<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
<TABLE>
<S> <C>
CMS ENERGY CORPORATION CMS ENERGY TRUST II
(Exact name of registrant as specified in its (Exact name of registrant as specified in its
charter) charter)
MICHIGAN DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
38-2726431 TO BE APPLIED FOR
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
FAIRLANE PLAZA SOUTH, SUITE 1100 ALAN M. WRIGHT
330 TOWN CENTER DRIVE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
DEARBORN, MICHIGAN 48126 CMS ENERGY CORPORATION
(313) 436-9200 FAIRLANE PLAZA SOUTH
(Address, including zip code, and telephone number, 330 TOWN CENTER DRIVE
including, area code, of registrant's principal DEARBORN, MICHIGAN 48126
offices) (313) 436-9200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
------------------------------
It is respectfully requested that the Commission send copies of all notices,
orders and communications to:
MICHAEL D. VAN HEMERT, ESQ.
ASSISTANT GENERAL COUNSEL
CMS ENERGY CORPORATION
FAIRLANE PLAZA SOUTH
330 TOWN CENTER DRIVE, SUITE 1100
DEARBORN, MICHIGAN 48126
(313) 436-9602
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE
OFFERING
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1)(2)(3) PRICE(1)(2)(3) REGISTRATION
FEE(1)(2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share, of CMS Energy
Corporation...............................................
Class G Common Stock, no par value, of CMS Energy
Corporation...............................................
Subordinated Debentures of CMS Energy Corporation(4)........
Trust Preferred Securities of CMS Energy Trust II(5)........
Guarantee of CMS Energy Corporation with respect to Trust
Preferred Securities of CMS Energy Trust II(6)............
Stock Purchase Contracts of CMS Energy Corporation(7).......
Stock Purchase Units of CMS Energy Corporation(7)...........
Total....................................................... $200,000,000 100% $200,000,000 $59,000
=============================================================================================================================
</TABLE>
(1) There are being registered hereunder such presently indeterminate principal
amount or number of shares of CMS Energy Corporation Common Stock, CMS
Energy Class G Common Stock, Subordinated Debentures, Stock Purchase
Contracts and Stock Purchase Units, as well as Trust Preferred Securities of
CMS Energy Trust II, as may from time to time be issued at indeterminate
prices, plus additional shares of CMS Energy Corporation Common Stock into
which such Subordinated Debentures or Trust Preferred Securities may be
converted.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(o) under the Securities Act of 1933 which permits the
registration fee to be calculated on the basis of the maximum offering price
of all the securities listed, the table does not specify by each class
information as to the amount to be registered, proposed maximum offering
price per unit or proposed maximum aggregate offering price.
(3) Exclusive of accrued interest and distributions, if any.
(4) The Subordinated Debentures may be purchased by, and constitute assets of,
CMS Energy Trust II, and may later be distributed under certain
circumstances to holders of Trust Preferred Securities. Additionally, Common
Stock may be issued upon conversion of any convertible Subordinated
Debentures. In either case, no additional consideration will be received.
(5) The Trust Preferred Securities may be convertible into the Subordinated
Debentures, which may be convertible into shares of CMS Energy Corporation
Common Stock. In addition, the Trust Preferred Securities may be directly
convertible into shares of CMS Energy Corporation Common Stock. Shares of
CMS Energy Corporation Common Stock issued upon conversion of the
Subordinated Debentures or Trust Preferred Securities will be issued without
the payment of additional consideration.
(6) The Registration Statement is deemed to include the obligations of CMS
Energy Corporation under the Guarantee (as defined herein) and certain
backup undertakings under: (i) the Subordinated Debt Indenture (as defined
herein) pursuant to which the Subordinated Debentures will be issued; (ii)
the Subordinated Debentures; and (iii) the Declaration of Trust of CMS
Energy Trust II, including CMS Energy Corporation's obligations under such
indenture to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust Preferred Securities and the Common
Securities of CMS Energy Trust II), which taken together provide a full and
unconditional guarantee of amounts due on the Trust Preferred Securities. No
separate consideration will be received for the Guarantee and such backup
undertakings. The Guarantee is not traded separately.
(7) Includes a presently indeterminate number of shares of Common Stock to be
issuable by CMS Energy Corporation upon settlement of the Stock Purchase
Contracts or Stock Purchase Units issued by CMS Energy Corporation.
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
SUBJECT TO COMPLETION, DATED , 1998
CMS ENERGY CORPORATION
CMS ENERGY COMMON STOCK
CLASS G COMMON STOCK
SUBORDINATED DEBENTURES
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
AND
CMS ENERGY TRUST II
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY CMS ENERGY CORPORATION
------------------------
CMS Energy Corporation, a Michigan corporation ("CMS Energy"), may offer,
from time to time, (i) shares of Common Stock, par value $.01 per share ("CMS
Energy Common Stock"), (ii) shares of Class G Common Stock, no par value ("Class
G Common Stock"), (iii) unsecured subordinated debt securities (the
"Subordinated Debentures") consisting of debentures, convertible debentures,
notes and other unsecured evidence of indebtedness, (iv) Stock Purchase
Contracts ("Stock Purchase Contracts") to purchase CMS Energy Common Stock, and
(v) Stock Purchase Units ("Stock Purchase Units"), each representing ownership
of a Stock Purchase Contract and Subordinated Debentures or Trust Preferred
Securities or debt obligations of third parties, including U.S. Treasury
Securities, securing the holder's obligation to purchase the CMS Energy Common
Stock under the Stock Purchase Contract, or any combination of the foregoing, in
each case in amounts, at prices and on terms to be determined at or prior to the
time of sale. See "Description of Securities."
CMS Energy Trust II (the "Trust"), a statutory business trust formed under
the laws of the State of Delaware, may also offer, from time to time, trust
preferred securities ("Trust Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Trust in amounts, at prices
and on terms to be determined at or prior to the time of sale. The undivided
common beneficial interests in the Trust will be owned by CMS Energy. The
proceeds from the offering of the Trust Preferred Securities and the sale of the
common securities may be contributed by the Trust to purchase from CMS Energy
Subordinated Debentures in an aggregate principal amount equal to the aggregate
liquidation preference of the Trust Preferred Securities, bearing interest at an
annual rate equal to the annual distribution rate of such Trust Preferred
Securities and having certain redemption terms which correspond to the
redemption terms for the Trust Preferred Securities. The Subordinated Debentures
will rank subordinate in right of payment to all of CMS Energy's Senior
Indebtedness (as defined herein). Distributions on the Trust Preferred
Securities may not be made unless the Trust receives corresponding interest
payments on the Subordinated Debentures from CMS Energy. CMS Energy will
irrevocably guarantee, on a subordinated basis and to the extent set forth
therein, with respect to the Trust Preferred Securities, if any, the payment of
distributions, the redemption price, including all accrued or deferred and
unpaid distributions, and payment on liquidation, but only to the extent of
funds on hand. The guarantee will be unsecured and will be subordinate to all
Senior Indebtedness of CMS Energy. Upon the occurrence of certain events
(subject to the conditions to be described in an accompanying Prospectus
Supplement), the Trust may be liquidated and the holders of the Trust Preferred
Securities could receive Subordinated Debentures in lieu of any liquidating cash
distribution.
Specific terms of the CMS Energy Common Stock, Class G Common Stock,
Subordinated Debentures, Stock Purchase Contracts, Stock Purchase Units, and
Trust Preferred Securities in respect of which this Prospectus is being
delivered (the "Offered Securities"), will be set forth in an accompanying
Prospectus Supplement or Supplements, together with the terms of the offering of
the Offered Securities, the initial price thereof and the net proceeds from the
sale thereof. The Prospectus Supplement will set forth with regard to the
particular Offered Securities, without limitation, the following: (i) in the
case of Subordinated Debentures, the designation, aggregate principal amount,
denomination, maturity, premium, if any, any exchange, conversion, redemption or
sinking fund provisions, interest rate (which may be fixed or variable), the
time or method of calculating interest payments, the right of CMS Energy, if
any, to defer payment or interest on the Subordinated Debentures and the maximum
length of such deferral, put options, if any, public offering price, ranking,
any listing on a securities exchange and other specific terms of the offering;
(ii) in the case of CMS Energy Common Stock or Class G Common Stock, the
designation, number of shares, public offering price and other specific terms of
the Offering, from the sale thereof; (iii) in the case of Trust Preferred
Securities, the designation, number of shares, liquidation preference per
security, initial public offering price, any listing on a securities exchange,
dividend rate (or method of calculation thereof), dates on which dividends shall
be payable and dates from which dividends shall accrue, any voting rights, any
redemption, exchange, conversion or sinking fund provisions and any other
rights, preferences, privileges, limitations or restrictions relating to a
specific series or the Trust Preferred Securities including a description of the
Guarantee (as defined herein), as the case may be; and (iv) in the case of Stock
Purchase Units, the specific terms of the Stock Purchase Contracts and any
Subordinated Debentures, Trust Preferred Securities, or debt obligations of
third parties securing the holders obligation to purchase CMS Energy Common
Stock and Class G Common Stock under the Stock Purchase Contracts, and the terms
of the offering and sale thereof. The offering price to the public of the
Offered Securities will be limited to $200,000,000 in the aggregate.
The outstanding CMS Energy Common Stock and Class G Common Stock is traded
on the New York Stock Exchange, Inc. ("NYSE"). CMS Energy Common Stock and Class
G Common Stock sold pursuant to a Prospectus Supplement accompanying this
Prospectus will also be listed for trading on the NYSE, subject to official
notice of issuance.
------------------------
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.
------------------------
CMS Energy intends to sell the Offered Securities through underwriters,
dealers, agents or directly to a limited number of purchasers. The names of, and
the Offered Securities to be purchased by or through, underwriters, dealers or
agents, if any, the compensation of such persons and other special terms in
connection with the offering and sale of such Offered Securities will be set
forth in the related Prospectus Supplement. See "Plan of Distribution" herein.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
------------------------
The date of this Prospectus is , 1998
<PAGE> 3
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND ANY INFORMATION
OR REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY CMS ENERGY OR ANY UNDERWRITER, DEALER OR AGENT.
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
TO WHICH THEY RELATE OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED OR INCORPORATED HEREIN OR THEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
AVAILABLE INFORMATION
CMS Energy is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Information, as of particular dates, concerning
CMS Energy's directors and officers, their remuneration, the principal holders
of CMS Energy's securities and any material interest of such persons in
transactions with CMS Energy is disclosed in proxy statements distributed to
shareholders of CMS Energy and filed with the Commission. Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at 500 West Madison Street, Chicago, Illinois 60661 and at Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such materials can
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a Web site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding CMS Energy. The outstanding shares of
CMS Energy Common Stock and Class G Common Stock are listed on the NYSE and
reports, proxy statements and other information concerning CMS Energy may also
be inspected and copied at the offices of such exchange at 20 Broad Street, New
York, New York 10005.
No separate financial statements of the Trust have been included herein.
CMS Energy and the Trust do not consider that such financial statements would be
material to holders of Trust Preferred Securities because the Trust is a newly
organized special purposes entity, has no operating history and no independent
operations and is not engaged in, and does not propose to engage in, any
activity other than as described under "CMS Energy Trust II". Further, CMS
Energy believes that financial statements of the Trust are not material to the
holders of the Trust Preferred Securities since CMS Energy will guarantee the
Trust Preferred Securities such that the holders of the Trust Preferred
Securities, with respect to the payment of distributions and amounts upon
liquidation, dissolution and winding-up, are at least in the same position
vis-a-vis the assets of CMS Energy as a preferred stockholder of CMS Energy. CMS
Energy beneficially owns directly or indirectly all of the undivided beneficial
interests in the assets of the Trust (other than the beneficial interests
represented by the Trust Preferred Securities). See "CMS Energy Trust II,"
"Description of Securities -- Trust Preferred Securities" and "Description of
Securities -- The Guarantee." In future filings under the Exchange Act, an
audited footnote to CMS Energy's annual financial statements will state that the
Trust is wholly-owned by CMS Energy, that the sole assets of the Trust are the
Subordinated Debentures of CMS Energy having a specified aggregate principal
amount, and, considered together, the back-up undertakings, including the
Guarantee, constitute a full and unconditional guarantee by CMS Energy of the
Trust's obligations under the Trust Preferred Securities issued by the Trust.
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by CMS Energy (File No. 1-9513) with the
Commission pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus and shall be deemed to be a part hereof: (i) CMS Energy's Annual
Report on Form 10-K for the year ended December 31, 1997; and (ii) CMS Energy's
Registration Statement on Form 8-B/A dated November 21, 1996.
All documents subsequently filed by CMS Energy pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act and prior to the termination of the
offering made by this Prospectus (the "Offering") shall be deemed to be
incorporated by reference herein and shall be deemed to be a part hereof from
the date of filing of such documents (such documents, and the documents
enumerated above, being hereinafter referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed Incorporated
Document modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
CMS Energy undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, upon
the written or oral request of any such person, a copy of any and all of the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to CMS Energy at its principal
executive offices located at Fairlane Plaza South, Suite 1100, 330 Town Center
Drive, Dearborn, Michigan 48126, Attention: Office of the Secretary, telephone:
(313) 436-9200.
Certain information contained in this Prospectus summarizes, is based upon,
or refers to information and financial statements contained in one or more
Incorporated Documents; accordingly, such information contained herein is
qualified in its entirety by reference to such documents and should be read in
conjunction therewith.
