (Section 2.9)
Same Day Settlement and Payment
Payments in respect of the Exchange Notes represented by the Global Exchange
Notes (including principal, premium, if any, and interest, will be made by wire
transfer of immediately available same day funds to the accounts specified by
the holder of interests in such Global Note. Principal, premium, if any, and
interest on all Certificated Exchange Notes in registered form will be payable
at the office or agency of the Trustee in The City of New York, except that, at
the option of CMS Energy, payment of any interest may be made (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the security register or (ii) by wire transfer to an account
maintained by the Person entitled thereto as specified in the security
register. (Sections 3.1 and 3.2) Payment of any interest due on Exchange Notes
will be made to the Persons in whose name such Exchange Notes are registered at
the close of business on the Record Date for such interest payments. (Section
2.3(f)) The record dates for the Exchange Notes shall be May 1 or November 1
preceding the applicable payment date.
26
<PAGE> 32
THE EXCHANGE OFFER
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Notes were sold by CMS Energy on November 7, 1997, pursuant to the Purchase
Agreement dated November 4, 1997 (the "Purchase Agreement") by and among CMS
Energy and the Initial Purchasers and were subsequently offered by the Initial
Purchasers to qualified institutional buyers pursuant to Rule 144A that are
accredited investors in a manner exempt from registration under the Securities
Act as well as to purchasers pursuant to Regulation S under the Securities Act.
The summary herein of certain provisions of the Registration Rights Agreement
does not purport to be complete and reference is made to the provisions of the
Registration Rights Agreement which has been filed as an exhibit to the
Exchange Offer Registration Statement and a copy of which is available as set
forth in "Available Information."
CMS Energy and the Initial Purchasers entered into the Registration Rights
Agreement pursuant to which CMS Energy agreed to file with the Commission a
registration statement (the "Exchange Offer Registration Statement") on the
appropriate form under the Securities Act with respect to the offer to exchange
the Notes for the Exchange Notes to be registered under the Securities Act with
terms substantially identical to those of the Notes (the "Exchange Offer")
(except that the Exchange Notes will not contain terms with respect to certain
transfer restrictions, registration rights and interest step-in provisions).
Upon the effectiveness of the Exchange Offer Registration Statement, CMS Energy
will offer Exchange Notes pursuant to the Exchange Offer in exchange for
Transfer Restricted Securities (as defined herein) to the Holders of Transfer
Restricted Securities who are able to make certain representations. If (i) CMS
Energy is not required to file the Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any Holder of Transfer
Restricted Securities notifies CMS Energy that (A) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (B) it may not
resell the Exchange Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales
or (C) it is a broker-dealer and owns Exchange Notes acquired directly from CMS
Energy or an affiliate of CMS Energy, CMS Energy will file with the Commission
a shelf registration statement (the "Shelf Registration Statement") to cover
resales of the Exchange Notes by the Holders thereof who satisfy certain
conditions relating to the provision of information in connection with the
Shelf Registration Statement. CMS Energy will use its best efforts to cause
the applicable registration statement to be declared effective as promptly as
possible by the Commission. For purposes of the foregoing, "Transfer Restricted
Securities" means each Note until (i) the date on which such Note has been
exchanged by a person other than a broker-dealer for an Exchange Note in the
Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange
Offer of such Note for an Exchange Note, the date on which such an Exchange
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of this Prospectus, (iii) the date on which such
Note has been effectively registered under the Securities Act and disposed of
in accordance with the Shelf Registration Statement, or (iv) the date on which
such Note is eligible to be distributed to the public pursuant to Rule 144
under the Securities Act.
The Registration Rights Agreement provides that (i) CMS Energy will file an
Exchange Offer Registration Statement with the Commission on or prior to 60
days after the Closing, (ii) CMS Energy will use its best efforts to have the
Exchange Offer Registration Statement declared effective by the Commission on
or prior to 120 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, CMS Energy will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, Exchange Notes in exchange for all
Notes tendered prior thereto in the Exchange Offer and (iv) if obligated to
file the Shelf Registration Statement, CMS Energy will file the Shelf
Registration Statement with the Commission on or prior to 60 days after such
filing obligation arises and to use its best efforts to cause the Shelf
Registration to be declared effective by the Commission on or prior to 120 days
after the date on which CMS Energy becomes obligated to file such Shelf
Registration Statement. Except as provided in the next paragraph, if (a) CMS
Energy fails to file any of the Registration Statements required by the
Registration Rights Agreement on or before the date specified for such filing,
(b) any of such Registration Statements is not declared effective by the
Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), (c) CMS Energy fails to consummate the Exchange
Offer within 30 business days after the Registration Statement is first
declared effective with respect to the Exchange Offer Registration Statement or
(d) the Shelf Registration Statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective or usable
in connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (a) through (d) above being a "Registration Default"), then CMS Energy
will pay liquidated damages to each Holder of Notes, with respect to the first
90-day period immediately
27
<PAGE> 33
following the occurrence of the first Registration Default in an amount equal
to $0.05 per week per $1,000 principal amount of Notes held by such Holder. The
amount of the Liquidated Damages will increase by an additional $0.05 per week
per $1,000 principal amount of Notes with respect to each subsequent 90-day
period until all Registration Defaults have been cured, up to a maximum amount
of Liquidated Damages of $0.25 per week per $1,000 principal amount of Notes.
All accrued Liquidated Damages will be paid by CMS Energy on each interest
payment date to the Depositary by wire transfer of immediately available funds
or by federal funds check and to Holders of certificated securities by mailing
checks to their registered addresses. Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to CMS Energy
(as described in the Registration Rights Agreement) in order to participate in
the Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on the
Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Notes included in the
Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term "Expiration Date" shall mean , 1998, unless CMS Energy,
in its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
To extend the Expiration Date, CMS Energy will notify the Exchange Agent of any
extension by oral or written notice and will notify the holders of the Notes by
means of a press release or other public announcement prior to 9:00 A.M., New
York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that CMS Energy is extending the
Exchange Offer for a specified period of time.
CMS Energy reserves the right (i) to delay acceptance of any Notes, to extend
the Exchange Offer or to terminate the Exchange Offer and not permit acceptance
of Notes not previously accepted if any of the conditions set forth herein
under "- Conditions" shall have occurred and shall not have been waived by CMS
Energy, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner deemed by it to be advantageous to the holders of the
Notes. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by oral or written notice thereof to the
Exchange Agent. If the Exchange Offer is amended in a manner determined by CMS
Energy to constitute a material change, CMS Energy will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Notes
of such amendment.
Without limiting the manner in which CMS Energy may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, CMS Energy shall have no obligations to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will accrue interest at the rate of 7 3/8% per annum from
the last date on which interest was paid on the Notes, or, if no interest has
been paid on such Notes, from November 7, 1997, the date of issuance of the
Notes for which the Exchange Offer is being made. Interest on the Exchange
Notes is payable semiannually on May 15 and November 15, commencing May 15,
1997.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
Medallion Guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
any other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i) a timely confirmation
of a book-entry transfer (a "Book-Entry Confirmation") of such Notes into the
Exchange Agent's account at The Depositary (the "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date or (ii) the holder
must comply with the guaranteed delivery procedures described below. THE METHOD
OF DELIVERY OF LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDERS.
28
<PAGE> 34
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTERS OF TRANSMITTAL OR OTHER REQUIRED DOCUMENTS SHOULD
BE SENT TO CMS ENERGY. Delivery of all documents must be made to the Exchange
Agent at its address set forth below. Holders may also request their respective
brokers, dealers, commercial banks, trust companies or nominees to effect such
tender for such holders.
The tender by a holder of Notes will constitute an agreement between such
holder and CMS Energy in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal. Any beneficial
owner whose Notes are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered holder promptly and instruct such registered holder to tender
on his behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be medallion guaranteed by any member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor' institution
within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution") unless the Notes tendered pursuant thereto are tendered for the
account of an Eligible Institution.
If the Letter of Transmittal is signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations, or others acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and unless waived by CMS Energy, evidence satisfactory to CMS Energy
of their authority to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of receipt)
and withdrawal of the tendered Notes will be determined by CMS Energy, in its
sole discretion, which determination will be final and binding. CMS Energy
reserves the absolute right to reject any and all Notes not properly tendered
or any Notes which, if accepted, would, in the opinion of counsel for CMS
Energy, be unlawful. CMS Energy also reserves the absolute right to waive any
irregularities or conditions of tender as to particular Notes. CMS Energy's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Notes must be cured within such time as CMS Energy shall determine.
Neither CMS Energy, the Exchange Agent nor any other person shall be under any
duty to give notification of defects or irregularities with respect to tenders
of Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, CMS Energy reserves the right, in its sole discretion, subject to
the provisions of the Senior Debt Indenture, to purchase or make offers for any
Notes that remain outstanding subsequent to the Expiration Date or, as set
forth under "- Conditions," to terminate the Exchange Offer in accordance with
the terms of the Registration Agreement, and to the extent permitted by
applicable law, purchase Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers could
differ from the terms of the Exchange Offer.
ACCEPTANCE OF NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer, all
Notes properly tendered will be accepted promptly after the Expiration Date,
and the Exchange Notes will be issued promptly after acceptance of the Notes.
See "- Conditions." For purposes of the Exchange Offer, Notes shall be deemed
to have been accepted as validly tendered for exchange when, as and if CMS
Energy has given oral or written notice thereof to the Exchange Agent.
In all cases, issuance of Exchange Notes for Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of a Book-Entry Confirmation of such Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal and all other required
documents. If any tendered Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer, such unaccepted or such
29
<PAGE> 35
nonexchanged Notes will be credited to an account maintained with such
Book-Entry Transfer Facility as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect to
the Notes at the Book-Entry Transfer Facility for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any financial
institution that is a participant in the Book- Entry Transfer Facility's
systems may make book-entry delivery of Notes by causing the Book-Entry
Transfer Facility to transfer such Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, the Letter of Transmittal (or
facsimile) thereof with any required signature guarantees and any other
required documents must, in any case, be transmitted to and received by the
Exchange Agent at one of the addresses set forth under "- Exchange Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by CMS Energy (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of
Notes and the amount of Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange, Inc.