3
<PAGE> 5
CMS ENERGY CORPORATION
CMS Energy, incorporated in 1987, is the parent holding company of
Consumers Energy Company ("Consumers") and CMS Enterprises Company
("Enterprises"). Consumers, a combination electric and gas utility company
serving in all 68 counties of Michigan's Lower Peninsula, is the largest
subsidiary of CMS Energy. Consumers' customer base includes a mix of
residential, commercial and diversified industrial customers, the largest
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) storage, transmission and
processing of natural gas; (iv) energy marketing, services and trading; and (v)
international energy distribution.
CMS Energy's 1997 consolidated operating revenue was $4,787 million. This
consolidated operating revenue was derived from its electric utility operations
(approximately 53% or $2,515 million), its gas utility operations (approximately
25% or $1,204 million), marketing, services and trading (approximately 14% or
$692 million), independent power production and other non-utility activities
(approximately 4% or $181 million), natural gas transmission, storage and
processing (approximately 2% or $102 million), and oil and gas exploration and
production activities (approximately 2% or $93 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 independent power production, gas transmission and storage,
marketing services and trading, and international energy distribution revenue
for 1997 was $913 million.
Consumers is a public utility serving almost six million of Michigan's nine
and a half million residents 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' 1997 consolidated operating
revenue of $3,769 million was derived approximately 67% ($2,515 million) from
its electric utility business, approximately 32% ($1,204 million) from its gas
utility business and approximately 1% ($50 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 (the "MPSC") and
the Federal Energy Regulatory Commission.
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 or securities.
The foregoing information concerning CMS Energy and it subsidiaries does
not purport to be comprehensive. For additional information concerning CMS
Energy and its subsidiaries' business and affairs, including their capital
requirements and external financing plans, pending legal and regulatory
proceedings and descriptions of certain laws and regulations to which those
companies are subject, prospective purchasers should refer to the Incorporated
Documents.
4
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CMS ENERGY TRUST II
CMS Energy Trust II is a statutory business trust formed under the Delaware
Business Trust Act (the "Trust Act") pursuant to: (i) a trust agreement executed
by CMS Energy, as sponsor, and the trustees of the Trust (the "CMS Trustees");
and (ii) the filing of a certificate of trust with the Secretary of State of the
State of Delaware. The trust agreement will be amended and restated in its
entirety (as so amended and restated, the "Trust Agreement") and will be
qualified as an indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). CMS Energy will directly or indirectly acquire common
securities of the Trust in an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Trust exists for the
exclusive purposes of: (i) issuing the Trust Preferred Securities and common
securities (the "Common Securities" and, together with the Trust Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of the Trust; (ii) investing the gross proceeds of the Trust
Securities in the Subordinated Debentures; and (iii) engaging in only those
other activities necessary or incidental thereto. The Trust has a term of
approximately 30 years, but may terminate earlier as provided in the Trust
Agreement.
Pursuant to the Trust Agreement, the number of CMS Trustees will initially
be three. Two of the CMS Trustees (the "Administrative Trustees") will be
persons who are employees or officers of or who are affiliated with CMS Energy.
The third trustee will be a financial institution that is unaffiliated with CMS
Energy, which trustee will serve as property trustee under the Trust Agreement
and as indenture trustee for the purposes of compliance with the provisions of
the Trust Indenture Act (the "Property Trustee"). Initially, The Bank of New
York, a New York banking corporation, will be the Property Trustee until removed
or replaced by the holder of the Common Securities. For the purpose of
compliance with the provisions of the Trust Indenture Act, The Bank of New York
will also act as trustee (the "Guarantee Trustee") under the Guarantee and The
Bank of New York (Delaware) will act as the Delaware Trustee for the purposes of
the Trust Act (as defined herein), until removed or replaced by the holder of
the Common Securities. See "Description of Securities -- The Guarantee."
The Property Trustee will hold title to the Subordinated Debentures for the
benefit of the holders of the Trust Securities and the Property Trustee will
have the power to exercise all rights, powers and privileges under the
Subordinated Debt Indenture (as defined herein) as the holder of the
Subordinated Debentures. In addition, the Property Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Subordinated
Debentures for the benefit of the holders of the Trust Securities. The Property
Trustee will make payments of distributions and payments on liquidation,
redemption and otherwise to the holders of the Trust Securities out of funds
from the Property Account. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Trust Preferred Securities. CMS Energy, as the
direct or indirect holder of all the Common Securities, will have the right to
appoint, remove or replace any CMS Trustee and to increase or decrease the
number of CMS Trustees; provided, that the number of CMS Trustees shall be at
least three, a majority of which shall be Administrative Trustees. CMS Energy
will pay all fees and expenses related to the Trust and the offering of the
Trust Securities.
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Trust Agreement, the Trust Act and the Trust Indenture Act.
The trustee in the State of Delaware is The Bank of New York (Delaware),
White Clay Center, Route 273, Newark, Delaware 19711. The principal place of
business of the Trust shall be c/o CMS Energy Corporation, Fairlane Plaza South,
Suite 1100, 330 Town Center Drive, Dearborn, Michigan 48126-2712.
5
<PAGE> 7
USE OF PROCEEDS
The proceeds received by the Trust from the sale of its Trust Preferred
Securities or the Common Securities will be invested in the Subordinated
Debentures. As will be more specifically set forth in the applicable Prospectus
Supplement, CMS Energy will use such borrowed amounts and the net proceeds from
the sale of CMS Energy Common Stock, Class G Common Stock, Stock Purchase
Contracts, Stock Purchase Units and any Subordinated Debentures offered hereby
for its general corporate purposes, including capital expenditures, investment
in subsidiaries, working capital and repayment of debt.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratios of earnings to fixed charges and the ratios of earnings to fixed
charges and preferred stock dividends for each of the years ended December 31,
1993 through 1997, are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 1.88 2.01 1.94 2.07 1.88
Ratio of earnings to fixed charges and preferred stock
dividends................................................. 1.67 1.79 1.77 1.87 1.81
</TABLE>
For the purpose of computing such ratios, earnings represent net income
before income taxes, net interest charges and the estimated interest portion of
lease rentals.
6
<PAGE> 8
DESCRIPTION OF SECURITIES
CAPITAL STOCK
The following summary of certain rights of the holders of CMS Energy
capital stock does not purport to be complete and is qualified in its entirety
by express reference to the Restated Articles of Incorporation of CMS Energy
(the "Articles of Incorporation") and the By-Laws of CMS Energy, copies of which
are filed as exhibits to the Registration Statement of which this Prospectus is
a part, and by express reference to the Registration Statement on Form 8-B/A,
which is incorporated into this Prospectus by reference. See "Incorporation of
Certain Documents by Reference" herein.
The authorized capital stock of CMS Energy consists of 250 million shares
of CMS Energy Common Stock, 60 million shares of Class G Common, and 10 million
shares of CMS Energy Preferred Stock, $.01 par value ("Preferred Stock"). The
CMS Energy Common Stock and the Class G Common Stock are sometimes together
referred to herein as the "Common Stock."
COMMON STOCK
The Class G Common Stock is intended to reflect the separate performance of
the gas distribution, storage and transportation businesses conducted by
Consumers and Michigan Gas Storage, a subsidiary of Consumers (such businesses,
collectively, have been attributed to the "Consumers Gas Group"). The CMS Energy
Common Stock is intended to reflect the performance of all businesses of CMS
Energy and its subsidiaries, including the businesses of the Consumers Gas
Group, except for the interest in the Consumers Gas Group attributable to the
outstanding shares of Class G Common Stock.
DIVIDEND RIGHTS AND POLICY; RESTRICTIONS ON DIVIDENDS
Dividends on the CMS Energy Common Stock are paid at the discretion of the
Board of Directors based primarily upon the earnings and financial condition of
CMS Energy, including the Consumers Gas Group, except for the interest in the
Consumers Gas Group attributable to the outstanding shares of the Class G Common
Stock, and other factors. Dividends are payable out of the assets of CMS Energy
legally available therefore, including the Available Class G Dividend Amount (as
defined in the Articles of Incorporation).
Dividends on the Class G Common Stock are paid at the discretion of the
Board of Directors based primarily upon the earnings and financial condition of
the Consumers Gas Group, and, to a lesser extent, CMS Energy as a whole.
Dividends are payable out of the lesser of (i) the assets of CMS Energy legally
available therefore and (ii) the Available Class G Dividend Amount. Although the
Available Class G Dividend Amount is intended to reflect the amount available
for dividends to holders of outstanding Class G Common Stock, it is also legally
available for dividends to holders of CMS Energy Common Stock.
CMS Energy, in the sole discretion of its Board of Directors could pay
dividends exclusively to the holders of CMS Energy Common Stock, exclusively to
the holders of Class G Common Stock, or to the holders of both of such classes
in equal or unequal amounts.
CMS Energy is a holding company and its assets consist primarily of
investments in its subsidiaries. As a holding company with no significant
operations of its own, the principal sources of its funds are dependent
primarily upon the earnings of its subsidiaries (in particular, Consumers),
borrowings and sales of equity. CMS Energy's ability to pay dividends, including
dividends on CMS Energy Common Stock and Class G Common Stock, 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. Accordingly, the
ability of CMS Energy to pay dividends on its capital stock will depend on the
earnings, financial requirements, contractual restrictions of the subsidiaries
of CMS Energy, in particular, Consumers, and other factors. CMS Energy's
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts on the capital stock of CMS Energy
or to make any funds available therefor, whether by dividends, loans or other
payments
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Dividends on capital stock of CMS Energy are limited by Michigan law to
legally available assets of CMS Energy. Distributions on Common Stock may be
subject to the rights of the holders, if any, of the CMS Energy Preferred Stock.
There are restrictions on CMS Energy's ability to pay dividends contained
in certain revolving credit and term loan agreements, the Indenture dated as of
September 15, 1992, as amended and supplemented, between CMS Energy and NBD
Bank, as Trustee, and the Indenture dated as of January 15, 1994, as amended and
supplemented, between CMS Energy and The Chase Manhattan Bank, as Trustee. A
discussion of specific restrictions on CMS Energy's ability to pay dividends
will be set forth in an accompanying Prospectus Supplement pursuant to which
convertible Subordinated Debentures, convertible Trust Preferred Securities,
Stock Purchase Contracts, Stock Purchase Units, CMS Energy Common Stock or Class
G Common Stock are offered.
VOTING RIGHTS
The holders of CMS Energy Common Stock vote with the holders of Class G
Common Stock as a single class, except on matters which would be required by law
or the Articles of Incorporation to be voted on by class. Each holder of Common
Stock is entitled to one vote for each share of Common Stock held by such holder
on each matter voted upon by the shareholders. Such right to vote is not
cumulative. A majority of the votes cast by the holders of shares entitled to
vote thereon is sufficient for the adoption of any question presented, except
that certain provisions of the Articles of Incorporation relating to special
shareholder meetings, the removal, indemnification and liability of the Board of
Directors and the requirements for amending these provisions may not be amended,
altered, changed or repealed unless such amendment, alteration, change or repeal
is approved by the affirmative vote of at least 75% of the outstanding shares
entitled to vote thereon.
Under Michigan law, the approval of the holders of a majority of the
outstanding shares of a class of Common Stock, voting as a separate class, would
be necessary for authorizing, effecting or validating the merger or
consolidation of CMS Energy into or with any other corporation if such merger or
consolidation would adversely affect the powers or special rights of such class
of stock, and to authorize any amendment to the Articles of Incorporation that
would increase or decrease the aggregate number of authorized shares of such
class (except pursuant to Section 303 of the Michigan Business Corporation Act,
which, under certain circumstances, would enable the Board of Directors to
increase the number of authorized shares to satisfy the exchange features of the
Common Stock described below) or alter or change the powers, preferences or
special rights of the shares of such class so as to affect them adversely. The
Articles of Incorporation also provide that unless the vote or consent of a
greater number of shares shall then be required by law, the vote or consent of
the holders of a majority of all the shares of either class of Common Stock then
outstanding, voting as a separate class, will be necessary for authorizing,
effecting or validating the merger or consolidation of CMS Energy into or with
any other entity if such merger or consolidation would adversely affect the
powers or special rights of such class of Common Stock, either directly by
amendment to the Articles of Incorporation or indirectly by requiring the
holders of such class to accept or retain, in such merger or consolidation,
anything other than (i) shares of such class or (ii) shares of the surviving or
resulting corporation, having, in either case, powers and special rights
identical to those of such class prior to such merger or consolidation. The
effect of these provisions may be to permit the holders of a majority of the
outstanding shares of either class of Common Stock to block any such merger or
amendment which would adversely affect the powers or special rights of holders
of such class of Common Stock.
PREEMPTIVE RIGHTS
The Articles of Incorporation provide that holders of Common Stock will
have no preemptive rights to subscribe for or purchase any additional shares of
the capital stock of CMS Energy of any class now or hereafter authorized, or
Preferred Stock, bonds, debentures, or other obligations or rights or options
convertible into or exchangeable for or entitling the holder or owner to
subscribe for or purchase any shares of capital stock, or any rights to exchange
shares issued for shares to be issued.
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LIQUIDATION RIGHTS
In the event of the dissolution, liquidation or winding up of CMS Energy,
whether voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of CMS Energy and after there shall have been paid
or set apart for the holders of Preferred Stock the full preferential amounts
(including any accumulated and unpaid dividends) to which they are entitled, the
holders of CMS Energy Common Stock and Class G Common Stock shall be entitled to
receive, on a per share basis, the same portion of all of the assets of CMS
Energy remaining for distribution to the holders of Common Stock, regardless of
whether or not any of such assets were attributed to the Consumers Gas Group.