("NYSE') trading days after the date of execution of the Notice of Guaranteed
Delivery, a Book-Entry Confirmation and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) a Book-Entry Confirmation and all other documents
required by the Letter of Transmittal are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL OF TENDERS
Tenders of Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date at one of the addresses set forth under "- Exchange Agent." Any
such notice of withdrawal must specify the name and number of the account at
the Book-Entry Transfer Facility from which the Notes were tendered, identify
the principal amount of the Notes to be withdrawn, and specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Notes and otherwise comply with the procedures of such Book-Entry
Transfer Facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notice will be determined by CMS Energy,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Notes which have been tendered for exchange
but which are not exchanged for any reason will be credited to an account
maintained with such Book-Entry Transfer Facility for the Notes as soon as
practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Notes may be retendered by following one of
the procedures described under "- Procedures for Tendering" and "- Book-Entry
Transfer" at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Notes will not be
required to be accepted for exchange, nor will Exchange Notes be issued in
exchange for any Notes, and CMS Energy may terminate or amend the Exchange
Offer as provided herein before the acceptance of such Notes, if, because of
any change in law, or applicable interpretations thereof by the Commission, CMS
Energy determines that it is not permitted to effect the Exchange Offer. CMS
Energy has no obligation to, and will not knowingly, permit acceptance of
tenders of Notes from affiliates of CMS Energy or from any other holder or
holders who are not eligible to participate in the Exchange Offer under
applicable law or interpretations thereof by the Staff of the Commission, or if
the Exchange Notes to be received by such holder or holders of Notes in the
Exchange Offer, upon receipt, will not be tradable by such holder without
restriction
30
<PAGE> 36
under the Securities Act and the Exchange Act and without material restrictions
under the "blue sky" or securities laws of substantially all of the states of
the United States.
EXCHANGE AGENT
NBD Bank has been appointed as Exchange Agent for the Exchange Offer. Questions
and requests for assistance and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent addressed as follows:
By Mail (Certified, Registered, Overnight or First Class) or Hand Delivery:
NBD Bank
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile
(For Eligible Institutions Only)
(212) 240-8438
Telephone Number
(212) 240-8801
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be borne
by CMS Energy. The principal solicitation for tenders pursuant to the Exchange
Offer is being made by mail; however, additional solicitations may be made by
telegraph, telephone, telecopy or in person by officers and regular employees
of CMS Energy.
CMS Energy will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. CMS Energy, however, will pay the
Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith.
The expenses to be incurred in connection with the Exchange Offer will be paid
by CMS Energy, including fees and expenses of the Exchange Agent and the
Trustee, and accounting, legal, printing and related fees and expenses.
CMS Energy will pay all transfer taxes, if any, applicable to the exchange of
Notes pursuant to the Exchange Offer. If, however, Exchange Notes or Notes for
principal amounts not tendered or accepted for exchange are to be registered or
issued in the name of any person other than the registered holder of the Notes
tendered, or if tendered Notes are registered in the name of any person other
than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, CMS Energy believes that Exchange
Notes issued pursuant to the Exchange Offer in exchange for Notes may be
offered for resale, resold and otherwise transferred by any owner of such
Exchange Notes (other than any such owner which is an "affiliate" of CMS Energy
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of such
owner's business and such owner does not intend to participate, and has no
arrangement or understanding with any person to participate, in the
distribution of such Exchange Notes. Any owner of Notes who tenders in the
Exchange Offer with the intention to participate, or for the purpose of
participating,
31
<PAGE> 37
in a distribution of the Exchange Notes may not rely on the position of the
staff of the Commission enunciated in Exxon Capital Holdings Corporation
(available May 13,1998, as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993) and Morgan Stanley & Co., Incorporated (available
June 5, 1991) or similar no-action letters (collectively the "No-Action
Letters") but rather must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
In addition, any such resale transaction should be covered by an effective
registration statement containing the selling security holders information
required by Item 507 of Regulation S-K of the Securities Act. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, may be a statutory
underwriter and must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes.
By tendering in the Exchange Offer, each Holder (or DTC participant, in the
case of tenders of interests in the Global Notes held by DTC) will represent to
CMS Energy (which representation may be contained the Letter of Transmittal) to
the effect that (A) it is not an affiliate of CMS Energy, (B) it is not engaged
in, and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Exchange Notes to be
issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its
ordinary course of business. Each Holder will acknowledge and agree that any
broker-dealer and any such Holder using the Exchange Offer to participate in a
distribution of the Exchange Notes acquired in the Exchange Offer (1) could not
under Commission policy as in effect on the date of the Registration Rights
Agreement rely on the position of the Commission enunciated in the No-Action
Letters, and (2) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K if
the resales are of Exchange Notes obtained by such Holder in exchange for Notes
acquired by such Holder directly from CMS Energy or an affiliate thereof.
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or to register the Exchange Notes prior to
offering or selling such Exchange Notes. CMS Energy has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to cooperate with selling Holders or underwriters in connection with
the registration and qualification of the Exchange Notes for offer or sale
under the securities or "blue sky" laws of such jurisdictions as may be
necessary to permit the holders of Exchange Notes to trade the Exchange Notes
without any restrictions or limitations under the securities laws of the
several states of the United States.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Notes who do not exchange their Notes for Exchange Notes pursuant to
the Exchange Offer will continue to be subject to the restrictions on transfer
of such Notes as set forth in the legend thereon as a consequence of the
issuance of the Notes pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable
state securities laws. In general, the Notes may not be registered under the
Securities Act, except pursuant a transaction not subject to, the Securities
Act and applicable state securities laws. CMS Energy does not currently
anticipate that it will register the Notes under the Securities Act. To the
extent that Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Notes could be adversely
affected.
DIRECTORS AND EXECUTIVE OFFICERS
The information required by this item appears (i) under "Nominees for Election
as Directors" on pages 2 through 5 of CMS Energy's definitive Proxy Statement,
dated April 21, 1997, relating to it 1997 Annual Meeting of Shareholders (the
"1997 Proxy Statement"); (ii) under "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 6 of the 1997 Proxy Statement; and (iii) under
"CMS Energy and Consumers Executive Officers" on pages 25 through 27 of CMS
Energy and Consumers Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, all of which information is incorporated by reference.
32
<PAGE> 38
EXECUTIVE COMPENSATION
The information required by this item appears under (i) "Executive
Compensation" on pages 10 through 12 of the 1997 Proxy Statement; (ii)
"Organization and Compensation Committee Report" on pages 13 through 14 of the
1997 Proxy Statement; and (iii) "Comparison of Five-year Cumulative Total
Return Among CMS Energy Corporation, S&P 500 Index & Dow Jones Utility Index"
on page 15 of the 1997 Proxy Statement all of which information is incorporated
by reference.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF NOTES
FOR EXCHANGE NOTES
The following summary describes the principal United States federal income tax
consequences to holders who exchange Notes for Exchange Notes pursuant to the
Exchange Offer. This summary is intended to address the beneficial owners of
Notes that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any State or the District of Columbia, or estates or trusts
that are not foreign estates or trusts for United States federal income tax
purposes, in each case, that hold the Notes as capital assets.
The exchange of Notes for Exchange Notes pursuant to the Exchange Offer will
not constitute a taxable exchange for United States federal income tax
purposes. As a result, a holder of a Note whose Note is accepted in the
Exchange Offer will not recognize gain or loss on the exchange. A tendering
holder's tax basis in the Exchange Notes received pursuant to the Exchange
Offer will be the same as such holder's tax basis in the Notes surrendered
therefor. A tendering holder's holding period for the Exchange Notes received
pursuant to the Exchange Offer-will include its holding period for the Notes
surrendered therefor.
ALL HOLDERS OF NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THE EXCHANGE OF
NOTES FOR EXCHANGE NOTES, AND OF THE OWNERSHIP AND DISPOSITION OF EXCHANGE
NOTES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE
EXCHANGE NOTES
The following is a summary of the material United States federal income tax
consequences of the acquisition, ownership and disposition of the Notes or the
Exchange Notes by a United States Holder (as defined below). This summary deals
only with the United States Holders that will hold the Notes or the Exchange
Notes as capital assets. The discussion does not cover-all aspects of federal
taxation that may be relevant to, or the actual tax effect that any of the
matters described herein will have on, the acquisition, ownership or
disposition of the Notes or the Exchange Notes by particular investors, and
does not address state, local, foreign or other tax laws. In particular, this
summary does not discuss all of the tax considerations that may be relevant to
certain types of investors subject to special treatment under the federal
income tax laws (such as banks, insurance companies, investors liable for the
alternative minimum tax, individual retirement accounts and other tax- deferred
accounts, tax-exempt organizations, dealers in securities or currencies,
investors that will hold the Notes or the Exchange Notes as part of straddles,
hedging transactions or conversion transactions for federal tax purposes or
investors whose functional currency is not United States Dollars). Furthermore,
the discussion below is based on provisions of the Internal Revenue Code of
1986, as amended, and regulations, rulings, and judicial decisions thereunder
as of the date hereof, and such authorities may be repealed, revoked or
modified so as to result in U.S. federal income tax consequences different from
those discussed below.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR DISPOSITION OF EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR INTERNATIONAL TAXING
JURISDICTION.
As used herein, the term "United States Holder" means a beneficial owner of the
Notes or the Exchange Notes that is (i) a citizen or resident of the United
States for United States federal income tax purposes, (ii) a corporation
created or organized under the laws of the United States or any State thereof,
(iii) a person or entity that is otherwise subject to United States federal
income tax on a net
33
<PAGE> 39
income basis in respect of income derived from the Notes or the Exchange Notes,
or (iv) a partnership to the extent the interest therein is owned by a person
who is described in clause (i), (ii) or (iii) of this paragraph.
INTEREST
Interest paid on an Existing Note or an Exchange Note will be taxable to a
United States Holder as ordinary income at the time it is received or accrued,
depending on the holder's method of accounting for tax purposes.
PURCHASE, SALE, EXCHANGE, RETIREMENT AND REDEMPTION OF THE EXCHANGE NOTES
In general (with certain exceptions described below) a United States Holder's
tax basis in an Exchange Note will equal the price paid for the Notes for which
such Exchange Note was exchanged pursuant to the Exchange Offer. A United
States Holder generally will recognize gain or loss on the sale, exchange,
retirement, redemption or other disposition of an Note or an Exchange Note (or
portion thereof) equal to the difference between the amount realized on such
disposition and the United States Holder's tax basis in the Note or the
Exchange Note (or portion thereof). Except to the extent attributable to
accrued but unpaid interest, gain or loss recognized on such disposition of an
Note or a Exchange Note will be capital gain or loss. Under the "Taxpayer
Relief Act of 1997" (the "Taxpayer Act") the maximum rate applicable to
long-term capital gains of individuals has been reduced to 20%. However, the
Taxpayer Act also extends the holding period for long-term capital gains to 18
months for capital assets disposed of after July 28, 1997. Gain on capital
assets held between 12 months and 18 months are subject to tax at a maximum
rate of 28%. Any such gain will generally be United States source gain.
BOND PREMIUM
If a United States Holder acquires an Exchange Note or has acquired a Note, in
each ease, for an amount more than its redemption price, the Holder may elect
to amortize such bond premium on a yield to maturity basis. Once made, such an
election applies to all bonds (other than bonds the interest on which is
excludable from gross income) held by the United States Holder at the beginning
of the first taxable year to which the election applies or thereafter acquired
by the United States Holder, unless the IRS consents to a revocation of the
election. The basis of an Exchange Note will be reduced by any amortizable bond
premium taken as a deduction.
MARKET DISCOUNT
The purchase of an Exchange Note or the purchase of a Note other than at
original issue may be affected by the market discount provisions of the Code.
These rules generally provide that, subject to a statutorily defined de minimis
exception, if a United States Holder purchases an Exchange Note (or purchased a
Note) at a "market discount," as defined below, and thereafter recognizes gain
upon a disposition of the Exchange Note (including dispositions by gift or
redemption), the lesser of such gain (or appreciation, in the case of a gift)
or the portion of the market discount that has accrued ("accrued market
discount") while the Exchange Note (and its predecessor Note, if any) was held
by such United States Holder will be treated as ordinary interest income at the
time of disposition rather than as capital gain. For an Exchange Note or a
Note, "market discount" is the excess of the stated redemption price at
maturity over the tax basis immediately after its acquisition by a United
States Holder. Market discount generally will accrue ratably during the period
from the date of acquisition to the maturity date of the Exchange Note, unless
the United States Holder elects to accrue such discount on the basis of the
constant yield method. Such an election applies only to the Exchange Note with
respect to which it is made and is irrevocable.
In lieu of including the accrued market discount income at the time of
disposition, a United States Holder of an Exchange Note acquired at a market
discount (or acquired in exchange for a Note acquired at a market discount) may
elect to include the accrued market discount in income currently either ratably
or using the constant yield method. Once made, such an election applies to all
other obligations that the United States Holder purchases at a market discount
during the taxable year for which the election is made and in all subsequent
taxable years of the United States Holder, unless the Internal Revenue Service
consents to a revocation of the election. If an election is made to include
accrued market discount in income currently, the basis of a Exchange Note (or,
where applicable, a predecessor Note) in the hands of the United States Holder
will be increased by the accrued market discount thereon as it is includible in
income. A United States Holder of a market discount Exchange Note who does not
elect to include market discount in income currently generally will be required
to defer deductions for interest on borrowings allocable to such Exchange Note,
if any, in an amount not exceeding the accrued market discount on such Exchange
Note until the maturity or disposition of such Exchange Note.
34
<PAGE> 40
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of interest and principal on, and the proceeds of sale or other
disposition of the Notes or the Exchange Notes payable to a United States
Holder, may be subject to information reporting requirements and backup
withholding at a rate of 31% will apply to such payments if the United States
Holder fails to provide an accurate taxpayer identification number or to report
all interest and dividends required to be shown on its federal income tax
returns. Certain United States Holders (including, among others, corporations)
are not subject to backup withholding. United States Holders should consult
their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of the Exchange Notes received in exchange for the
Notes where such Notes were acquired as a result of market-making activities or
other trading activities. CMS Energy has agreed that, starting on the
Expiration Date and ending on the close of business on the first anniversary of
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
CMS Energy will not receive any proceeds from any sale of the Exchange Notes by
broker-dealers. The Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices or negotiated prices. Any such resale may
be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of Exchange Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, CMS Energy will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. CMS Energy has agreed to pay all expenses incident to the
Exchange Offer and will indemnify the holders of the Exchange Notes against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Opinions as to the legality of the Exchange Notes will be rendered for CMS
Energy by Michael D. Van Hemert, Assistant General Counsel for CMS Energy.
35
<PAGE> 41
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, 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, June 30, and September 30, 1996 and 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 these reports are not "reports" 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 extend that said firm has audited said consolidated
financial statements and consented to the use of their reports thereon.
36
<PAGE> 42
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CMS
ENERGY, THE INITIAL PURCHASERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE EXCHANGE
NOTES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
PAGE
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CMS Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . 9
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . 10
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Description of Exchange Notes . . . . . . . . . . . . . . . . . . . . . . 12
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . 32
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 33
Certain United States Federal Income
Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
OFFER TO EXCHANGE
7 3/8% UNSECURED NOTES
DUE 2000,
SERIES B
FOR ANY AND ALL
OF THE OUTSTANDING
7 3/8% UNSECURED NOTES
DUE 2000,
SERIES A
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED
[CMS ENERGY LOGO]
- --------------------------------------------------------------------------------
<PAGE> 43
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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 (I) of the Michigan Business Corporation Act, and (iv) any action
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 thereafter
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 provides 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.
II-1
<PAGE> 44
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 of officers or 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
cited above.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit No. DESCRIPTION
*3(a) - Restated Articles of Incorporation of CMS Energy.
(Designated in CMS Energy's form S-4 dated June 6, 1995,
File No. 33-60007, as Exhibit 3(c).)
*3(b) - By-Laws of CMS Energy. (Designated in CMS Energy's Form
10-K for the year ended December 31, 1994, File No.
1-9513, as Exhibit 3(c).)
*4(a) - Indenture dated as of September 15, 1992 between CMS
Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's Form S-3 Registration
Statement filed May 1, 1992, File No. 33-47629, as
Exhibit (4)(a).)
First Supplemental Indenture dated as of October 1, 1992
between CMS Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated October 1,
1992, File No. 1-9513, as Exhibit (4).)
Second Supplemental Indenture dated as of October 1,
1992 between CMS Energy Corporation and NBD Bank, as
Trustee. (Designated in CMS Energy's Form 8-K dated
October 1, 1992, File No. 1-9513, as Exhibit 4(a).)
Third Supplemental Indenture dated as of May 6, 1997
between CMS Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's Form 10-Q for the quarter
ended March 31, 1997, File No. 1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated as of September 26,
1997 between CMS Energy Corporation and NBD Bank, as
Trustee. (Designated in CMS Energy's form S-3
Registration Statement filed October 6, 1997, File No.
333-37241, as Exhibit (4)(a).)
Fifth Supplemental Indenture dated as of November 4,
1997 between CMS Energy Corporation and NBD Bank, as
Trustee. (Designated in CMS Energy's Form 10-Q for the
quarter ended September 30, 1997, File No. 1-9513, as
Exhibit (4)(b).)
*4(b) - Credit Agreement dated as of July 21, 1997, among CMS
Energy Corporation, the Banks, the Administrative Agent,
the Collateral Agent, the Documentation Agent, the
Syndication Agent, the Co-Agents and the Lead Manager,
all as defined therein, and the Exhibits thereto.
(Designated in CMS Energy's Form 10-Q for the quarter
ended June 30, 1997, File No. 1-9513, as Exhibit (4).)
*4(c) - Form of Exchange Note. (Designated in CMS Energy's Form
10-Q for the quarter ended September 30, 1997, File No.
1-9513, as Exhibit (4)(b).)
4(d) - Registration Rights Agreement dated as of November 7,
1997 by and among CMS Energy Corporation and Donaldson,
Lufkin & Jenrette Securities Corporation, Chase
Securities Inc., CIBC Oppenheimer Corp., Morgan Stanley
& Co. Incorporated, and Salomon Brothers Inc.
5 - Opinion of Michael D. Van Hemert, Assistant General
Counsel for CMS Energy.
II-2
<PAGE> 45
8 - Opinion of Theodore J. Vogel, Tax Counsel for CMS
Energy, regarding tax matters.
*12 - Statement re: computation of Ratios of Earnings to Fixed
Charges. (Designated in CMS Energy's Form S-3 dated
December 3, 1997, File No. 333-41395, as Exhibit (12).)
15 - Letter re: unaudited interim financial information.
23(a) - Consent of Michael D. Van Hemert, Assistant General
Counsel for CMS Energy (included in Exhibit 5 above).
23(b) - Consent of Theodore J. Vogel, Tax Counsel for CMS Energy
(included in Exhibit 8 above).
23(c) - Consent of Arthur Anderson LLP.
*24 - Powers of Attorney of Directors whose names are signed
to this registration statement pursuant to such powers.
(Designated in CMS Energy's Form S-3 dated December 3,
1997, File No. 333-41395, as Exhibit (24).)