Neither the merger or consolidation of CMS Energy into or with any other
corporation, nor the merger or consolidation of any other corporation into or
with CMS Energy nor any sale, transfer or lease of all or any part of the assets
of CMS Energy, shall be deemed to be a dissolution, liquidation or winding up
for the purposes of this provision.
Because CMS Energy has subsidiaries which have debt obligations and other
liabilities of their own, CMS Energy's rights and the rights of its creditors
and its stockholders to participate in the distribution of assets of any
subsidiary upon the latter's liquidation or recapitalization will be subject to
prior claims of the subsidiary's creditors, except to the extent that CMS Energy
may itself be a creditor with recognized claims against the subsidiary.
SUBDIVISION OR COMBINATION
If CMS Energy subdivides (by stock split, stock dividend or otherwise) or
combines (by reverse stock split or otherwise) the outstanding shares of either
Class G Common Stock or CMS Energy Common Stock, the voting and liquidation
rights of shares of CMS Energy Common Stock relative to Class G Common Stock
will be appropriately adjusted so as to avoid any dilution in aggregate voting
or liquidation rights of either class of Common Stock. For example, in case CMS
Energy were to effect a two-for-one split of Class G Common Stock, the per share
liquidation rights of CMS Energy Common Stock would be multiplied by two in
order to avoid dilution in the aggregate liquidation rights of holders of CMS
Energy Common Stock and each post-split share of Class G Common Stock would have
one-half of a vote on matters voted upon by the Shareholders.
EXCHANGES
The Articles of Incorporation do not provide for either the mandatory or
optional exchange or redemption of CMS Energy Common Stock but do provide that
Class G Common Stock may be exchanged for CMS Energy Common Stock as described
in the Registration Statement on Form 8-B/A incorporated by reference herein.
CMS Energy cannot predict the impact of the potential for such exchanges on the
market prices of CMS Energy Common Stock.
CMS Energy may exchange the Class G Common Stock for a proportionate number
of shares of a subsidiary that holds all the assets and liabilities attributed
to the Consumers Gas Group, and no other assets and liabilities. If CMS Energy
transfers all or substantially all of the properties and assets attributed to
the Consumers Gas Group, CMS Energy is required, subject to certain exceptions
and conditions, to exchange each outstanding share of Class G Common Stock for a
number of shares of CMS Energy Common Stock having a Fair Market Value (defined
in the Articles of Incorporation) equal to 110% of the Fair Market Value of one
share of Class G Common Stock.
CMS Energy may, in the sole discretion of the Board of Directors, at any
time, exchange each outstanding share of Class G Common Stock for a number of
shares of CMS Energy Common Stock having a Fair Market Value equal to 115% of
the Fair Market Value of one share of Class G Common Stock.
CMS Energy cannot predict the impact of the potential for such exchanges on
the market prices of the CMS Energy Common Stock.
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TRANSFER AGENT AND REGISTRAR
CMS Energy Common Stock and Class G Common Stock are transferable at
Consumers Energy Company, 212 W. Michigan Avenue, Jackson, MI 49201. CMS Energy
is the registrar and transfer agent for CMS Energy Common Stock and Class G
Common Stock.
PREFERRED STOCK
The authorized Preferred Stock may be issued without the approval of the
holders of Common Stock in one or more series, from time to time, with each such
series to have such designation, powers, preferences and relative,
participating, optional or other special rights, voting rights, if any, and
qualifications, limitations or restrictions thereof, as shall be stated in a
resolution providing for the issue of any such series adopted by CMS Energy's
Board of Directors. The Articles of Incorporation provide that holders of
Preferred Stock will not have any preemptive rights to subscribe for or purchase
any additional shares of the capital stock of CMS Energy of any class now or
hereafter authorized, or any Preferred Stock, bonds, debentures or other
obligations or rights or options convertible into or exchangeable for or
entitling the holder or owner to subscribe for or purchase any shares of capital
stock. The future issuance of Preferred Stock may have the effect of delaying,
deterring or preventing a change in control of CMS Energy.
PRIMARY SOURCE OF FUNDS OF CMS ENERGY; RESTRICTIONS ON SOURCES OF DIVIDENDS
The ability of CMS Energy to pay (i) dividends on its capital stock and
(ii) its indebtedness, including the Subordinated Debentures, depends and will
depend substantially upon timely receipt of sufficient dividends or other
distributions from its subsidiaries, in particular Consumers. Consumers' ability
to pay dividends on its common stock depends upon its revenues, earnings and
other factors. Consumers' revenues and earnings will depend substantially upon
rates authorized by the MPSC.
Consumers' ability to pay dividends is restricted by its First Mortgage
Bond Indenture (the "Mortgage Indenture") and its Articles of Incorporation
("Articles"). The Mortgage Indenture provides that Consumers can only pay
dividends on its common stock out of retained earnings accumulated subsequent to
September 30, 1945, provided that upon such payment, there shall remain of such
retained earnings an amount equivalent to any deficiency in maintenance and
replacement expenditures as compared with maintenance and replacement
requirements since December 31, 1945. Because of restrictions in its Articles
and Mortgage Indenture, Consumers was prohibited from paying dividends on its
common stock from June 1991 to December 31, 1992. However, as of December 31,
1992, Consumers effected a quasi-reorganization in which Consumers' accumulated
deficit of $574 million was eliminated against other paid-in capital. With the
accumulated deficit eliminated, Consumers satisfied the requirements under its
Mortgage Indenture and resumed paying dividends on its common stock in May 1993.
Consumers' Articles also provide two restrictions on its payment of
dividends on its common stock. First, prior to the payment of any common stock
dividend, Consumers must reserve retained earnings after giving effect to such
dividend payment of at least (i) $7.50 per share on all then outstanding shares
of its preferred stock, (ii) in respect to its Class A Preferred Stock, 7.5% of
the aggregate amount established by its Board of Directors to be payable on the
shares of each series thereof in the event of involuntary liquidation of
Consumers, and (iii) $7.50 per share on all then outstanding shares of all other
stock over which its preferred stock and Class A Preferred Stock do not have
preference as to the payment of dividends and as to assets. Second, dividend
payments during the 12 month period ending with the month the proposed payment
is to be paid are limited to: (i) 50% of net income available for the payment of
dividends during the base period (hereinafter defined) if the ratio of common
stock and surplus to total capitalization and surplus for 12 consecutive
calendar months within the 14 calendar months immediately preceding the proposed
dividend payment (the "base period"), adjusted to reflect the proposed dividend,
is less than 20%; and (ii) 75% of net income available for the payment of
dividends during the base period if the ratio of common stock and surplus to
total capitalization and surplus for the base period, adjusted to reflect the
proposed dividend, is at least 20% but less than 25%.
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In addition, Consumers' Indenture dated January 1, 1996, between Consumers
and Bank of New York as Trustee ("Indenture"), and certain Preferred Securities
Guarantees by Consumers dated January 23, 1996 and September 11, 1997
(collectively the "Consumers Preferred Securities Guarantees"), in connection
with which the 8.36% Trust Preferred Securities of Consumers Power Company
Financing 1 and the 8.20% Trust Securities of Consumers Energy Financing II
(collectively the "Consumers Trust Preferred Securities") were issued, provide
that Consumers shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase or make a liquidation payment with respect
to, any of its capital stock if: (i) there shall have occurred any event that
would constitute an event of default under the Indenture or the trust agreements
pursuant to which the Consumers Trust Preferred Securities were issued, (ii) a
default with respect to its payment of any obligations under the Consumers
Preferred Securities Guarantees or certain Consumers common stock guarantees, or
(iii) it gives notice of its election to extend the interest payment period on
the subordinated notes issued under the Indenture, at any time for up to 20
consecutive quarters provided, however, Consumers may declare and pay stock
dividends where the dividend stock is the same stock as that on which the
dividend is being paid.
Consumers' Articles also prohibit the payment of cash dividends on its
common stock if Consumers is in arrears on preferred stock dividend payments.
In addition, Michigan law prohibits payment of a dividend if, after giving
it effect, Consumers would not be able to pay its debts as they become due in
the usual course of business, or its total assets would be less than the sum of
its total liabilities plus, unless the articles permit otherwise, the amount
that would be needed, if Consumers were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution. Currently, it is Consumers' policy to pay annual dividends equal
to 80% of its annual consolidated net income. Consumers' Board of Directors
reserves the right to change this policy at any time.
SUBORDINATED DEBENTURES
The Subordinated Debentures will be issued under an Indenture (the
"Subordinated Debt Indenture"), between CMS Energy and The Bank of New York as
Trustee (the "Subordinated Debt Trustee "). The descriptions of the provisions
of the Subordinated Debentures and the Subordinated Debt Indenture contained
herein are brief summaries of such provisions and do not purport to be complete.
The form of the Subordinated Debt Indenture is filed as an exhibit to the
Registration Statement of which this Prospectus is a part, and reference is made
thereto for the respective definitive provisions of such Indenture. The
descriptions herein are qualified in their entirety by such reference. Certain
capitalized terms used herein shall have the meanings respectively set forth in
the Subordinated Debt Indenture. Section references below are references to
sections of the Subordinated Debt Indenture.
GENERAL
CMS Energy will offer under this Prospectus unsecured Subordinated
Debentures. The Subordinated Debt Indenture does not limit the aggregate
principal amount of Subordinated Debentures which may be issued thereunder.
Subordinated Debentures may be issued under the Subordinated Debt Indenture from
time to time in one or more series. The Subordinated Debentures shall mature on
a date not less than nine months nor more than 40 years after the date of
issuance. (Section 2.3) Capitalized terms used in this section "Subordinated
Debentures" and not otherwise specifically defined in this Prospectus shall have
the meanings respectively set forth in the Subordinated Debt Indenture. The
terms of any Subordinated Debentures may or may not restrict the issuance by CMS
Energy or its subsidiaries of additional indebtedness which is secured,
unsecured, senior, pari passu or subordinated to such Subordinated Debentures.
CMS Energy is a holding company and its assets consist primarily of
investments in its subsidiaries. The Subordinated Debentures will be obligations
exclusively of CMS Energy. CMS Energy's ability to service its indebtedness,
including the Subordinated Debentures, 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
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distinct legal entities and have no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Subordinated Debentures 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 Subordinated Debentures, 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).
The applicable Prospectus Supplement will set forth the following terms
relating to the Subordinated Debentures: (1) the specific designation of the
Subordinated Debentures; (2) any limit on the aggregate principal amount of the
Subordinated Debentures; (3) the date or dates, if any (and whether fixed or
extendible), on which the Subordinated Debentures will mature; (4) the rate or
rates per annum (which may be fixed or variable) at which the Subordinated
Debentures will bear interest, if any, the date or dates on which any such
interest will be payable and the regular record dates for any interest payable
on the Subordinated Debentures; (5) the place or places where the principal of
and any interest on the Subordinated Debentures shall be payable and where such
Subordinated Debentures may be surrendered for registration of transfer or
exchange; (6) any provisions relating to the issuance of the Subordinated
Debentures at an original issue discount; (7) the option, if any, of CMS Energy
to redeem the Subordinated Debentures and the periods within which or the dates
on which, the prices at which and the terms and conditions upon which, such
Subordinated Debentures may be redeemed, in whole or in part, upon the exercise
of such option; (8) the obligation, if any, of CMS Energy to redeem such
Subordinated Debentures pursuant to any sinking fund or other mandatory
redemption provisions or at the option of the holder and the periods within
which or the dates on which, the prices at which and the terms and conditions
upon which such Subordinated Debentures will be redeemed, in whole or in part,
pursuant to such obligation; (9) the obligation, if any, of CMS Energy to permit
the conversion of the Subordinated Debentures into CMS Energy Common Stock, and
the terms and conditions upon which such conversion shall be effected; (10) the
denominations in which such Subordinated Debentures will be issued and whether
the Subordinated Debentures will be issuable in registered form or bearer form
or both, and, if issuable in bearer form, the restrictions as to the offer, sale
and delivery of the Subordinated Debentures in bearer form and as to exchanges
between registered and bearer form; (11) whether the Subordinated Debentures
will be issuable in the form of one or more temporary or permanent global
securities and, if so, the identity of the depository for such global
securities; (12) whether and under what circumstances CMS Energy will pay
additional amounts with respect to the Subordinated Debentures to a nonUnited
States Person (as defined in such Prospectus Supplement) on account of any tax,
assessment or governmental charge withheld or deducted and, if so, whether CMS
Energy will have the option to redeem such Subordinated Debentures rather than
pay such additional amounts; and (13) any other terms of the Subordinated
Debentures not inconsistent with the Subordinated Debt Indenture, including
covenants and events of default relating solely to the Subordinated Debentures.
Subordinated Debentures may be issued at a substantial discount from the stated
principal amount thereof ("Original Issue Discount Securities"). United States
federal income tax consequences and other special considerations applicable
thereto or to other Subordinated Debentures offered and sold at par which are
treated as having been issued at a discount for United States federal income tax
purposes will be described in the Prospectus Supplement relating thereto.
CONCERNING THE TRUSTEE
The Bank of New York, the Trustee under the Subordinated Debt Indenture, is
one of a number of banks with which CMS Energy and its subsidiaries maintain
ordinary banking relationships, including credit facilities.
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EXCHANGE AND TRANSFER
Subordinated Debentures may be presented for exchange and registered
Subordinated Debentures may be presented for registration of transfer at the
offices and subject to the restrictions set forth therein and in the applicable
Prospectus Supplement without service charge, but upon payment of any taxes or
other governmental charges due in connection therewith, subject to any
applicable limitations contained in the Subordinated Debt Indenture.
Subordinated Debentures in bearer form and the coupons appertaining thereto, if
any, will be transferable by delivery. (Section 2.8)
PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of the principal of and the premium and interest, if any, on all Subordinated
Debentures in registered form will be made at the office or agency of the
Subordinated Debt 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) Unless otherwise indicated in the applicable Prospectus Supplement, payment
of any interest due on Subordinated Debentures in registered form will be made
to the Persons in whose name such Subordinated Debentures are registered at the
close of business on the Record Date for such interest payments. (Section
2.3(f))
EVENTS OF DEFAULT
The occurrence of any of the following events with respect to the
Subordinated Debentures of any series will constitute an "Event of Default" with
respect to the Subordinated Debentures of such series: (a) default for 30 days
in the payment of any interest on any of the Subordinated Debentures of such
series (whether or not payment is prohibited by the subordination provisions of
the Subordinated Debt Indenture); provided, however, that if CMS Energy is
permitted by the terms of the Subordinated Debentures of the applicable series
to defer the payment in question, the date on which such payment is due and
payable shall be the date on which CMS Energy is required to make payment
following such deferral, if such deferral has been elected pursuant to the terms
of the Subordinated Debentures; (b) default in the payment when due of any of
the principal of or the premium, if any, on any of the Subordinated Debentures
of such series, whether at maturity, upon redemption, acceleration or otherwise
(whether or not payment is prohibited by the subordination provisions of the
Subordinated Debt Indenture); provided, however, that if CMS Energy is permitted
by the terms of the Subordinated Debentures of the applicable series to defer
the payment in question, the date on which such payment is due and payable shall
be the date on which CMS Energy is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Subordinated Debentures; (c) failure by CMS Energy to deliver shares of CMS
Energy Common Stock upon an appropriate election by holders of the Subordinated
Debentures to convert such Subordinated Debentures; (d) default in the deposit
or payment of any sinking fund or analogous payment in respect of any
Subordinated Debentures of such series (whether or not payment is prohibited by
the subordination provisions of the Subordinated Debt Indenture); (e) default
for 60 days by CMS Energy in the observance or performance of any other covenant
or agreement contained in the Subordinated Debt Indenture relating to the
Subordinated Debentures of such series after written notice thereof as provided
in the Subordinated Debt Indenture; (f) certain events of bankruptcy, insolvency
or reorganization relating to CMS Energy; (g) entry of final judgments against
CMS Energy or Consumers aggregating in excess of $25,000,000 which remain
undischarged or unbonded for 60 days; (h) a default resulting in the
acceleration of indebtedness of CMS Energy 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 Subordinated Debt Indenture; or (i)
the voluntary or involuntary dissolution, winding-up or termination of a Trust,
except in connection with the distribution of Subordinated Debentures to the
holders of Trust Preferred Securities in liquidation of such Trust, the
redemption of all outstanding Trust Securities of the Trust and certain mergers,
consolidations or amalgamations permitted by the Trust Agreement of such Trust.
Additional Events of Default may be prescribed for the benefit of the
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Holders of a particular series of Subordinated Debentures and will be described
in the Prospectus Supplement relating to such Subordinated Debentures. (Section
5.1)
If an Event of Default on any series of Subordinated Debentures shall have
occurred and be continuing, either the Subordinated Debt Trustee or the Holders
of not less than 25% in aggregate principal amount of the Subordinated
Debentures of such series then Outstanding may declare the principal of all
Subordinated Debentures of such series and the interest, if any, accrued thereon
to be due and payable immediately and, should the Subordinated Debenture Trustee
or the holders of the Subordinated Debentures fail to make such declaration, the
holders of at least 25% in aggregate liquidation amount of the Trust Preferred
Securities then outstanding shall have such right. (Section 5.1)
Upon certain conditions, any such declarations may be rescinded and
annulled if all Events of Default, other than the nonpayment of accelerated
principal, with respect to the Subordinated Debentures of all such affected
series then Outstanding shall have been cured or waived as provided in the
Subordinated Debt Indenture by the Holders of a majority in aggregate principal
amount of the Subordinated Debentures of the affected series then Outstanding
and, should the holders of the Subordinated Debentures fail to waive such
defaults, the holders of a majority in aggregate liquidation amount of the Trust
Preferred Securities shall have such right. (Section 5.1)
Reference is made to the Prospectus Supplement relating to any series of
Original Issue Discount Securities for the particular provisions relating to the
acceleration of a portion of the principal amount thereof upon the occurrence
and continuance of an Event of Default with respect thereto.
The Subordinated Debt Indenture provides that the Subordinated Debt Trustee
will be under no obligation to exercise any of its rights or powers under the
Subordinated Debt Indenture at the request, order or direction of the Holders of
the Subordinated Debentures, unless such Holders shall have offered to the
Subordinated Debt Trustee reasonable indemnity. (Sections 6.1 and 6.2(d))
Subject to such provisions for indemnity and certain other limitations contained
in the Subordinated Debt Indenture, the Holders of a majority in aggregate
principal amount of the Subordinated Debentures 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
Subordinated Debt Trustee, or exercising any trust or power conferred on the
Subordinated Debt Trustee, with respect to the Subordinated Debentures of such
affected series. (Sections 5.9 and 6.2)
The Subordinated Debt Indenture provides that no Holder of Subordinated
Debentures may institute any action against CMS Energy under the Subordinated
Debt Indenture (except actions for payment of overdue principal, premium or
interest) unless such Holder previously shall have given to the Subordinated
Debt Trustee written notice of default and continuance thereof and unless the
Holders of not less than 25% in aggregate principal amount of the Subordinated
Debentures of the affected series then Outstanding (voting as one class) shall
have requested the Subordinated Debt Trustee to institute such action and shall
have offered the Subordinated Debt Trustee reasonable indemnity, the
Subordinated Debt Trustee shall not have instituted such action within 60 days
of such request and the Subordinated Debt Trustee shall not have received
direction inconsistent with such request by the Holders of a majority in
aggregate principal amount of the Subordinated Debentures of the affected series
then Outstanding (voting as one class). (Sections 5.6, 5.7 and 5.9)
The Subordinated Debt Indenture requires CMS Energy to furnish to the
Subordinated Debt Trustee annually a statement as to CMS Energy's compliance
with all conditions and covenants under the Subordinated Debt Indenture.
(Section 4.3(d)) The Subordinated Debt Indenture provides that the Subordinated
Debt Trustee may withhold notice to the Holders of the Subordinated Debentures
of any series of any default affecting such series (except defaults as to
payment of principal, premium or interest on the Subordinated Debentures of such
series) if it considers such withholding to be in the interests of the Holders
of the Subordinated Debentures of such series. (Section 5.11)
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SUBORDINATION
The Subordinated Debt Indenture provides (and each Holder of Subordinated
Debentures by acceptance thereof agrees) that the Subordinated Debentures will
be subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined herein) of CMS Energy. (Section 12.1) No payment on
account of principal of, premium, if any, or interest on the Subordinated
Debentures and no acquisition of, or payment on account of any sinking fund for,
the Subordinated Debentures may be made unless full payment of amounts then due
for principal, premium, if any, and interest then due on all Senior Indebtedness
by reason of the maturity thereof (by lapse of time, acceleration or otherwise)
has been made or duly provided for in cash or in a manner satisfactory to the
Holders of such Senior Indebtedness. In addition, the Subordinated Debt
Indenture provides that upon the happening and during the continuation of any
default in payment of the principal of, premium, if any, or interest on any
Senior Indebtedness when the same becomes due and payable or in the event any
judicial proceeding shall be pending with respect to any such default, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no payment shall be made by CMS Energy with respect to the
principal of, premium, if any, or interest on Subordinated Debentures or to
acquire any Subordinated Debentures or on account of any sinking fund provisions
applicable to Subordinated Debentures. CMS Energy shall give prompt written
notice to the Subordinated Debt Trustee of any default in payment of principal
of or interest on any Senior Indebtedness. (Section 12.2) The Subordinated Debt
Indenture provisions described in this paragraph, however, do not prevent CMS
Energy from making sinking fund payments in Subordinated Debentures acquired
prior to the maturity of Senior Indebtedness or, in the case of default, prior
to such default and notice thereof. Upon any distribution of its assets in
connection with any dissolution, winding up, liquidation or reorganization of
CMS Energy, whether voluntary or involuntary, in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise: (i) all Senior Indebtedness must be paid in full before the Holders
of the Subordinated Debentures are entitled to any payments whatsoever; and (ii)
any payment or distribution of CMS Energy's assets of any kind or character,
whether in cash, securities or other property, which would otherwise (but for
the subordination provisions) be payable or deliverable in respect of the
Subordinated Debentures shall be paid or delivered directly to the Holders of
such Senior Indebtedness (or their representative or trustee) in accordance with
the priorities then existing among such Holders until all Senior Indebtedness
shall have been paid in full before any payment or distribution is made to the
Holders of Subordinated Debentures. (Section 12.3) In the event that
notwithstanding such subordination provisions, any payment or distribution of
assets of any kind or character is made on the Subordinated Debentures before
all Senior Indebtedness is paid in full, the Subordinated Debt Trustee or the
Holders of Subordinated Debentures receiving such payment will be required to
pay over such payment or distribution to the Holders of such Senior
Indebtedness. (Sections 12.2 and 12.3) Subject to the payment in full of all
Senior Indebtedness, the rights of the Holders of the Subordinated Debentures
will be subrogated to the rights of the Holders of Senior Indebtedness to
receive payments or distributions applicable to Senior Indebtedness until all
amounts owing on the Subordinated Debentures are paid in full. As a result of
the subordination provisions, in the event of CMS Energy's insolvency, Holders
of the Subordinated Debentures may recover ratably less than senior creditors of
CMS Energy.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including interest accruing on or after the filing of any petition in
bankruptcy relating to CMS Energy whether or not such claim for post-petition
interest is allowed in such proceeding) on the following, whether outstanding on
the date of execution of the Subordinated Debt Indenture or thereafter incurred,
created or assumed: (i) indebtedness of CMS Energy for money borrowed by CMS
Energy (including purchase money obligations, except indebtedness to trade
creditors or assumed by CMS Energy in the ordinary course of business in
connection with the obtaining of goods, materials or services) or evidenced by
debentures (other than the Subordinated Debentures), notes, bankers' acceptances
or other corporate Subordinated Debentures or similar instruments issued by CMS
Energy; (ii) all capital lease obligations of CMS Energy; (iii) obligations with
respect to letters of credit; (iv) all indebtedness of others of the type
referred to in the preceding clauses (i) and (iii) assumed by or guaranteed in
any manner by CMS Energy or in effect guaranteed by CMS Energy; or (v) renewals,
extensions or refundings of any of the indebtedness referred to in the preceding
clauses (i), (ii), (iii) and (iv) unless, in the case of any particular
indebtedness, renewal, extension or refunding, under the
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express provisions of the instrument creating or evidencing the same or the
assumption or guarantee of the same, or pursuant to which the same is
outstanding, such indebtedness or such renewal, extension or refunding thereof
is not superior in right of payment to the Subordinated Debentures. (Section
12.1) The Subordinated Debt Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued.
CERTAIN COVENANTS
If Subordinated Debentures are issued to a Trust or a trustee of such Trust
in connection with the issuance of Trust Preferred Securities by such Trust, CMS
Energy will covenant that it will not, and it will not cause any of its
subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
CMS Energy's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of CMS Energy that
rank pari passu with or junior to the Subordinated Debentures (other than (a)
any dividend, redemption, liquidation, interest, principal or guarantee payment
by CMS Energy where the payment is made by way of securities (including capital
stock) that rank pari passu with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made,
(b) payments under the Guarantee, (c) purchases of CMS Energy Common Stock
related to the issuance of CMS Energy Common Stock under any of CMS Energy's
benefit plans for its directors, officers or employees, (d) as a result of a
reclassification of CMS Energy's capital stock or the exchange or conversion of
one series or class of CMS Energy's capital stock for another series or class of
CMS Energy's capital stock and (e) the purchase of fractional interests in
shares of CMS Energy's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged)
if at such time (i) there shall have occurred any event of which CMS Energy has
actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute an Event of Default and (b) in respect of which CMS
Energy shall not have taken reasonable steps to cure, (ii) CMS Energy shall be
in default with respect to its payment of any obligations under the Guarantee or
(iii) CMS Energy shall have given notice of its selection of an Extension Period
as provided in the Subordinated Debt Indenture with respect to the Subordinated
Debentures and shall not have rescinded such notice, or such Extension Period,
or any extension thereof, shall be continuing. CMS Energy will also covenant (i)
for so long as Trust Preferred Securities are outstanding, not to convert the
Subordinated Debentures except pursuant to a notice of conversion delivered to
the Conversion Agent by a holder of Trust Preferred Securities, (ii) to maintain
directly or indirectly 100% ownership of the Common Securities, provided that
certain successor which are permitted pursuant to the Subordinated Debt
Indenture may succeed to CMS Energy's ownership of the Common Securities, (iii)
not to voluntarily terminate, wind-up or liquidate such Trust, except (a) in
connection with a distribution of the Subordinated Debentures to the holders of
the Trust Preferred Securities in liquidation of such Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement, (iv) to maintain the reservation for issuance of the number of shares
of CMS Energy Common Stock that would be required from time to time upon the
conversion of all the Subordinated Debentures then outstanding, (v) to use its
reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause such Trust to remain classified as a grantor trust and not
as an association taxable as a corporation for United States federal income tax
purposes and (vi) to deliver shares of CMS Energy Common Stock upon an election
by the holders of the Trust Preferred Securities to convert such Trust Preferred
Securities into CMS Energy Common Stock. (Section 3.5).