*25 - Statement of Eligibility and Qualification of NBD Bank
(Trustee under the Supplemental Indenture). (Designated
in CMS Energy's Form S-3 dated December 5, 1996, File
No. 333-17289, as Exhibit (25)(a).)
99(a) - Form of Letter of Transmittal for the 7 3/8% Unsecured
Notes, Due 2000, Series B.
99(b) - Certification of Taxpayer Identification Number on
Substitute Form W-9.
99(c) - Form of Notice of Guaranteed Delivery.
- ---------------
* Previously filed
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.
ITEM 22. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) 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.
(2) 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 20 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 as 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 be governed by the final adjudication of such issue.
(3) To respond to requests for information that is incorporated by
reference in to the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other
II-3
<PAGE> 46
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
became effective.
II-4
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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 23rd day of December, 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 and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C> <C>
(i) Principal executive officer
/s/ William T. McCormick, Jr. Chairman of the Board, Chief
--------------------------------------- Executive Officer and Director December 23, 1997
William T. McCormick, Jr.
(ii) Principal financial officer:
/s/ A.M. Wright Senior Vice President, Chief
--------------------------------------- Financial Officer and Treasurer December 23, 1997
Alan M. Wright
(iii) Controller or principal accounting officer
/s/ P.D. Hopper Senior Vice President, Controller and
--------------------------------------- Chief Accounting Officer December 23, 1997
Preston D. Hopper
* Director
----------------------------------------
(John M. Deutch) December 23, 1997
*
----------------------------------------
(James J. Duderstadt) Director December 23, 1997
----------------------------------------
(Kathleen R. Flaherty) Director December 23, 1997
</TABLE>
II-5
<PAGE> 48
<TABLE>
<S> <C> <C>
* Director
-----------------------------------------
(Victor J. Fryling) December 23, 1997
* Director
-----------------------------------------
(Earl D. Holton) December 23, 1997
* Director
-----------------------------------------
(William U. Parfet) December 23, 1997
Director
-----------------------------------------
(Percy A. Pierre) December 23, 1997
* Director
-----------------------------------------
(Kenneth Whipple) December 23, 1997
* Director
-----------------------------------------
(John B. Yasinsky) December 23, 1997
*By: /s/ A.M. Wright
-----------------------------------------
Alan M. Wright
Attorney in-fact
</TABLE>
II-6
<PAGE> 49
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ------- --- -----------
*3(a) - Restated Articles of Incorporation of CMS Energy. (Designated
in CMS Energy's form S-4 dated June 6, 1995, File No.
33-60007, as Exhibit 3(c).)
*3(b) - By-Laws of CMS Energy. (Designated in CMS Energy's Form
10-K for the year ended December 31, 1994, File No. 1-9513,
as Exhibit 3(c).)
*4(a) - Indenture dated as of September 15, 1992 between CMS Energy
Corporation and NBD Bank, as Trustee, (Designated in CMS
Energy's Form S-3 Registration Statement filed May 1, 1992,
File No. 33-47629, as Exhibit (4).)
First Supplemental Indenture dated as of October 1, 1992
between CMS Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated October 1, 1992,
File No. 1-9513, as Exhibit (4).)
Second Supplemental Indenture dated as of October 1, 1992
between CMS Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated October 1, 1992,
File No. 1-9513, as Exhibit 4(a).)
Third Supplemental Indenture dated as of May 6, 1997 between
CMS Energy Corporation and NBD Bank, as Trustee. (Designated
in CMS Energy's Form 10-Q for the quarter ended March 31,
1997, File No. 1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated as of September 26, 1997
between CMS Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's form S-3 Registration Statement
filed October 6, 1997, File No. 333-37241, as Exhibit (4)(a).)
Fifth Supplemental Indenture dated as of November 4, 1997
between CMS Energy Corporation and NBD Bank, as Trustee.
(Designated in CMS Energy's Form 10-Q for the quarter ended
September 30, 1997, File No. 1-9513, as Exhibit (4)(b).)
*4(b) - Credit Agreement dated as of July 21, 1997, among CMS Energy
Corporation, the Banks, the Administrative Agent, the
Collateral Agent, the Documentation Agent, the Syndication
Agent, the Co-Agents and the Lead Manager, all as defined
therein, and the Exhibits thereto. (Designated in CMS Energy's
Form 10-Q for the quarter ended June 30, 1997, File No.
1-9513, as Exhibit (4).)
*4(c) - Form of Exchange Note. (Designated in CMS Energy's Form 10-Q
for the quarter ended September 30, 1997, File No. 1-9513, as
Exhibit (4)(b).)
4(d) - Registration Rights Agreement dated as of November 7, 1997
by and among CMS Energy Corporation and Donaldson, Lufkin &
Jenrette Securities Corporation, Chase Securities Inc., CIBC
Oppenheimer Corp., Morgan Stanley & Co. Incorporated, and
Salomon Brothers Inc.
5 - Opinion of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy.
8 - Opinion of Theodore J. Vogel, Tax Counsel for CMS Energy,
regarding tax matters.
*12 - Statement re: computation of Ratios of Earnings to Fixed
Charges. (Designated in CMS Energy's Form S-3 dated December
3, 1997, File No. 333-41395, as Exhibit (12).)
15 - Letter re: unaudited interim financial information.
23(a) - Consent of Michael D. Van Hemert, Assistant General
Counsel for CMS Energy (included in Exhibit 5 above).
23(b) - Consent of Theodore J. Vogel, Tax Counsel for CMS Energy
(included in Exhibit 8 above).
23(c) - Consent of Arthur Anderson LLP.
*24 - Powers of Attorney of Directors whose names are signed to this
registration statement pursuant to such powers. (Designated
in CMS Energy's Form S-3 dated December 3, 1997, File No. 333-
41395, as Exhibit (24).)
*25 - Statement of Eligibility and Qualification of NBD Bank
(Trustee under the Supplemental Indenture). (Designated in
CMS Energy's Form S-3 dated December 5, 1996, File No. 333-
17289, as Exhibit (25)(a).)
99(a) - Form of Letter of Transmittal for the 7 3/8% Unsecured Notes,
Due 2000, Series B.
99(b) - Certification of Taxpayer Identification Number on Substitute
Form W-9.
99(c) - Form of Notice of Guaranteed Delivery.
- -------------
* Previously filed
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> 1
EXHIBIT 4(d)
=================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of November 7, 1997
by and among
CMS Energy Corporation
and
Donaldson, Lufkin & Jenrette Securities Corporation
Chase Securities Inc.
CIBC Oppenheimer Corp.
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
=================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of November 7, 1997, by and among CMS Energy Corporation, a Michigan
corporation (the "Company"), and Donaldson, Lufkin & Jenrette Securities
Corporation, Chase Securities Inc., CIBC Oppenheimer Corp., Morgan Stanley &
Co. Incorporated, and Salomon Brothers Inc, (each an "Initial Purchaser" and,
collectively, the "Initial Purchasers"), each of whom has agreed to purchase
the Company's 7 3/8% Senior Unsecured Notes Due 2000, Series A (the "Series A
Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated November
4, 1997 (the "Purchase Agreement"), by and among the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Series A
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 3 of the
Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York, or in the city of the primary corporate trust office of the
Trustee, on which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Series B Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Series A
Notes that such Broker-Dealer acquired for its own account as a result of
market making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
-1-
<PAGE> 3
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant
to which the Company shall offer the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities for Series B Notes in an aggregate principal amount equal
to the aggregate principal amount of the Transfer Restricted Securities
tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to persons permitted to
purchase the Series A Notes in offshore transactions in reliance upon
Regulation S under the Act.
Global Noteholder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of September 15, 1992, as previously
supplemented, between the Company and NBD Bank, as Trustee (the "Trustee"), and
as further supplemented by a Fifth Supplemental Indenture pursuant to which the
Notes are to be issued, as such Indenture is amended or supplemented from time
to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
-2-
<PAGE> 4
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Series B Notes: The Company's 7 3/8% Senior Unsecured Notes Due 2000,
Series B to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Series A Notes covered by a Shelf
Registration Statement, in exchange for such Series A Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the
Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company shall (i) cause to be filed with the Commission as
soon as practicable after the Closing Date, but in no event later than 60 days
after the Closing Date, the Exchange Offer Registration Statement, (ii) use its
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after the Closing Date, (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may
be necessary in order to cause such Exchange Offer Registration Statement to
become effective, (B) file, if applicable, a
-3-
<PAGE> 5
post-effective amendment to such Exchange Offer Registration Statement
pursuant to Rule 430A under the Act and (C) cause all necessary filings, if
any, in connection with the registration and qualification of the Series B
Notes to be made under the Blue Sky laws of such jurisdictions as are necessary
to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness
of such Exchange Offer Registration Statement, commence and Consummate the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; provided, however, that in no event shall such period be less than 20
Business Days. The Company shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Notes shall be included in the Exchange Offer Registration Statement. The
Company shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Series A Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Series A Notes (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Series B Note received by such Broker-Dealer in the Exchange
Offer, which prospectus delivery requirement may be satisfied by the delivery
by such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the date on which the Exchange Offer is
Consummated.
The Company shall promptly provide sufficient copies of the latest version
of such Prospectus to such Restricted Broker-Dealers promptly upon request,
and in no event later than one day after such request, at any time during such
one-year period in order to facilitate such sales.