As part of the Guarantee, CMS Energy will agree that it will honor all
obligations described therein relating to the conversion or exchange of the
Trust Preferred Securities into or for CMS Energy Common Stock or Subordinated
Debentures.
CONSOLIDATION, MERGER OR SALE OF ASSETS
The Subordinated 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 Subordinated Debentures and the
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Subordinated 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).
CONVERSION RIGHTS
If the Prospectus Supplement provides, the Holders of Subordinated
Debentures may convert the Subordinated Debentures into CMS Energy Common Stock,
as defined herein (see "Description of Securities -- Common Stock"), at the
option of the Holders at the principal amount thereof, or of such portion
thereof, at any time during the period specified in the Prospectus Supplement,
at the conversion price or conversion rate specified in the Prospectus
Supplement; except that, with respect to any Subordinated Debentures (or portion
thereof) called for redemption, such conversion right shall terminate at the
close of business on the fifteenth day prior to the date fixed for redemption of
such Subordinated Debentures, unless CMS Energy shall default in payment of the
amount due upon redemption thereof. (Section 13.2)
The conversion privilege and conversion price or conversion rate will be
adjusted in certain events, including if CMS Energy: (i) pays a dividend or
makes a distribution in shares of CMS Energy Common Stock; (ii) subdivides its
outstanding shares of CMS Energy Common Stock into a greater number of shares;
(iii) combines its outstanding shares of CMS Energy Common Stock into a smaller
number of shares; (iv) pays a dividend or makes a distribution on its CMS Energy
Common Stock other than in shares of its CMS Energy Common Stock; (v) issues by
reclassification of its shares of CMS Energy Common Stock any shares of its
capital stock; (vi) issues any rights or warrants to all holders of shares of
its CMS Energy Common Stock entitling them (for a period expiring within 45
days, or such other period as may be specified in the Prospectus Supplement) to
purchase shares of CMS Energy Common Stock (or Convertible Securities) at a
price per share less than the Average Market Price per share for such CMS Energy
Common Stock; and (vii) distributes to all holders of shares of its CMS Energy
Common Stock any assets or Subordinated Debentures or any rights or warrants to
purchase securities, provided that no adjustment shall be made under (vi) or
(vii) above if the adjusted conversion price would be higher than, or the
adjusted conversion rate would be less than, the conversion price or conversion
rate, as the case may be, in effect prior to such adjustment. (Sections 13.7,
13.8 and 13.9) CMS Energy may reduce the conversion price or increase the
conversion rate, temporarily or otherwise, by any amount but in no event shall
such adjusted conversion price or conversion rate result in shares of CMS Energy
Common Stock being issuable upon conversion of the Subordinated Debentures if
converted at the time of such adjustment at an effective conversion price per
share less than the par value of the CMS Energy Common Stock at the time such
adjustment is made. (Section 13.10) No adjustments in the conversion price or
conversion rate need be made unless the adjustment would require an increase or
decrease of at least one percent (1%) in the initial conversion price or
conversion rate. Any adjustment which is not made shall be carried forward and
taken into account in any subsequent adjustment. (Section 13.13) The foregoing
conversion provisions may be modified to the extent set forth in the Prospectus
Supplement.
MODIFICATION OF THE SUBORDINATED DEBT INDENTURE
The Subordinated Debt Indenture permits CMS Energy and the Subordinated
Debt Trustee to enter into supplemental indentures thereto without the consent
of the Holders of the Subordinated Debentures to: (a) secure the Subordinated
Debentures of one or more series; (b) evidence the assumption by a successor
corporation of the obligations of CMS Energy under the Subordinated Debt
Indenture and the Subordinated Debentures then Outstanding; (c) add covenants
for the protection of the Holders of the Subordinated Debentures; (d) cure any
ambiguity or correct any defect or inconsistency in the Subordinated Debt
Indenture or to make such other provisions as CMS Energy deems necessary or
desirable with respect to matters or questions arising under the Subordinated
Debt Indenture, provided that no such action adversely affects the interests of
any Holders of Subordinated Debentures; (e) establish the form and terms of any
series of securities under the Subordinated Debt Indenture; and (f) evidence the
acceptance of appointment by a successor Subordinated Debt Trustee. (Section
8.1)
The Subordinated Debt Indenture also permits CMS Energy and the
Subordinated Debt Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Subordinated
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Debentures 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 Subordinated Debt Indenture or
modify in any manner the rights of the Holders of the Subordinated Debentures of
each such affected series; provided, however, that CMS Energy and the
Subordinated Debt Trustee may not, without the consent of the Holder of each of
the Subordinated Debentures then outstanding and affected thereby, enter into a
supplemental indenture to: (a) change the time of payment of the principal (or
any installment of principal) of any of the Subordinated Debentures, or reduce
the principal amount thereof, or reduce the rate or change the time of payment
of interest thereon (other than any permitted deferrals of the payments of
interest), or reduce the amount payable on any Original Issue Discount
Securities upon acceleration or provable in bankruptcy, or impair the right to
institute suit for the enforcement of any payment on any of the Subordinated
Debentures when due, or materially adversely affects the subordination
provisions of the Subordinated Debt Indenture; or (b) reduce the percentage in
principal amount of the Subordinated Debentures of the affected series, the
consent of whose Holders is required for any such modification or for any waiver
provided for in the Subordinated Debt Indenture, provided that, so long as any
of the Trust Preferred Securities remain outstanding, no such modification may
be made that adversely affects the holders of such Trust Preferred Securities in
any material respect, and no termination of the Subordinated Debt Indenture may
occur, and no waiver of any Event of Default or compliance with any covenant
under the Subordinated Debt Indenture may be effective, without the prior
consent of the holders of at least a majority in aggregate liquidation amount of
the Trust Preferred Securities then outstanding unless and until the principal
of the Subordinated Debentures and all accrued and unpaid interest thereon has
been paid in full. (Section 8.2)
Prior to the acceleration of the maturity of any Subordinated Debentures,
the Holders of a majority in aggregate principal amount of the Subordinated
Debentures 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 Subordinated Debentures
waive any past default or Event of Default and its consequences, except a
default or an Event of Default in respect of a covenant or provision of the
Subordinated Debt Indenture or of any Subordinated Debentures which cannot be
modified or amended without the consent of the Holder of each of the
Subordinated Debentures affected. (Section 5.10)
DEFEASANCE, COVENANT DEFEASANCE AND DISCHARGE
The Subordinated 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
Subordinated Debentures of a particular series then Outstanding (except for
certain obligations to register the transfer of or exchange the Subordinated
Debentures of such series, to replace stolen, lost or mutilated Subordinated
Debentures of such series, to maintain paying agencies and to maintain the trust
described below), or (b) CMS Energy need not comply with certain restrictive
covenants of the Subordinated Debt Indenture (including those described under
"Consolidation, Merger or Sale of Assets") if CMS Energy irrevocably deposits in
trust with the Subordinated Debt 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 Subordinated Debentures of such series on the stated
maturity of such Subordinated Debentures (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 Subordinated Debt Trustee an opinion of independent counsel to the effect
that the exercise of such option would not cause the Holders of the Subordinated
Debentures of such series 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
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Subordinated 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 Subordinated Debentures of any series as
described in the preceding paragraph and the Subordinated Debentures of such
series 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 Subordinated Debt Trustee would be insufficient to pay amounts
due on the Subordinated Debentures of such series 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 Subordinated Debt Indenture
with respect to all Subordinated Debentures then Outstanding (except for certain
obligations to register the transfer of or exchange such Subordinated Debentures
to replace stolen, lost or mutilated Subordinated Debentures, to maintain paying
agencies and to maintain the trust described below) by irrevocably depositing in
trust with the Subordinated Debt 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 Subordinated Debentures on the stated maturities
thereof (including one or more redemption dates), provided that such
Subordinated Debentures 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 Subordinated
Debentures outstanding for other property. Accordingly, holders of Subordinated
Debentures outstanding 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.
TRUST PREFERRED SECURITIES
GENERAL
The Trust may issue, from time to time, Trust Preferred Securities having
terms described in the Prospectus Supplement relating thereto. The Trust
Agreement of the Trust will authorize the establishment of no more than one
series of Trust Preferred Securities, having such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such rights or restrictions as shall be set
forth therein or otherwise established by the Trust Trustees pursuant thereto.
Reference is made to the Prospectus Supplement relating to the Trust Preferred
Securities for specific terms, including: (i) the distinctive designation and
the number of Trust Preferred Securities to be offered which will represent
undivided beneficial interests in the assets of the Trust; (ii) the annual
distribution rate and the dates or date upon which such distributions will be
paid, provided, however distributions on the Trust Preferred Securities will be
paid quarterly in arrears to holders of Trust Preferred Securities as of a
record date on which the Trust Preferred Securities are outstanding; (iii)
whether holders' can convert the Trust Preferred Securities into shares of CMS
Energy Common Stock; (iv) whether distributions on Trust Preferred Securities
would be deferred during any deferral of interest payments on the Subordinated
Debentures, provided, however that no such deferral, including extensions, if
any, may exceed 20 consecutive quarters nor extend beyond the stated maturity
date of the Subordinated Debentures, and at the end of any such deferrals, CMS
Energy shall make all interest payments then accrued or deferred and unpaid
(including any compounded interest); (v) the amount of any liquidation
preference; (vi) the obligation, if any, of the Trust to redeem Trust Preferred
Securities through the exercise of CMS Energy of an option on the corresponding
Subordinated Debenture and the price or prices at which, the period or periods
within which and the terms and conditions upon which Trust Preferred Securities
shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (vii) the period or periods within which and the terms and
conditions, if any, including the price or prices or
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the rate or rates of conversion or exchange and the terms and conditions of any
adjustments thereof, upon which the Trust Preferred Securities shall be
convertible or exchangeable at the option of the holder of the Trust Preferred
Securities or other property or cash; (viii) the voting rights, if any, of the
Trust Preferred Securities in addition to those required by law and in the Trust
Agreement, or set forth under the Guarantee (as defined below); (ix) the
additional payments, if any, which the Trust will pay as a distribution as
necessary so that the net amounts reserved by the Trust and distributable to the
holders of the Trust Preferred Securities, after all taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes) have
been paid will not be less than the amount that would have been reserved and
distributed by the Trust, and the amount the holders of the Trust Preferred
Securities would have reserved, had no such taxes, duties, assessments or
governmental charges been imposed; (x) the terms and conditions, if any, upon
which the Subordinated Debentures may be distributed to holders of Trust
Preferred Securities; and (xi) any other relative rights, powers, preferences,
privileges, limitations or restrictions of the Trust Preferred Securities not
inconsistent with the Trust Agreement or applicable law. All Trust Preferred
Securities offered hereby will be irrevocably guaranteed by CMS Energy, on a
subordinated basis and to the extent set forth below under "Description of The
Guarantee." Any applicable federal income tax considerations applicable to any
offering of the Trust Preferred Securities will be described in the Prospectus
Supplement relating thereto. The aggregate number of Trust Preferred Securities
which the Trust shall have authority to issue will be pursuant to the terms of
the Trust Agreement.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Trust Agreement, the sole purpose of the Trust is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust, and to invest the proceeds from such issuance and sale to
acquire directly the Subordinated Debentures from CMS Energy.
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover distributions
and payments due on the Trust Securities because of the following factors: (i)
the aggregate principal amount of Subordinated Debentures will be equal to the
sums of the aggregate stated liquidation amount of the Trust Securities; (ii)
the interest rate and the interest and other payment dates on the Subordinated
Debentures will match the distribution rate and distribution and other payment
dates for the Trust Preferred Securities; (iii) CMS Energy shall pay all, and
the Trust shall not be obligated to pay, directly or indirectly, all costs,
expenses, debt and obligations of the Trust (other than with respect to the
Trust Securities); and (iv) the Trust Agreement further provides that CMS Energy
Trustees shall not take or cause or permit the Trust to, among other things,
engage in any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefore are available) and
other payments due on the Trust Preferred Securities (to the extent funds
therefor are available) are guaranteed by CMS Energy as and to the extent set
forth under "The Guarantee" below. If CMS Energy does not make interest payments
on the Subordinated Debenture purchased by the Trust, it is expected that the
Trust will not have sufficient funds to pay distributions on the Trust Preferred
Securities. The Guarantee does not apply to any payment of distributions unless
and until the Trust has sufficient funds for the payment of distributions and
other payments on the Trust Preferred Securities only if and to the extent that
CMS Energy has made a payment of interest or principal on the Subordinated
Debenture held by the Trust as its sole asset. The Guarantee, when taken
together with CMS Energy's obligations under the Subordinated Debenture and the
Indenture and its obligations under the Trust Agreement, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust securities), provide a full and unconditional
guarantee of amounts on the Trust Preferred Securities.
If CMS Energy fails to make interest or other payments on the Subordinated
Debentures when due (taking account of any extension period), the Trust
Agreement provides a mechanism whereby the holders of the Trust Preferred
Securities may direct the Property Trustee to enforce its rights under the
Subordinated Debenture. If the Property Trustee fails to enforce its rights
under the Subordinated Debentures, a holder of Trust Preferred Securities may
institute a legal proceeding against CMS Energy to enforce the Property
Trustee's rights under the Subordinated Debentures without first instituting any
legal proceeding against the
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Property Trustee or any other person or entity. Notwithstanding the foregoing,
if an event of default has occurred and is continuing under the Trust Agreement,
and such event is attributable to the failure of CMS Energy to pay interest or
principal on the Subordinated Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption on the redemption date), then
a holder of Trust Preferred Securities may institute legal proceedings directly
against CMS Energy to obtain payment. If CMS Energy fails to make payments under
the Guarantee, the Guarantee provides a mechanism whereby the holders of the
Trust Preferred Securities may direct the Guarantee Trustee to enforce its
rights thereunder. Any holder of Trust Preferred Securities may institute a
legal proceeding directly against CMS Energy to enforce the Guarantee Trustee's
rights under the Guarantee without first instituting a legal proceeding against
the Trust, the Guarantee Trustee, or any other person or entity.
THE GUARANTEE
Set forth below is a summary of information concerning the Trust Preferred
Securities Guarantee (the "Guarantee") which will be executed and delivered by
CMS Energy for the benefit of the holders, from time to time, of the Trust
Preferred Securities. The Guarantee will be qualified as an indenture under the
Trust Indenture Act of 1939. The Bank of New York, an independent trustee, will
act as indenture trustee under the Guarantee for the purpose of compliance with
the provisions of the Trust Indenture Act of 1939. This summary does not purport
to be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Guarantee, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
GENERAL
CMS Energy will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Trust Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Trust Preferred Securities, to the extent not paid by or on behalf of the Trust
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid distributions required to be paid on the Trust Preferred
Securities, to the extent that the Trust has funds on hand available therefor at
such time; (ii) the redemption price with respect to any Trust Preferred
Securities called for redemption to the extent that the Trust has funds on hand
available therefor at such time; or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (unless the Subordinated
Debentures are distributed to holders of the Trust Preferred Securities), the
lesser of (a) the liquidation distribution, to the extent that the Trust has
funds on hand available therefor at such time, and (b) the amount of assets of
the Trust remaining available for distribution to holders of Trust Preferred
Securities. CMS Energy's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts of CMS Energy to the holders of the
Trust Preferred Securities or by causing the Trust to pay such amount to such
holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Preferred Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection. If CMS Energy does not make interest
payments on the Subordinated Debentures held by the Trust, the Trust will not be
able to pay distributions on the Trust Preferred Securities and will not have
funds legally available therefor.
CMS Energy has, through the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Subordinated Debt Indenture and the Expense
Agreement, taken together, fully, irrevocably and unconditionally guaranteed all
of the Trust's obligations under the Trust Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the Trust Preferred
Securities.
CMS Energy has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities to
the same extent as the Guarantee, except that upon the
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occurrence and during the continuation of a Trust Agreement Event of Default,
holders of Trust Preferred Securities shall have priority over holders of Common
Securities with respect to distributions and payments on liquidation, redemption
or otherwise.
CERTAIN COVENANTS OF CMS ENERGY
CMS Energy will covenant in the Guarantee that if and so long as (i) the
Trust is the holder of all the Subordinated Debentures, (ii) a Tax Event in
respect of the Trust has occurred and is continuing and (iii) CMS Energy has
elected, and has not revoked such election, to pay Additional Sums in respect of
the Trust Preferred Securities and Common Securities, CMS Energy will pay to the
Trust such Additional Sums. CMS Energy will also covenant that it will not, and
it will not cause any of its subsidiaries to (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of CMS Energy's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay or repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of CMS
Energy that rank pari passu with or junior to the Subordinated Debentures (other
than (a) any dividend, redemption, liquidation, interest, principal or guarantee
payment by CMS Energy where the payment is made by way of securities (including
capital stock) that rank pari passu with or junior to the securities on which
such dividend, redemption, interest, principal or guarantee payment is being
made, (b) payments under the Guarantee, (c) purchases of CMS Energy Common Stock
related to the issuance of CMS Energy Common Stock under any of CMS Energy's
benefit plans for its directors, officers or employees, (d) as a result of a
reclassification of CMS Energy's capital stock or the exchange or conversion of
one series or class of CMS Energy's capital stock for another series or class of
CMS Energy's capital stock and (e) the purchase of fractional interests in
shares of CMS Energy's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged)
if at such time (i) there shall have occurred any event of which CMS Energy has
actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute a Subordinated Debenture Event of Default and (b) in
respect of which CMS Energy shall not have taken reasonable steps to cure, (ii)
CMS Energy shall be in default with respect to its payment of any obligations
under the Guarantee or (iii) CMS Energy shall have given notice of its selection
of an Extension Period as provided in the Subordinated Debt Indenture with
respect to the Subordinated Debentures and shall not have rescinded such notice,
or such Extension Period, or any extension thereof, shall be continuing. CMS
Energy also will covenant to (i) for so long as Trust Preferred Securities are
outstanding, not convert Subordinated Debentures except pursuant to a notice of
conversion delivered to the Conversion Agent by a holder of Trust Preferred
Securities, (ii) maintain directly or indirectly 100% ownership of the Common
Securities, provided that certain successors which are permitted pursuant to the
Subordinated Debt Indenture may succeed to CMS Energy's ownership of the Common
Securities, (iii) not voluntarily terminate, wind-up or liquidate the Trust,
except (a) in connection with a distribution of the Debentures to the holders of
the Trust Preferred Securities in liquidation of the Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement, (iv) maintain the reservation for issuance of the number of shares of
CMS Energy Common Stock that would be required from time to time upon the
conversion of all the Subordinated Debentures then outstanding, (v) use its
reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause the Trust to remain classified as a grantor trust and not as
an association taxable as a corporation for United States federal income tax
purposes and (vi) deliver shares of CMS Energy Common Stock upon an election by
the holders of the Trust Preferred Securities to convert such Trust Preferred
Securities into CMS Energy Common Stock.
As part of the Guarantee, CMS Energy will agree that it will honor all
obligations described therein relating to the conversion or exchange of the
Trust Preferred Securities into or for CMS Energy Common Stock or Subordinated
Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority in aggregate liquidation amount of
such
22
<PAGE> 24
outstanding Trust Preferred Securities. All guarantees and agreements contained
in the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of CMS Energy and shall inure to the benefit of the holders of
the Trust Preferred Securities then outstanding.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the Trust Preferred Securities, upon
full payment of the amounts payable upon liquidation of the Trust, upon the
distribution, if any, of CMS Energy Common Stock to the holders of Trust
Preferred Securities in respect of the conversion of all such holders' Trust
Preferred Securities into CMS Energy Common Stock or upon distribution of the
Subordinated Debentures to the holders of the Trust Preferred Securities in
exchange for all of the Trust Preferred Securities. The Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of Trust Preferred Securities must restore payment of any sums paid under
such Trust Preferred Securities or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of CMS
Energy to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of the
Trust Preferred Securities may institute a legal proceeding directly against CMS
Energy to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, any record holder of Trust Preferred Securities shall have
the right, which is absolute and unconditional, to proceed directly against CMS
Energy to obtain Guarantee Payments, without first waiting to determine if the
Guarantee Trustee has enforced the Guarantee or instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other person or entity. CMS
Energy has waived any right or remedy to require that any action be brought just
against the Trust, or any other person or entity before proceeding directly
against CMS Energy.
CMS Energy, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not CMS Energy is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of CMS Energy and
will rank subordinate and junior in right of payment to all other liabilities of
CMS Energy and will rank pari passu with any guarantee now or hereafter entered
into by CMS Energy in respect of any preferred or preference stock of any
affiliate of CMS Energy.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Trust Preferred
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Trust or upon
distribution of the Subordinated Debentures to the holders of the Trust
Preferred Securities. The Guarantee does not place a limitation on the amount of
additional indebtedness that may be incurred by CMS Energy or any of its
subsidiaries.
23
<PAGE> 25
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
CMS Energy may issue Stock Purchase Contracts, representing contracts
obligating holders to purchase from CMS Energy, and CMS Energy to sell to the
holders, a specified number of shares of CMS Energy Common Stock at a future
date or dates. The price per share of CMS Energy Common Stock may be fixed at
the time the Stock Purchase Contracts are issued or may be determined by
reference to a specific formula set forth in the Stock Purchase Contracts. The
Stock Purchase Contracts may require CMS Energy to make periodic payments to the
holders of the Stock Purchase Units or visa versa, and such payments may be
unsecured or refunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not purport to be complete and will be qualified in its entirety
by reference to the Stock Purchase Contracts, and, if applicable, collateral
arrangements and depositary arrangements, relating to such Stock Purchase
Contracts or Stock Purchase Units.
LEGAL OPINIONS
Opinions as to the legality of certain of the Offered Securities will be
rendered for CMS Energy by Michael D. Van Hemert, Esq., Assistant General
Counsel for CMS Energy. Certain matters of Delaware law relating to the validity
of the Trust Preferred Securities will be passed upon on behalf of the Trust by
Skadden, Arps, Slate, Meagher & Flom special Delaware counsel to the Trust.
Certain United States Federal income taxation matters may be passed upon for CMS
Energy and the Trust by special tax counsel to CMS Energy and of the Trust, who
will be named in the Prospectus Supplement. Certain legal matters with respect
to Offered Securities will be passed upon by counsel for any underwriters,
dealers or agents, each of whom will be named in the related Prospectus
Supplement.
EXPERTS
The consolidated financial statements and schedule of CMS Energy as of
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997 incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP (formerly Arthur Andersen & Co.), independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
Future consolidated financial statements of CMS Energy and the reports
thereon of Arthur Andersen LLP also will be incorporated by reference in this
Prospectus in reliance upon the authority of that firm as experts in giving
those reports to the extent that said firm has audited said consolidated
financial statements and consented to the use of their reports thereon.
24
<PAGE> 26
PLAN OF DISTRIBUTION
CMS Energy and/or the Trust may sell the Offered Securities: (i) through
the solicitation of proposals of underwriters or dealers to purchase the Offered
Securities; (ii) through underwriters or dealers on a negotiated basis; (iii)
directly to a limited number of purchasers or to a single purchaser; or (iv)
through agents. The Prospectus Supplement with respect to any Offered Securities
will set forth the terms of such offering, including the name or names of any
underwriters, dealers or agents; the purchase price of the Offered Securities
and the proceeds to CMS Energy and/or the Trust from such sale; any underwriting
discounts and commissions and other items constituting underwriters'
compensation; any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchange on which
such Offered Securities may be listed. Any initial public offering price,
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, CMS Energy
and/or the Trust will sell such Offered Securities to the dealers as principals.
The dealers may then resell such Offered Securities to the public at varying
prices to be determined by such dealers at the time of resale. The names of the
dealers and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
The Offered Securities may be sold directly by CMS Energy and/or the Trust
or through agents designated by CMS Energy and/or the Trust from time to time.
Any agent involved in the offer or sale of the Offered Securities in respect to
which this Prospectus is delivered will be named, and any commissions payable by
CMS Energy and/or the Trust to such agent will be set forth, in the Prospectus
Supplement relating thereto. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
The Offered Securities may be sold directly by CMS Energy and/or the Trust
to institutional investors or others, who may be deemed to be underwriters
within the meaning of the Securities Act with respect to any resale thereof. The
terms of any such sales will be described in the Prospectus Supplement relating
thereto.
Agents, dealers and underwriters may be entitled under agreements with CMS
Energy and/or the Trust to indemnification by CMS Energy and/or the Trust
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which such agents, dealers or
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for CMS Energy and/or the Trust in the ordinary course of business.
The Offered Securities may or may not be listed on a national securities
exchange. Reference is made to the Prospectus Supplement with regard to such
matter. No assurance can be given that there will be a market for any of the
Offered Securities.
25
<PAGE> 27
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C>
Filing fee -- Securities and Exchange Commission........... $ 59,000
*Listing on New York Stock Exchange......................... 50,000
*Trustees expenses.......................................... 18,000
*Printing and Engraving..................................... 200,000
*Services of counsel........................................ 50,000
*Services of independent public accountants, Arthur Anderson
LLP....................................................... 10,000
*Rating Agency Fees, Collateral Agent's and Purchase........ 100,000
Contract Agent's Fees......................................
*Blue Sky fees and expenses................................. 20,000
*Miscellaneous.............................................. 5,000
--------
Total.................................................. $512,000
========
</TABLE>
- -------------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following resolution was adopted by the Board of Directors of CMS Energy on
May 6, 1987:
RESOLVED: That effective March 1, 1987 the Corporation shall indemnify to
the full extent permitted by law every person (including the estate, heirs and
legal representatives of such person in the event of the decease, incompetency,
insolvency or bankruptcy of such person) who is or was a director, officer,
partner, trustee, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against all liability, costs, expenses, including attorneys'
fees, judgments, penalties, fines and amounts paid in settlement, incurred by or
imposed upon the person in connection with or resulting from any claim or any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative, investigative or of whatever nature, arising from the
person's service or capacity as, or by reason of the fact that the person is or
was, a director, officer, partner, trustee, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. Such right of indemnification shall not be
deemed exclusive of any other rights to which the person may be entitled under
statute, bylaw, agreement, vote of shareholders or otherwise.
CMS Energy's Bylaws provide:
The Corporation may purchase and maintain liability insurance, to the full
extent permitted by law, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity.
Article VIII of the Articles of Incorporation reads:
A director shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach of duty as a director except (i)
for a breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for a violation of
Section 551(l) of the Michigan Business Corporation Act, and (iv) any 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
II-1
<PAGE> 28
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.
Officers and directors and Administrative Trustees of the Trust 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.
The Trust Agreement of the Trust provides that to the fullest extent
permitted by applicable law, the Trust shall indemnify and hold harmless each of
the Trustees, any Affiliate of the Trustees, any officer, director, shareholder,
employee, representative or agent of any Trustee and any employee or agent of
the Trust or its Affiliates (each a "Indemnified Person"), from and against any
loss, damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason the creation, operation
or termination of the Trust or any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by the Trust Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of negligence or
willful misconduct with respect to such acts or omissions.