-4-
<PAGE> 6
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Series B Notes
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a)(i) below have been
complied with) or (ii) if any Holder of Transfer Restricted Securities shall
notify the Company within 20 Business Days following the Consummation of the
Exchange Offer that (A) such Holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Company or one of its affiliates, then the Company shall (x)
cause to be filed on or prior to 60 days after the date on which the Company
determines that it is not required to file the Exchange Offer Registration
Statement pursuant to clause (i) above or 60 days after the date on which the
Company receives the notice specified in clause (ii) above a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf Registration
Statement")), relating to all Transfer Restricted Securities the Holders of
which shall have provided the information required pursuant to Section 4(b)
hereof, and shall (y) use its best efforts to cause such Shelf Registration
Statement to become effective on or prior to 120 days after the date on which
the Company becomes obligated to file such Shelf Registration Statement. If,
after the Company has filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 3(a) above, the Company is required to
file and make effective a Shelf Registration Statement solely because the
Exchange Offer shall not be permitted under applicable federal law, then the
filing of the Exchange Offer Registration Statement shall be deemed to satisfy
the requirements of clause (x) above. Such an event shall have no effect on
the requirements of clause (y) above. The Company shall use its best efforts
to keep the Shelf Registration Statement discussed in this Section 4(a)
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to the extent necessary to
ensure that it is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a), and to ensure
that it conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of at least two years (as extended pursuant to Section
6(c)(i)) following the date on which such Shelf Registration Statement first
becomes effective under the Act.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor,
such information specified in item 507 of Regulation S-K under the Act for use
in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof
unless and until such Holder shall have used its best efforts to provide all
such information. Each Holder as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
-5-
<PAGE> 7
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement, (iii) the Exchange Offer has not been Consummated within 30
Business Days after the Exchange Offer Registration Statement is first declared
effective by the Commission or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
within fifteen business days by a post-effective amendment to such Registration
Statement that cures such failure and that is itself declared effective within
five business days (each such event referred to in clauses (i) through (iv), a
"Registration Default"), then the Company agrees to pay liquidated damages to
each Holder of Transfer Restricted Securities with respect to the first 90-day
period immediately following the occurrence of such Registration Default, in an
amount equal to $.05 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues. The amount of the liquidated damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.25 per week per $1,000 principal amount of Transfer
Restricted Securities. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or,
if applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4)
upon the filing of a post-effective amendment to the Registration Statement or
an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement) to again be declared effective or made usable in the case of (iv)
above, the liquidated damages payable with respect to the Transfer Restricted
Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable,
shall cease.
All accrued liquidated damages shall be paid to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by mailing checks to their registered
addresses on each Damages Payment Date. All obligations of the Company set
forth in the preceding paragraph that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof, there has been published a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of
-6-
<PAGE> 8
counsel to the Company there is a substantial question as to whether the
Exchange Offer is permitted by applicable federal law, the Company hereby
agrees to seek a no-action letter or other favorable decision from the
Commission allowing the Company to Consummate an Exchange Offer for such
Series A Notes. The Company hereby agrees to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Company hereby agrees to take all such other actions as are reasonably
requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (A) participating in
telephonic conferences with the Commission, (B) delivering to the Commission
staff an analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an Exchange
Offer should be permitted and (C) diligently pursuing a resolution (which
need not be favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate in
a distribution of the securities to be acquired in the Exchange Offer (1)
could not under Commission policy as in effect on the date of this Agreement
rely on the position of the Commission enunciated in Morgan Stanley and Co.,
Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to clause
(i) above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered by
an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K if
the resales are of Series B Notes obtained by such Holder in exchange for
Series A Notes acquired by such Holder directly from the Company or an
affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the Commission
(A) stating that the Company is registering the Exchange Offer in reliance
on the position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the Series B Notes to be received in the Exchange Offer
and that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in its
ordinary course of business and has no arrangement or understanding with any
Person to participate in the distribution of the Series B Notes received in
the Exchange Offer and (C) any other undertaking or representation required
by the Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the
-7-
<PAGE> 9
Company shall comply with all the provisions of Section 6(c) below and
shall use its best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the intended
method or methods of distribution thereof (as indicated in the information
furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto
the Company will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus, to the extent
that the same are required to be available to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), the Company
shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Transfer Restricted Securities during the period required by this Agreement,
the Company shall file promptly an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B), use
its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for their
intended purpose(s) as soon as practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462,
as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (A) when
the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of
any request by the Commission for amendments to the Registration Statement
or amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or
of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction,
or the initiation of any proceeding for any of the preceding purposes, (D)
of the existence of any fact or the happening of any event that makes any
statement of
-8-
<PAGE> 10
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time
the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company shall use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to the Initial Purchaser(s), each selling Holder named
in any Registration Statement or Prospectus and each of the underwriter(s)
in connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration Statement
or Prospectus (including all such documents incorporated by reference) to
which the selling Holders of the Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s) in connection with such
sale, if any, shall reasonably object within five Business Days after the
receipt thereof;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s) in connection with such sale, if any, make the Company's
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the selling
Holders, any managing underwriter participating in any disposition pursuant
to such Registration Statement and any attorney or accountant retained by
such selling Holders or any of such underwriter(s), all financial and other
records, material corporate documents and properties of the Company and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior
to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being sold
to such underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such Prospectus supplement
-9-
<PAGE> 11
or post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(viii) furnish to each selling Holder and each of the underwriter(s)
in connection with such sale, if any, without charge, at least one copy of
the Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference therein
and all exhibits (including exhibits incorporated therein by reference);
(ix) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s), if
any, in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto;
(x) enter into such agreements (including an underwriting agreement)
and make such representations and warranties and take all such other actions
in connection therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any Holder
of Transfer Restricted Securities or underwriter in connection with any sale
or resale pursuant to any Registration Statement contemplated by this
Agreement, and in such connection, whether or not an underwriting agreement
is entered into and whether or not the registration is an Underwritten
Registration, the Company shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its best
efforts to furnish) to each selling Holder and each underwriter, if any,
upon the effectiveness of the Shelf Registration Statement and to each
Restricted Broker-Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, signed on behalf of the Company by (x)
the President or any Vice President and (y) a principal financial or
accounting officer of the Company, confirming, as of the date
thereof, the matters set forth in paragraphs (a) through (d) of
Section 8 of the Purchase Agreement and such other similar matters as
the Holders, underwriter(s) and/or Restricted Broker Dealers may
reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company covering
matters similar to those set forth in paragraph (f) of Section 8 of
the Purchase Agreement and such other matters as the Holders,
underwriters and/or Restricted Broker Dealers may reasonably request,
and in any event including a statement to the effect that such
counsel has participated in conferences with officers and other
representatives of the Company, representatives of the independent
public accountants for the Company and have considered the matters
required to be stated therein and the statements contained therein,
although such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that such counsel
advises that,
-10-
<PAGE> 12
on the basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or
verification), no facts came to such counsel's attention that caused
such counsel to believe that the applicable Registration Statement,
at the time such Registration Statement or any post-effective
amendment thereto became effective and, in the case of the Exchange
Offer Registration Statement, as of the date of Consummation of the
Exchange Offer, 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 not misleading, or that the
Prospectus contained in such Registration Statement as of its date
and, in the case of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further that
such counsel assumes no responsibility for, and has not indepen-
dently verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial data
included in any Registration Statement contemplated by this Agreement
or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 8 of the Purchase Agreement, without exception.
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, in connection with any sale or resale pursuant to any
Shelf Registration Statement, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be reasonably
requested by the selling Holders, the underwriter(s), if any, and
Restricted Broker Dealers, if any, to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company pursuant to this
clause (x).
The above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted
Broker-Dealer promptly and, if requested by such Persons, shall confirm such
advice in writing;
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such
-11-
<PAGE> 13
jurisdictions as the selling Holders or underwriter(s), if any, may request
and do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however, that
the Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration Statement,
in any jurisdiction where it is not now so subject;
(xii) issue, upon the request of any Holder of Series A Notes covered
by any Shelf Registration Statement contemplated by this Agreement, Series B
Notes having an aggregate principal amount equal to the aggregate principal
amount of Series A Notes surrendered to the Company by such Holder in
exchange therefor or being sold by such Holder; such Series B Notes to be
registered in the name of such Holder or in the name of the purchaser(s) of
such Notes, as the case may be; in return, the Series A Notes held by such
Holder shall be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted Securities in
such denominations and such names as the Holders or the underwriter(s), if
any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use its best efforts to cause the disposition of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the underwriter(s),
if any, to consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders
-12-
<PAGE> 14
e
selling Transfer Restricted Securities to consummate the disposition of such
Transfer Restricted Securities;
(xviii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to any applicable Registration Statement, as
soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a twelve-month
period beginning after the effective date of the Registration Statement (as
such term is defined in paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use its best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each document filed
with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
twhe supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "Advice").
If so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees; (ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws; (iii) all expenses of
printing (including printing certificates for the Series B Notes to be issued
in the Exchange Offer and printing of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of counsel
-13-
<PAGE> 15
for the Company and (other than in connection with the Exchange Offer)
the Holders of Transfer Restricted Securities; (v) all application and filing
fees in connection with listing the Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with the Shelf Registration Statement, the Company will
reimburse the Holders of Transfer Restricted Securities registered pursuant to
the Shelf Registration Statement, for the reasonable fees and disbursements of
not more than one counsel, who shall be chosen by the Holders of a majority in
principal amount of the Transfer Restricted Securities for whose benefit the
Shelf Registration Statement is being prepared in consultation with the
Company.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION
Indemnification. (a) The Company agrees, to the extent permitted by law,
to indemnify and hold harmless each Holder and each person, if any, who
controls any Holder within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act or otherwise, and to reimburse the Holders and such controlling
person or persons, if any, for any legal or other expenses incurred by them in
connection with defending any action, suit or proceeding (including
governmental investigations) as provided in Section 8(c) hereof, insofar as
such losses, claims, damages, liabilities or actions, suits or proceedings
(including governmental investigations) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, or, if any Registration Statement shall be amended
or supplemented, in the Registration Statement as so amended or supplemented,
or arise out of or are based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any such untrue
statement or alleged untrue statement or omission or alleged omission which was
made in the Registration Statement or in the Registration Statement as so
amended or supplemented, in reliance upon and in conformity with information
furnished in writing to the Company by, any Holder expressly for use therein.