II-2
<PAGE> 29
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
*(1)(a) -- Form of Underwriting Agreement with respect to the Offered
Securities (other than the Trust Preferred Securities).
(Designated in CMS Energy's Form S-3 Registration Statement
filed February 15, 1995, File No. 33-57719, as Exhibit (1).)
*(1)(b) -- Form of Underwriting Agreement with respect to the Trust
Preferred Securities. (Designated in CMS Energy's Amendment
No. 1 to Form S-3 Registration Statement filed June 13,
1997, File No. 333-27849, as Exhibit (1)(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).)
Sixth Supplemental Indenture dated as of January 13, 1998
between CMS Energy Corporation and NBD Bank, as Trustee
(Designated in CMS Energy's Form 10-K for the year ended
December 31, 1997, File No. 1-9513, as Exhibit (4)(a)).)
*(4)(b) -- Indenture dated as of January 15, 1994 between CMS Energy
and The Chase Manhattan Bank, as Trustee. (Designated in CMS
Energy's Form 8-K dated March 29, 1994, File No. 1-9513, as
Exhibit (4)(a).)
First Supplemental Indenture dated as of January 20, 1994
between CMS Energy and the Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated March 29, 1994,
File No. 1-9513, as Exhibit (4)(b).)
Second Supplemental Indenture dated as of March 19, 1996
between CMS Energy Corporation and The Chase Manhattan Bank,
as Trustee. (Designated in CMS Energy's Form 10-Q for the
quarter ended March 31, 1996, File No. 1-9513, as Exhibit
(4).)
Third Supplemental Indenture dated as of March 17, 1997
between CMS Energy Corporation and The Chase Manhattan Bank,
as Trustee. (Designated in CMS Energy's Form 8-K dated May
1, 1997, File No. 1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated as of September 17, 1997
between CMS Energy Corporation and The Chase Manhattan Bank,
as Trustee. (Designated in CMS Energy's Form S-3
Registration Statement filed September 22, 1997, File No.
333-36115, as Exhibit (4)(d).)
</TABLE>
II-3
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
*(4)(c) -- Credit Agreement dated as of November 21, 1995, among CMS
Energy Corporation, the Banks, the Co-Agents, the
Documentation Agent, the Operational Agent and the Co-
Managers, all as defined therein, and the Exhibits thereto.
(Designated in CMS Energy's Form S-4 Registration Statement
filed January 12, 1996, File No. 33-60007, as Exhibit
4(ii).)
*(4)(d) -- Term Loan Agreement dated as of November 21, 1995, among CMS
Energy Corporation, the Banks, the Co-Agents, the
Documentation Agent, the Operational Agent and the Co-
Managers, all as defined therein, and the Exhibits thereto.
(Designated in CMS Energy's Form S-4 Registration Statement
filed January 12, 1996, File No. 33-60007, as Exhibit
4(ii)(A).)
*(4)(e) -- Subordinated Debt Indenture between CMS Energy and The Bank
of New York, as Trustee. (Designated in CMS Energy's Form
8-K dated June 1, 1997, File No. 1-9513, as Exhibit (4)(a).)
First Supplemental Indenture between CMS Energy and the Bank
of New York, as Trustee. (Designated in CMS Energy's Form
8-K dated July 1, 1997, File No. 1-9513, as Exhibit (4)(b).)
*(4)(f) -- Form of Supplemental Indenture to be used with the
Subordinated Debentures issued in connection with the Trust
Preferred Securities. (Designated in CMS Energy's Amendment
No. 1 to Form S-3 Registration Statement filed June 13,
1997, File No. 333-27849, as Exhibit (4)(f).)
*(4)(g) -- Certificate of Trust of CMS Energy Trust II. (Designated in
CMS Energy's Amendment No. 1 to Form S-3 Registration
Statement filed June 13, 1997, File No. 333-27849, as
Exhibit (4)(h).)
*(4)(h) -- Form of Amended and Restated Trust Agreement of CMS Energy
Trust II. (Designated in CMS Energy's Amendment No. 1 to
Form S-3 Registration Statement filed June 13, 1997, File
No. 333-27849, as Exhibit (4)(i).)
*(4)(i) -- 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).)
*(4)(j) -- 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)(k) -- Form of Subordinated Debenture (included in (4)(f).)
*(4)(l) -- Form of Trust Preferred Security (included in (4)(h).)
*(4)(m) -- Form of Trust Preferred Securities Guarantee Agreement of
CMS Energy Trust II. (Designated in CMS Energy's Amendment
No. 1 to Form S-3 Registration Statement filed June 13,
1997, File No. 333-27849, as Exhibit (4)(n).)
*(4)(n) -- Form of Purchase Contract Agreement between CMS Energy and
the Purchase Contract Agent (including as Exhibit A the form
of the Security Certificate).
(5)(a) -- Opinion of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy.
(5)(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the legality of the Trust Preferred Securities.
(12) -- Statement re computation of ratios of earnings to fixed
charges and ratios of earnings to fixed charges and
preferred stock dividends.
(23)(a) -- Consent of Michael D. Van Hemert, Assistant General for CMS
Energy (included in Exhibit (5)(a) above).
(23)(b) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit (5)(b) above).
(23)(c) -- Consent of Arthur Andersen LLP.
(24) -- Powers of Attorney.
</TABLE>
II-4
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
(25)(a) -- Statement of Eligibility and Qualification of The Bank of
New York (Trustee under the Subordinated Debt Indenture).
(25)(b) -- Statement of Eligibility of Property Trustee of CMS Energy
Trust II.
(25)(c) -- Statement of Eligibility of the Trust Preferred Security
Guarantee Trustee of CMS Energy Trust II.
</TABLE>
- -------------------------
* 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.
II-5
<PAGE> 32
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) To
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that (i) and (ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that 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.
(6) That (1) for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective; and (2) for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 33
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dearborn, and State of Michigan, on the 30th day of
March, 1998.
CMS ENERGY CORPORATION
By: /s/ A M WRIGHT
------------------------------------
Alan M. Wright
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in their
respective capacities as officers and/or directors of CMS Energy Corporation and
on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
(i) Principal executive officer:
/s/ WILLIAM T. MCCORMICK, JR. Chairman of the Board, Chief March 30, 1998
- --------------------------------------------- Executive Officer and Director
(William T. McCormick, Jr.)
(ii) Principal financial officer:
/s/ AM WRIGHT Senior Vice President, and Chief March 30, 1998
- --------------------------------------------- Financial Officer
(Alan M. Wright)
(iii) Controller or principal accounting
officer:
/s/ PD HOPPER Senior Vice President, Controller and March 30, 1998
- --------------------------------------------- Chief Accounting Officer
(Preston D. Hopper)
* Director March 30, 1998
- ---------------------------------------------
(John M. Deutch)
* Director March 30, 1998
- ---------------------------------------------
(James J. Duderstadt)
* Director March 30, 1998
- ---------------------------------------------
(Kathleen R. Flaherty)
* Director March 30, 1998
- ---------------------------------------------
(Victor J. Fryling)
* Director March 30, 1998
- ---------------------------------------------
(Earl D. Holton)
* Director March 30, 1998
- ---------------------------------------------
(William U. Parfet)
</TABLE>
II-7
<PAGE> 34
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
* Director March 30, 1998
- ---------------------------------------------
(Percy A. Pierre)
* Director March 30, 1998
- ---------------------------------------------
(Kenneth Whipple)
* Director March 30, 1998
- ---------------------------------------------
(John B. Yasinsky)
*By: /s/ A M WRIGHT
-------------------------------
Alan M. Wright
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CMS Energy
Trust II certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dearborn, State of Michigan, on the 30th day of
March, 1998.
CMS ENERGY TRUST II
By: /s/ A M WRIGHT
------------------------------------
Alan M. Wright, Trustee
By: /s/ THOMAS A. MCNISH
------------------------------------
Thomas A. Mc Nish, Trustee
II-9
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
*(1)(a) -- Form of Underwriting Agreement with respect to the Offered
Securities (other than the Trust Preferred Securities).
(Designated in CMS Energy's Form S-3 Registration Statement
filed February 15, 1995, File No. 33-57719, as Exhibit (1).)
*(1)(b) -- Form of Underwriting Agreement with respect to the Trust
Preferred Securities. (Designated in CMS Energy's Amendment
No. 1 to Form S-3 Registration Statement filed June 13,
1997, File No. 333-27849, as Exhibit (1)(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).)
Sixth Supplemental Indenture dated as of January 13, 1998
between CMS Energy Corporation and NBD Bank, as Trustee
(Designated in CMS Energy's Form 10-K for the year ended
December 31, 1997, File No. 1-9513, as Exhibit (4)(a)).)
*(4)(b) -- Indenture dated as of January 15, 1994 between CMS Energy
and The Chase Manhattan Bank, as Trustee. (Designated in CMS
Energy's Form 8-K dated March 29, 1994, File No. 1-9513, as
Exhibit (4)(a).)
First Supplemental Indenture dated as of January 20, 1994
between CMS Energy and the Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated March 29, 1994,
File No. 1-9513, as Exhibit (4)(b).)
Second Supplemental Indenture dated as of March 19, 1996
between CMS Energy Corporation and The Chase Manhattan Bank,
as Trustee. (Designated in CMS Energy's Form 10-Q for the
quarter ended March 31, 1996, File No. 1-9513, as Exhibit
(4).)
Third Supplemental Indenture dated as of March 17, 1997
between CMS Energy Corporation and The Chase Manhattan Bank,
as Trustee. (Designated in CMS Energy's Form 8-K dated May
1, 1997, File No. 1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated as of September 17, 1997
between CMS Energy Corporation and The Chase Manhattan Bank,
as Trustee. (Designated in CMS Energy's Form S-3
Registration Statement filed September 22, 1997, File No.
333-36115, as Exhibit (4)(d).)
</TABLE>
II-10
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
*(4)(c) -- Credit Agreement dated as of November 21, 1995, among CMS
Energy Corporation, the Banks, the Co-Agents, the
Documentation Agent, the Operational Agent and the Co-
Managers, all as defined therein, and the Exhibits thereto.
(Designated in CMS Energy's Form S-4 Registration Statement
filed January 12, 1996, File No. 33-60007, as Exhibit
4(ii).)
*(4)(d) -- Term Loan Agreement dated as of November 21, 1995, among CMS
Energy Corporation, the Banks, the Co-Agents, the
Documentation Agent, the Operational Agent and the Co-
Managers, all as defined therein, and the Exhibits thereto.
(Designated in CMS Energy's Form S-4 Registration Statement
filed January 12, 1996, File No. 33-60007, as Exhibit
4(ii)(A).)
*(4)(e) -- Subordinated Debt Indenture between CMS Energy and The Bank
of New York, as Trustee. (Designated in CMS Energy's Form
8-K dated June 1, 1997, File No. 1-9513, as Exhibit (4)(a).)
First Supplemental Indenture between CMS Energy and the Bank
of New York, as Trustee. (Designated in CMS Energy's Form
8-K dated July 1, 1997, File No. 1-9513, as Exhibit (4)(b).)
*(4)(f) -- Form of Supplemental Indenture to be used with the
Subordinated Debentures issued in connection with the Trust
Preferred Securities. (Designated in CMS Energy's Amendment
No. 1 to Form S-3 Registration Statement filed June 13,
1997, File No. 333-27849, as Exhibit (4)(f).)
*(4)(g) -- Certificate of Trust of CMS Energy Trust II. (Designated in
CMS Energy's Amendment No. 1 to Form S-3 Registration
Statement filed June 13, 1997, File No. 333-27849, as
Exhibit (4)(h).)
*(4)(h) -- Form of Amended and Restated Trust Agreement of CMS Energy
Trust II. (Designated in CMS Energy's Amendment No. 1 to
Form S-3 Registration Statement filed June 13, 1997, File
No. 333-27849, as Exhibit (4)(i).)
*(4)(i) -- 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).)
*(4)(j) -- 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)(k) -- Form of Subordinated Debenture (included in (4)(f).)
*(4)(l) -- Form of Trust Preferred Security (included in (4)(h).)
*(4)(m) -- Form of Trust Preferred Securities Guarantee Agreement of
CMS Energy Trust II. (Designated in CMS Energy's Amendment
No. 1 to Form S-3 Registration Statement filed June 13,
1997, File No. 333-27849, as Exhibit (4)(n).)
*(4)(n) -- Form of Purchase Contract Agreement between CMS Energy and
the Purchase Contract Agent (including as Exhibit A the form
of the Security Certificate).
(5)(a) -- Opinion of Michael D. Van Hemert, Assistant General Counsel
for CMS Energy.
(5)(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the legality of the Trust Preferred Securities.
(12) -- Statement re computation of ratios of earnings to fixed
charges and ratios of earnings to fixed charges and
preferred stock dividends.
(23)(a) -- Consent of Michael D. Van Hemert, Assistant General for CMS
Energy (included in Exhibit (5)(a) above).
(23)(b) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit (5)(b) above).
(23)(c) -- Consent of Arthur Andersen LLP.
(24) -- Powers of Attorney.
</TABLE>
II-11
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C> <C>
(25)(a) -- Statement of Eligibility and Qualification of The Bank of
New York (Trustee under the Subordinated Debt Indenture).
(25)(b) -- Statement of Eligibility of Property Trustee of CMS Energy
Trust II.