The Company's indemnity agreement contained in this Section 8(a), and the
covenants, representations and warranties of the Company contained in this
Agreement, shall remain in full force and effect regardless of any
investigation made by or on behalf of any person, and the indemnity agreement
contained in this Section 8 shall survive any termination of this Agreement.
The liabilities of the Company in this Section 8(a) are in addition to any
other liabilities of the Company under this Agreement or otherwise.
(b) Each Holder agrees, severally and not jointly, to the extent
permitted by law, to indemnify, hold harmless and reimburse the Company and
each person, if any, who controls the
-14-
<PAGE> 16
Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, to the same extent and upon the same terms as the indemnity
agreement of the Company set forth in Section 8(a) hereof, but only with
respect to alleged untrue statements or omissions made in the Registration
Statement or in the Registration Statement, as amended or supplemented, (if
applicable) in reliance upon and in conformity with information furnished in
writing to the Company by such Holder expressly for use therein.
The indemnity agreement on the part of each Holder contained in this
Section 8(b) shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any other person, and the
indemnity agreement contained in this Section 8(b) shall survive any
termination of this Agreement.
(c) If a claim is made or an action, suit or proceeding (including
governmental investigations) is commenced or threatened against any person as
to which indemnity may be sought under Section 8(a) or 9(b), such person (the
"Indemnified Person") shall notify the person against whom such indemnity may
be sought (the "Indemnifying Person") promptly after any assertion of such
claim threatening to institute an action, suit or proceeding or if such an
action, suit or proceeding is commenced against such Indemnified Person,
promptly after such Indemnified Person shall have been served with a summons or
other first legal process, giving information as to the nature and basis of the
claim. Failure to so notify the Indemnifying Person shall not, however,
relieve the Indemnifying Person from any liability which it may have on account
of the indemnity under Section 8(a) or 8(b) if the Indemnifying Person has not
been prejudiced in any material respect by such failure. Subject to the
immediately succeeding sentence, the Indemnifying Person shall assume the
defense of any such litigation or proceeding, including the employment of
counsel and the payment of all expenses, with such counsel being designated,
subject to the immediately succeeding sentence, in writing by a majority in
principal amount of the Holders in the case of parties indemnified pursuant to
Section 8(b) and by the Company in the case of parties indemnified pursuant to
Section 8(a). Any Indemnified Person shall have the right to participate in
such litigation or proceeding and to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include (x) the
Indemnifying Person and (y) the Indemnified Person and, in the written opinion
of counsel to such Indemnified Person, representation of both parties by the
same counsel would be inappropriate due to actual or likely conflicts of
interest between them, in either of which cases the reasonable fees and
expenses of counsel (including disbursements) for such Indemnified Person shall
be reimbursed by the Indemnifying Person to the Indemnified Person. If there
is a conflict as described in clause (ii) above, and the Indemnified Persons
have participated in the litigation or proceeding utilizing separate counsel
whose fees and expenses have been reimbursed by the Indemnifying Person and the
Indemnified Persons, or any of them, are found to be such fees and expenses of
such separate counsel as the Indemnifying Person shall have reimbursed. It is
understood that the Indemnifying Person shall not, in connection with any
litigation or proceeding or related litigation or proceedings in the same
jurisdiction as to which the Indemnified Persons are entitled to such separate
representation, be liable under this Agreement for the reasonable fees and
out-of-pocket expenses of more than one separate firm (together with not more
than one appropriate local counsel) for all such Indemnified Persons. Subject
to the next paragraph, all such fees and expenses shall be reimbursed by
payment to the Indemnified Persons of such reasonable fees and expenses of
counsel promptly after payment thereof by the Indemnified Persons.
-15-
<PAGE> 17
In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the Holders
and the Company agree that the Indemnifying Person's obligations to pay such
fees and expenses shall be conditioned upon the following:
(1) in case separate counsel is proposed to be retained by the
Indemnified Persons pursuant to clause (ii) of the preceding paragraph,
the Indemnified Persons shall in good faith fully consult with the
Indemnifying Person in advance as to the selection of such counsel;
(2) reimbursable fees and expenses of such separate counsel shall be
detailed and supported in a manner reasonably acceptable to the
Indemnifying Person (but nothing herein shall be deemed to require the
furnishing to the Indemnifying Person of any information, including
without limitation, computer print-outs of lawyers' daily time entries, to
the extent that, in the judgment of such counsel, furnishing such
information might reasonably be expected to result in a waiver of any
attorney-client privilege); and
(3) the Company and the Holders shall cooperate in monitoring and
controlling the fees and expenses of separate counsel for Indemnified
Persons for which the Indemnifying Person is liable hereunder, and the
Indemnified Person shall use every reasonable effort to cause such
separate counsel to minimize the duplication of activities as between
themselves and counsel to the Indemnifying Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 8, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
Contribution. If the indemnification provided for in this Section 8 above
is unavailable to or insufficient to hold harmless an Indemnified Person under
this Section 8 above in respect of any losses, claims, damages or liabilities
(or actions, suits or proceedings (including governmental investigations) in
respect thereof) referred to therein, then each Indemnifying Person under this
Section 8 above shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Indemnifying Person on the one hand and
the Indemnified Person on the other from the sale of the Transfer Restricted
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each Indemnifying Person
shall contribute to such amount paid or payable by such Indemnified Person in
such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of each Indemnifying Person, if any, on the one
hand and the Indemnified Person on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in
respect thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the
-16-
<PAGE> 18
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by
the Company on the one hand or the Holders on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Holders agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8. The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental proceedings) in respect thereof) referred to above in
this Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Person in connection with investigating
or defending any such action, suits or proceedings (including governmental
proceedings) or claim, provided that the provisions of Section 8 have been
complied with (in all material respects) in respect of any separate counsel for
such Indemnified Person. Notwithstanding the provisions of this Section 8, no
Holder shall be required to contribute any amount greater than the excess of
the amount by which the total received by such Holder with respect to the sale
of its Transfer Restricted Securities pursuant to a Registration Statement
exceeds the sum of (A) the amount paid by such Holder for such Transfer
Restricted Securities plus (B) the amount of any damages which such Holder 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 Holders' obligations in this Section 8 to contribute
are several in proportion to their respective underwriting obligations and not
joint.
The agreement with respect to contribution contained in this Section 8
hereof shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any Holder, and shall survive any
termination of this Agreement.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Securities Exchange Act,
to make available, upon request of any Holder of Transfer Restricted
Securities, to any Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
-17-
<PAGE> 19
For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering;
provided, that such investment bankers and managers must be reasonably
satisfactory to the Company. The Holders of Transfer Restricted Securities
included in any such Underwritten Offering shall be responsible for paying all
underwriting or placement fees charged, or costs or expenses incurred, by such
investment bankers and managers in connection with such Underwritten Offering.
Such investment bankers and managers are referred to herein as the
"underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by them of the provisions of this Agreement and hereby
agree to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement granting any registration rights with
respect to its securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under any agreement
in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Company will not take any
action, or voluntarily permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture,
-18-
<PAGE> 20
with a copy to the Registrar under the Indenture; and
(ii) if to the Company:
Fairlane Plaza South, Suite 1100
330 Towne Center Drive
Dearborne, Michigan 48126
Telecopier No.: (313) 436-9258
Attention: Alan M. Wright
With a copy to:
Michael D. VanHemert, Esq.
Telecopier No.: (313) 436-9225
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign
acquired Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
-19-
<PAGE> 21
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
-20-
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CMS ENERGY CORPORATION
By: /s/ A.M. Wright
_______________________________
Name: Alan M. Wright
Title: Senior Vice President,
Chief Financial Officer and Treasurer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CHASE SECURITIES INC.
CIBC OPPENHEIMER CORP.
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Jane Sadowsky
_______________________________
Name: Jane Sadowsky
Title: Senior Vice President
-21-
<PAGE> 1
[CMS ENERGY LETTERHEAD] EXHIBIT 5
December 23, 1997
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, MI 48126
Ladies and Gentlemen:
I am the Assistant General Counsel of CMS Energy Corporation, a Michigan
corporation ("CMS Energy"), and have acted as such in connection with the
Registration Statement on Form S-4 (the "Registration Statement") being filed
by CMS Energy with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), relating
to the registration of $300 million of 7 3/8% Unsecured Notes Due 2000, Series B
(the "Exchange Notes") to be issued under the Indenture dated as of September
15, 1992 between CMS Energy and NBD Bank, as trustee (the "Trustee"), as
previously supplemented and as further supplemented by the Fifth Supplemental
Indenture dated as of November 4, 1997 (collectively, the "Senior Debt
Indenture"). The Exchange Notes are being exchanged for all of the outstanding
7 3/8% Unsecured Notes Due 2000, Series A (the "Notes") pursuant to an Exchange
Offer. 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. CMS Energy is duly incorporated and validly existing under the laws of
the State of Michigan.
<PAGE> 2
2. CMS Energy has the corporate power and authority to authorize and deliver
the Exchange Notes pursuant to the Senior Debt Indenture.
3. The Exchange Notes will be legally issued and binding obligations of CMS
Energy (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 Senior Debt Indenture shall have been qualified
under the Trust Indenture Act; (ii) an appropriate prospectus with respect
to the Exchange Notes shall have been filed with the Commission pursuant
to Rule 424 under the Securities Act; and (iii) the Exchange Notes shall
be duly authenticated by the Trustee and the Exchange Notes shall have
been delivered to those holders of Notes in exchange for such Notes
pursuant to the Exchange Offer.
For purposes of this opinion, I have assumed that there will be no changes
in the laws currently applicable to CMS Energy and that such laws will be the
only laws applicable to CMS Energy.
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 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 CMS
Energy's Registration Statement relating to the Exchange Notes and to all
references to me included in or made apart of the Registration Statement.
Very truly yours,
/s/ Michael D. Van Hemert
--------------------------------
Michael D. Van Hemert
<PAGE> 1
[CMS ENERGY LETTERHEAD] Exhibit 8
December 23, 1997
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, MI 48126
Ladies and Gentleman
Reference is made to the prospectus, (the"Prospectus"), which constitutes
part of the registration statement on Form S-4 (the"Registration Statement"),
to be filed by CMS Energy Corporation ("CMS Energy") with the Securities and
Exchange Commission on or about the date hereof pursuant to the Securities Act
of 1933, as amended, for the registration of 7 3/8% Unsecured Notes due 2000,
Series B of CMS Energy (the "Exchange Notes").
I am of the opinion that the statements set forth under the caption
"Certain United States Federal Income Tax Consequences" in the Prospectus
constitute an accurate description, in general terms, of certain United States
federal income tax consideration that may be relevant to the prospective
holders of the Exchange Notes.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very Truly Yours
/s/ Theodore J. Vogel
----------------------
Theodore J. Vogel
<PAGE> 1
[ARTHUR ANDERSEN LLP LETTERHEAD]
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, its Form 10-Q for the quarter ended June 30, 1997, and its Form 10-Q for
the quarter ended September 30, 1997, which include our reports dated May 9,
1997, August 11, 1997, and November 10, 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
December 15, 1997.
<PAGE> 1
[ARTHUR ANDERSEN LLP LETTERHEAD]
EXHIBIT (23)(C)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement 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 31, 1996, and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Detroit, Michigan
December 15, 1997.
<PAGE> 1
EXHIBIT 99(A)
LETTER OF TRANSMITTAL
CMS ENERGY CORPORATION
OFFER TO EXCHANGE
7 3/8% UNSECURED NOTES DUE 2000, SERIES B
FOR ANY AND ALL OF THE OUTSTANDING
7 3/8% UNSECURED NOTES DUE 2000, SERIES A
THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1998
UNLESS THE OFFER IS EXTENDED
NBD BANK
(THE "EXCHANGE AGENT")
By Mail, (Certified, Registered, Overnight or First Class) or Hand Delivery:
NBD Bank
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile:
(For Eligible Institutions Only)
(212) 240-8438
Telephone Number
(212) 240-8801
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE> 2
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of CMS Energy Corporation (the "Company")
and this Letter of Transmittal, which together constitute the Company's offer
(the "Exchange Offer") to exchange $1,000 principal amount of its 7 3/8%
Unsecured Notes Due 2000, Series B (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which the Prospectus is a part, for each
$1,000 principal amount of its outstanding 7 3/8% Unsecured Notes Due 2000,
Series A (the "Notes"), respectively. The term "Expiration Date" shall mean 5:00
p.m., New York City time, on , 1998 unless the Company, in its
reasonable judgment, extends the Exchange Offer, in which case the term shall
mean the latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List on the next page the Notes to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate of Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.
- --------------------------------------------------------------------------------
DESCRIPTION OF NOTES TENDERED HEREBY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)
OF REGISTERED OWNER(S)
(PLEASE FILL IN)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CERTIFICATE AGGREGATE
OR PRINCIPAL AMOUNT PRINCIPAL
REGISTRATION REPRESENTED AMOUNT
NUMBER(S)* BY NOTES TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book Entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
Full Aggregate Principal Amount represented by such Notes. All Tenders must
be in integral multiples of $1,000.
================================================================================
This Letter of Transmittal is to be used (i) if certificates of Notes are
to be forwarded herewith, (ii) if delivery of Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company (the "Depository"), pursuant to the procedures set forth in "The
Exchange Offer - Procedures for Tendering Notes" in the Prospectus or (iii) if
tender of the Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer - Guaranteed Delivery Procedures." See Instruction 2. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder. The
undersigned has completed, executed and delivered this Letter of Transmittal to
indicate the action the undersigned desires to take with respect to the Exchange
Offer. Holders who wish to tender their Notes must complete this letter in its
entirety.
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITORY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
------------------------------------------------
[ ] The Depository Trust Company
Account Number
---------------------------------------------------------------
Transaction Code Number
------------------------------------------------------
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date must tender their Notes according to the guaranteed
delivery procedure set forth in the Prospectus under the caption "The Exchange
Offer - Guaranteed Delivery Procedures." See Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
-------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
------------------------
If delivery by book-entry transfer:
Account Number
---------------------------------------------------------------
Transaction Code Number
------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
-------------------------------------------------------------------------
Address
----------------------------------------------------------------------
3
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
such Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such Notes as are being tendered hereby, including all rights to accrued
and unpaid interest thereon as of the Expiration Date. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that said
Exchange Agent acts as the agent of the Company in connection with the Exchange
Offer) to cause the Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Notes and to acquire Exchange Notes
issuable upon the exchange of such tendered Notes, and that when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (A) it is not an affiliate
of the Company, (B) it is not engaged in, and does not intend to engage in, and
has no arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it
is acquiring the Exchange Notes in its ordinary course of business. If the
undersigned or the person receiving the Exchange Notes covered hereby is a
broker-dealer that is receiving the Exchange Notes for its own account in
exchange for Notes that were acquired as a result of market-making activities or
other trading activities, the undersigned acknowledges that it or such other
person will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. The undersigned and any such other person
acknowledges that, if they are participating in the Exchange Offer for the
purpose of distributing the Exchange Notes, (i) they cannot rely on the position
of the staff of the Securities and Exchange Commission enunciated in Exxon
Capital Holdings Corporation (available April 13, 1989) as interpreted in the
Securities and Exchange Commission's letter to Shearman & Sterling dated July 2,
1993. Morgan Stanley & Co., Inc. (available June 5, 1991) or similar no-action
letters and, in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with the resale transaction and (ii) failure to comply with such
requirements in such instance could result in the undersigned or any such other
person incurring liability under the Securities Act for which such persons are
not indemnified by the Company. If the undersigned or the person receiving the
Exchange Notes covered by this letter is an affiliate (as defined under Rule 405
of the Securities Act) of the Company, the undersigned represents to the Company
that the undesigned understands and acknowledges that such Exchange Notes may
not be offered for resale, resold or otherwise transferred by the undersigned or
such other person without registration under the Securities Act or an exemption
therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Notes or transfer ownership of such Notes on the account books
maintained by a book-entry facility. The undersigned further agrees that
acceptance of any tendered Notes by the Company and the issuance of Exchange
Notes in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreement and that the Company
shall have no further obligations or liabilities thereunder for the registration
of the Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer - Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Notes tendered hereby
and, in such event, the Notes not exchanged will be returned to the undersigned
at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Notes may be withdrawn at any time
prior to the Expiration Date.
4
<PAGE> 5
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered Notes, and any Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If Notes are surrendered by Holder(s) that have
completed either the box entitled "Special Registration Instructions" or the box
entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be guaranteed by an Eligible
Institution (defined in Instruction 2).
================================================================================
SPECIAL REGISTRATION
INSTRUCTIONS
To be completed ONLY if the Exchange Notes are to be issued in the
name of someone other than the undersigned.
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
--------------------------------------------------------------------------
Book-Entry Transfer Facility Account:
------------------------------------
--------------------------------------------------------------------------
Employee Identification or Social Security Number:
--------------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
================================================================================
================================================================================
SPECIAL DELIVERY
INSTRUCTIONS
To be completed ONLY if the Exchange Notes are to be sent to someone
other than the undersigned, or to the undersigned at an address other than
that shown under "Description of Notes Tendered Hereby."
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
--------------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
================================================================================
5
<PAGE> 6
(REGISTERED HOLDER(S) OF NOTES SIGN HERE)
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Notes or on a security position listing as the owner of the Notes or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(Please print or type):
Name and Capacity (full title):
------------------------------------------------
Address (including zip code):
--------------------------------------------------
Area Code and Telephone Number:
------------------------------------------------
Taxpayer Identification or Social Security No.:
--------------------------------
Dated:
-----------------------------
MEDALLION GUARANTEE
(IF REQUIRED -- SEE INSTRUCTION 4)
Authorized Signature:
----------------------------------------------------------
(SIGNATURE OF REPRESENTATIVE OF MEDALLION GUARANTOR)
Name and Title:
----------------------------------------------------------------
Name of Plan:
------------------------------------------------------------------
Area Code and Telephone Number:
------------------------------------------------
(PLEASE PRINT OR TYPE)
Dated:
-----------------------------
6
<PAGE> 7
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: NBD BANK
- ---------------------------------------------------------------------------------------------------------------------------
<S> <S> <C>
SUBSTITUTE PART I -- Please provide your TIN in the box at
FORM W-9 right and certify by signing and dating below. ------------------------------------------
Social Security Number
or
------------------------------------------
Employer Identification Number
(If awaiting TIN write "Applied For")
-------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART II -- For Payees exempt from backup withholding, see the enclosed Guidelines for
INTERNAL REVENUE SERVICE Certification of Taxpayer Identification Number on Substitute Form W-9 and complete as
instructed therein.
-------------------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or a
Taxpayer Identification Number has not been issued to me) and either (a) I have mailed
PAYER'S REQUEST FOR or delivered an application to receive a Taxpayer Identification Number to the
TAXPAYER IDENTIFICATION appropriate Internal Revenue Service ("IRS") or Social Security Administration office
NUMBER (TIN) or (b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a number,
and
(2) I am not subject to backup withholding either because (a) I am exempt from backup
withholding, (b) I have not been notified by the IRS that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the IRS that you are
no longer subject to backup withholding, do not cross out item (2). (Also see instructions
in the enclosed Guidelines.)
Signature ----------------------------------------------- Date-------------------, 1998
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates. All physically
delivered Notes or confirmations of any book-entry transfer to the Exchange
Agent's account at a book-entry transfer facility of Notes tendered by
book-entry transfer, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile thereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date (as defined
in the Prospectus). The method of delivery of this Letter of Transmittal, the
Notes and any other required documents is at the election and risk of the
Holder, and except as otherwise provided below, the delivery will be deemed made
only when actually received by the Exchange Agent. If such delivery is by mail,
it is suggested that registered mail with return receipt requested, properly
insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via
a facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. Guaranteed Delivery Procedures. Holders who wish to tender their Notes,
but whose Notes are not immediately available and thus cannot deliver their
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent (or comply with the procedures for book-entry transfer) on or prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the registration
number(s) of such Notes and the principal amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Depository) and any other documents required by the Letter
of Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Notes in proper form for
transfer (or a confirmation of book-entry transfer of such Notes into the
Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration
Date.
Any Holder who wishes to tender Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery relating to such Notes prior to the Expiration
Date. Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedures.
3. Partial Tenders; Withdrawals. If less than the entire principal amount
of Notes evidenced by a submitted certificate is tendered, the tendering Holder
should fill in the principal amount tendered in the column entitled "Principal
Amount Tendered" of the box entitled "Description of Notes Tendered Hereby." A
newly issued Note for the principal amount of Notes submitted but not tendered
will be sent to such Holder as soon as practicable after the Expiration Date.
All Notes delivered to the Exchange Agent will be deemed to have been tendered
in full unless otherwise indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date, after which tenders of Notes are irrevocable. To
be effective, a written telegraphic or facsimile transmission notice of
8
<PAGE> 9
withdrawal must be timely received by the Exchange Agent. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Notes to
be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn
(including the registration number(s) and principal amount of such Notes or, in
the case of Notes transferred by book-entry transfer, the name and number of the
account at the Depository to be credited), (iii) be signed by the Holder in the
same manner as the original signature on this Letter of Transmittal (including
any required Medallion Guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Notes register the transfer
of such Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange, will be returned to the Holder
thereof without cost to such Holder, or will be credited to an account
maintained with the Depository, as soon as practicable after withdrawal,
rejection of tender or termination of Exchange Offer.
4. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Medallion Guarantee. If this Letter of Transmittal is signed by
the registered Holder(s) of the Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates without
alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Depository, the signature must
correspond with the name as it appears on the security position listing as the
owner of the Notes.
If any of the Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Notes registered in different names is tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal as there are different registrations of Notes.
Signatures on this Letter of Transmittal or on a notice of withdrawal, as
the case may be, must be Medallion Guaranteed by an Eligible Institution unless
the Notes tendered hereby are tendered (i) by a registered Holder who has not
completed the box entitled "Special Registration Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the Notes) listed and tendered hereby, no endorsements of the tendered
Notes or separate written instruments of transfer or exchange are required. In
any other case, the registered Holder (or acting Holder) must either properly
endorse the Notes or transmit properly completed bond powers with this Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
Holder(s) appear(s) on the Notes, and, with respect to a participant in the
Depository whose name appears on a security position listing as the owner of
Notes, exactly as the name of the participant appears on such security position
listing), with the signature on the Notes or bond power guaranteed by an
Eligible Institution (except where the Notes are tendered for the account of an
Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.
5. Special Registration and Delivery Instructions. Tendering Holders
should indicate, in the applicable box, the name and address (or account at the
Depository) in which the Exchange Notes or substitute Notes for principal
amounts not tendered or not accepted for exchange are to be issued (or
deposited), if different from the names and addresses or accounts of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification number or social security number of the person named
must also be indicated and the tendering Holder should complete the applicable
box.
If no instructions are given, the Exchange Notes (and any Notes not
tendered or not accepted) will be issued in the name of and sent to the acting
Holder of the Notes or deposited at such Holder's account at the Depository.
9
<PAGE> 10
6. Transfer Taxes. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Notes to it or its order pursuant to
the Exchange Offer. If a transfer tax is imposed for any other reason other than
the transfer and exchange of Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from the
tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Notes listed in this Letter of Transmittal.
7. Waiver of Conditions. The Company reserves the right, in its reasonable
judgment, to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Prospectus.
8. Mutilated, Lost, Stolen or Destroyed Notes. Any Holder whose Notes have
been mutilated, lost, stolen or destroyed should contact the Exchange Agent at
the address indicated above for further instructions.
9. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number set forth above. In addition, all questions
relating to the Exchange Offer, as well as requests for assistance or additional
copies of the Prospectus and this Letter of Transmittal, may be directed to CMS
Energy Corporation, Fairlane Plaza South, Suite 1100, 330 Town Center Drive,
Dearborn, Michigan 48126, Attention: Office of the Secretary, telephone: (313)
436-9200.
10. Validity and Form. All questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered Notes and withdrawal of
tendered Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Notes not properly tendered or any Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right, in its reasonable judgment, to
waive any defects, irregularities or conditions of tender as to particular
Notes. The Company's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in this Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Notes must be cured within such time as the Company
shall determine. Although the Company intends to notify Holders of defects or
irregularities with respect to tenders of Notes, neither the Company, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned by
the Exchange Agent to the tendering Holder as soon as practicable following the
Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Holder with respect to tendered Notes may be subject to backup
withholding of 31%.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. In order for a foreign individual
to qualify as an exempt recipient, such individual must submit a statement,
signed under penalties of perjury, attesting to such individual's exempt status.
Forms of such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding
10
<PAGE> 11
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue
Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Notes tendered for exchange, the Holder is required to notify the
Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or dividends
or (iii) the Internal Revenue Service has notified such Holder that he or she is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the Notes.
If Notes are in more than one name or are not in the name of the actual Holder,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering Holder has not been issued a TIN and has applied for a number
or intends to apply for a number in the near future, the stockholder should
write "Applied For" in the space provided for in the TIN in Part I, and sign and
date the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of all payments of the purchase price to such stockholder until a
TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS)
OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
11
<PAGE> 1
EXHIBIT 99(B)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
============================================================ ============================================================
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF-- NUMBER OF--
- ------------------------------------------------------------ ------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Individual The individual 6. Sole proprietorship The owner(3)
2. Two or more individuals (joint The actual owner of 7. A valid trust, estate, or pension The legal entity(4)
account) the account or, if trust
combined funds, the 8. Corporate The corporation
first individual on 9. Association, club, religious, The organization
the account(1) charitable, educational, or other
3. Custodian account of a minor The minor(2) tax-exempt organization account
(Uniform Gift to Minors Act) 10. Partnership The partnership
4. a. The usual revocable savings The grantor- 11. A broker or registered nominee The broker or
trust account (grantor is also trustee(1) nominee
trustee) 12. Account with the Department of The public entity
b. So-called trust account that is The actual owner(1) Agriculture in the name of a
not a legal or valid trust public entity (such as a State or
under State law local government, school district,
5. Sole proprietorship The owner(3) or prison) that receives
agricultural program payments
============================================================ ============================================================
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter you business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), an individual
retirement plan or a custodial account under section 403(b)(7) if the
account satisfies the requirements of section 401(f)(2).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
- A foreign government or any political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A dealer in securities or commodities registered in the U.S. or a possession
of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one non-resident alien partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the number whether or not recipients are required
to file tax returns. Beginning January 1, 1993, payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain penalties
may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is a clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false state with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
EXHIBIT 99(C)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
7 3/8% UNSECURED NOTES DUE 2000, SERIES A
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
CMS ENERGY CORPORATION
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of CMS Energy Corporation (the "Company") made pursuant to the
Prospectus, dated , 1998 (the "Prospectus"), if certificates for the
outstanding 7 3/8% Unsecured Notes Due 2000, Series A of the Company (the
"Notes") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York
time, on the Expiration Date of the Exchange Offer. Such form may be delivered
or transmitted by telegram, telex, facsimile transmission, mail or hand delivery
to NBD Bank (the "Exchange Agent") as set forth below. In addition, in order to
utilize the guaranteed delivery procedure to tender Notes pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) as well as all tendered Notes in proper form for transfer (or
a confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Depository Trust Company) and all other documents required by the
Letter of Transmittal must also be received by the Exchange Agent within three
New York Stock Exchange trading days after the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
NBD BANK, EXCHANGE AGENT
By Mail, (Certified, Registered, Overnight or First Class) or Hand Delivery:
NBD Bank
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile:
(For Eligible Institutions Only)
(212) 240-8438
Telephone Number
(212) 240-8801
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer - Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Notes Tendered: (1)
$
- ------------------------------------------------------------
(1) Must be in denominations of principal amount of $1,000 and any integral
multiple thereof
Certificate Nos. (if available):
- --------------------------------------------------------------------------------
Total Principal Amount Represented by Certificate(s):
$
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
<TABLE>
<S> <C>
x
- ------------------------------------------------------------ ---------------------------------------
- ------------------------------------------------------------ ---------------------------------------
SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY DATE
</TABLE>
Area Code and Telephone Number:
- ---------------------------------------------------
2
<PAGE> 3
Must be signed by the holder(s) of Notes as their name(s) appear(s) on
certificates for Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es)
Name(s)
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Capacity:
---------------------------------------------------------------
---------------------------------------------------------------
Address(es):
---------------------------------------------------------------
---------------------------------------------------------------
Account Number:
---------------------------------------------------------------
================================================================================
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Notes being tendered hereby or confirmation of book-entry
transfer of such Notes into the Exchange Agent's account at The Depository Trust
Company, in proper form for transfer, together with any other documents required
by the Letter of Transmittal within three New York Stock Exchange trading days
after the Expiration Date.
================================================================================
Name of Firm
------------------------ Authorized Signature
-----------------
Address Name
----------------------------- ---------------------------------
(PLEASE TYPE OR PRINT)
- ------------------------------------- Title
---------------------------------
Area Code &
Telephone No. Date
------------------------ ---------------------------------
NOTE: DO NOT SEND CERTIFICATES OF NOTES WITH THIS FORM. CERTIFICATES OF NOTES
SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
================================================================================
3