(25)(c) -- Statement of Eligibility of the Trust Preferred Security
Guarantee Trustee of CMS Energy Trust II.
</TABLE>
- -------------------------
* 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.
II-12
<PAGE> 1
EXHIBIT 5(a)
March 30, 1998
CMS Energy Corporation
Fairlane Plaza South
330 Town Center Drive
Suite 1100
Dearborn, MI 48126
Ladies and Gentlemen:
I am the Assistant General Counsel of CMS Energy Corporation, a
Michigan corporation ("CMS Energy" or the "Company"), and have acted as such in
connection with the Registration Statement on Form S-3 (the "Registration
Statement") being filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the registration of not to exceed $200,000,000
of: (i) CMS Energy Common Stock, $.01 par value ("CMS Energy Common Stock");
(ii) CMS Energy Class G Common Stock, no par value ("Class G Common Stock");
(iii) Subordinated Debentures of the Company ("Debentures"); (iv) Trust
Preferred Securities of CMS Energy Trust II (the "Trust"); (v) the guarantee by
the Company of the obligations of the Trust to holders of the Trust Preferred
Securities ("Trust Preferred Securities Guarantee"); (vi) Stock Purchase
Contracts of the Company; and (vii) Stock Purchase Units of the Company. The
offered securities are collectively referred to as the "Securities". The Trust
Preferred Securities Guarantee is to be issued pursuant to a Trust Preferred
Securities Guarantee Agreement (the "Trust Preferred Securities Guarantee
Agreement") to be entered into between the Company and The Bank of New York, as
trustee (the "Guarantee Trustee"). The Debentures are to be issued under an
Indenture to be entered into between the Company and The Bank of New York, as
trustee (the "Indenture Trustee"), and one or more supplemental indentures
thereto (collectively, the "Indenture"). 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
<PAGE> 2
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.
I note that the issuance of the Trust Preferred Securities is governed
by the laws of the State of Delaware. Any matters relating to Delaware law will
be opined upon by Skadden, Arps, Slate, Meagher & Flom.
Based on the foregoing, it is my opinion that:
1. The Company is duly incorporated and validly existing under the
laws of the State of Michigan.
2. The Company has the corporate power and authority: (i) to
execute and deliver the Indenture, the Trust Preferred
Securities Guarantee, and any Stock Purchase Contract or Stock
Purchase Unit; and (ii) to authorize and sell the Debentures
pursuant to the Indenture, the CMS Energy Common Stock and the
Class G Common Stock, and the CMS Energy Common Stock and Class
G Common Stock.
3. The Trust Preferred Securities Guarantee will be a legally
issued and binding obligation of the Company (except to the
extent enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws affecting the enforcement of creditors'
rights generally and by the effect of general principles of
equity, regardless of whether enforceability is considered in a
proceeding in equity or at law) when: (i) the Registration
Statement, as finally amended (including any necessary
post-effective amendments), shall have become effective under
the Securities Act; (ii) the Trust Preferred Securities
Guarantee shall have been qualified under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), and duly
executed and delivered by the Company and the Guarantee Trustee;
(iii) the Trust Preferred Securities shall have been legally
issued; and (iv) the Trust Preferred Securities Guarantee shall
have been duly executed and delivered as provided in the Trust
Preferred Securities Guarantee Agreement.
4. The Debentures will be legally issued and binding obligations
of the Company (except to the extent enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally and by the effect
of general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at
law) when: (i) the Registration Statement, as finally amended
(including any necessary post-effective amendments), shall have
become effective under the Securities Act; (ii) the Indenture
shall have been qualified under
<PAGE> 3
3
the Trust Indenture Act and duly executed and delivered by the
Company and the Indenture Trustee; (iii) an appropriate
prospectus supplement with respect to the particular Debentures
then being sold by the Company shall have been filed with the
Commission pursuant to Rule 424 under the Securities Act; (iv)
the Company's Board of Directors or duly authorized committee
thereof shall have duly adopted final resolutions authorizing
the issuance and sale of the Debentures, as contemplated by the
Registration Statement and Indenture; (v) the supplemental
indenture under which the particular Debentures are to be issued
shall have been duly executed and authenticated as provided in
the Indenture and such resolutions; and (vi) the Debentures
shall have been duly delivered to the purchasers thereof against
payment of the agreed consideration therefor.
5. The Stock Purchase Contracts and the Stock Purchase Units, when
issued and sold, will be legally issued and binding obligations
of the Company (except to the extent enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally and by the effect
of general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity or at
law) when: (i) the Registration Statement, as finally amended
(including any necessary post-effective amendments), shall have
become effective under the Securities Act; (ii) an appropriate
prospectus supplement with respect to the particular Stock
Purchase Contracts and the particular Stock Purchase Units then
being sold by the Company shall have been filed with the
Commission pursuant to Rule 424 under the Securities Act; and
(iii) the Stock Purchase Contracts under which the CMS Energy
Common Stock are to be purchased shall have been duly executed
and delivered as provided in the Stock Purchase Contracts.
6. The CMS Energy Common Stock and the Class G Common Stock will
be legally issued, fully paid and non-assessable when: (i) the
Registration Statement, as finally amended, shall have become
effective under the Securities Act; (ii) the Company's Board of
Directors or a duly authorized committee thereof shall have duly
adopted final resolutions authorizing the issuance and sale of
the Class G Common Stock, the CMS Energy Common Stock, Trust
Preferred Securities or Debentures to be converted into CMS
Energy Common Stock or Stock Purchase Contracts pursuant to
which CMS Energy Common Stock or Class G Common Stock may be
purchased, as contemplated by the Registration Statement and
prospectus supplement relating thereto; and (iii) upon delivery,
purchase or conversion, as the case may be, certificates
representing the CMS Energy Common Stock or Class G Common Stock
shall have been duly executed, countersigned and registered and
duly delivered to the purchasers thereof against payment of the
agreed consideration therefor.
<PAGE> 4
4
For purposes of this opinion, I have assumed that there will be no
changes in the laws currently applicable to the Company and that such laws will
be the only laws applicable to the Company.
I do not find it necessary for the purposes of this opinion to cover,
and accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the execution and delivery of the Trust
Preferred Securities Guarantee or 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 note that the rights, duties
and obligations of the Indenture Trustee under the Indenture are stated to be
governed and construed in accordance with the laws of the State of New York.
However, for purposes of paragraph 4 above, I have assumed that the Indenture,
as to the rights, duties and obligations of the Indenture Trustee, is stated to
be governed by the laws of the State of Michigan.
I hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement on Form S-3 relating to the Securities and to
all references to me included in or made a part of the Registration Statement.
Very truly yours,
/s/ Michael D. Van Hemert
---------------------------
Michael D. Van Hemert
<PAGE> 1
EXHIBIT 5(b)
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
March 30, 1998
CMS Energy Corporation
CMS Energy Trust II
c/o CMS Energy Corporation
Fairlane Plaza South
330 Town Center Drive, Suite 1100
Dearborn, MI 48126
Re: CMS Energy Corporation;
CMS Energy Trust II;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special Delaware counsel to (1) CMS Energy
Corporation (the "Company"), a corporation organized under the laws of the State
of Michigan and (2) CMS Energy Trust II (the "CMS Trust"), a statutory business
trust formed under the Business Trust Act of the State of Delaware, in
connection with the preparation of a Registration Statement on Form S-3 (File
No. 333- _____), filed by the Company and the CMS Trust with the Securities and
Exchange Commission (the "Commission") on March 30, 1998 under the Securities
Act of 1933, as amended (the "Act") (such Registration Statement being
hereinafter referred to as the "Registration Statement") relating to the
registration under the Act of the preferred securities (the "Preferred
Securities") of the CMS Trust and certain other securities.
The Preferred Securities are to be issued pursuant to the
Amended and Restated Trust Agreement (the "Trust Agreement"), among the Company,
as sponsor, The Bank of New York, as property trustee (the "Property Trustee"),
The Bank of New York (Delaware), as Delaware trustee and Alan M. Wright and
Thomas A. McNish, as administrative trustees.
<PAGE> 2
CMS Energy Corporation
March 30, 1998
Page 2
This opinion is being delivered in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of (i) the
certificate of trust of the CMS Trust (the "Certificate of Trust") filed with
the Secretary of State of the State of Delaware on May 22, 1997; (ii) the form
of the Trust Agreement, as filed as an exhibit to the Registration Statement;
and (iii) the form of the Preferred Securities. We have also examined originals
or copies, certified or otherwise identified to our satisfaction, of such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us a certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed or to be executed by parties other than the CMS Trust, we
have assumed that such parties had or will have the power, corporate or other,
to enter into and perform all obligations thereunder and have also assumed the
due authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents and that such documents constitute
valid and binding obligations of such parties. In addition, we have assumed that
the Trust Agreement and the Preferred Securities, when executed, will conform to
forms thereof reviewed by us. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied upon
oral or written statements and representations of officers, trustees and other
representatives of the Company, the CMS Trust and others.
Members of our firm are admitted to the bar in the State of
Delaware, and we express no opinion as to the laws of any other jurisdiction.
Based on and subject to the foregoing and to the other
qualifications and limitations set forth
<PAGE> 3
CMS Energy Corporation
March 30, 1998
Page 3
herein, we are of the opinion that the Preferred Securities, when the Trust
Agreement is duly executed and delivered and the terms of the Preferred
Securities are established in accordance with the terms of the Trust Agreement,
will be duly authorized for issuance and, when issued and executed in accordance
with the Trust Agreement and delivered and paid for as set forth in the form of
prospectus supplement for the Preferred Securities included in the Registration
Statement, will be validly issued, fully paid and nonassessable, representing
undivided beneficial interests in the assets of the CMS Trust. We bring to your
attention, however, that the Preferred Securities holders may be obligated,
pursuant to the Trust Agreement, to (i) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from transfers of
Preferred Securities and (ii) provide security and indemnity in connection with
the requests of or directions to the Property Trustee to exercise its rights and
powers under the Trust Agreement.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
use of our name under the heading "Legal Matters" in the prospectus supplement
included in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of any subsequent changes of the facts stated or assumed herein or of
any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE> 1
EXHIBIT (12)
CMS ENERGY CORPORATION
Ratio of Earnings to Fixed Charges
(Millions of Dollars)
<TABLE>
<CAPTION>
Years Ended December 31
1997 1996 1995 1994 1993
---------------------------------
<S> <C> <C> <C> <C> <C>
Earnings as defined (a)
Consolidated net income $ 268 $ 240 $ 204 $ 179 $ 155
Income taxes 117 139 118 92 75
Exclude equity basis subsidiaries (80) (85) (57) (18) (6)
Fixed charges as defined, adjusted to
exclude capitalized interest of $16,
$8, $8, $6 and $5 for the years
ended December 31, 1997, 1996, 1995,
1994, and 1993, respectively 314 275 268 226 241
---------------------------------
Earnings as defined $ 619 $ 569 $ 533 $ 479 $ 465
============================================================================
Fixed charges as defined (a)
Interest on long-term debt $ 273 $ 230 $ 224 $ 193 $ 204
Estimated interest portion of lease rental 8 10 9 9 11
Other interest charges 49 43 42 30 32
---------------------------------
Fixed charges as defined $ 330 $ 283 $ 275 $ 232 $ 247
============================================================================
Ratio of earnings to fixed charges 1.88 2.01 1.94 2.07 1.88
============================================================================
</TABLE>
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of
Regulation S-K.
<PAGE> 2
EXHIBIT (12)
CMS ENERGY CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SECURITIES DIVIDENDS AND
DISTRIBUTIONS
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings as defined(a)
Consolidated net income..................................... $268 $240 $204 $179 $155
Income taxes................................................ 117 139 118 92 75
Exclude equity basis subsidiaries........................... (80) (85) (57) (18) (6)
Fixed charges as defined, adjusted to exclude capitalized
interest of $16, $8, $8, $6 and $5 for the years ended
December 31, 1997, 1996, 1995, 1994, and 1993,
respectively.............................................. 357 310 295 249 253
---- ---- ---- ---- ----
Earnings as defined......................................... $662 $604 $560 $502 $477
==== ==== ==== ==== ====
Fixed charges as defined(a)
Interest on long-term debt.................................. $273 $230 $224 $193 $204
Estimated interest portion of lease rental.................. 8 10 9 9 11
Other interest charges...................................... 49 43 42 30 32
Preferred securities dividends and distributions............ 67 54 42 36 17
---- ---- ---- ---- ----
Fixed charges as defined.................................... $397 $337 $317 $268 $264
==== ==== ==== ==== ====
Ratio of earnings to fixed charges and preferred securities
dividends and distributions............................... 1.67 1.79 1.77 1.87 1.81
==== ==== ==== ==== ====
</TABLE>
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of
Regulation S-K.
<PAGE> 1
EXHIBIT (23)
[ARTHUR ANDERSEN LLP LETTERHEAD]
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 26,
1998, included or incorporated by reference in CMS Energy Corporation's Form
10-K for the year ended December 31, 1997, and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
Detroit, Michigan,
March 26, 1998.
<PAGE> 1
EXHIBIT 24
[CMS ENERGY LETTERHEAD]
January 24, 1998
Mr. Alan M. Wright and
Mr. Thomas A. McNish
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, MI 48126
We hereby appoint each of you lawful attorney for each of us and in each of our
names to sign and cause to be filed with the Securities and Exchange Commission
registration statement(s) and/or any amendment(s) thereto, including
post-effective amendment or amendments, to be accompanied in each case by a
prospectus or supplemental prospectus and any necessary exhibits with respect
to the issue and sale of up to $300 million net aggregate principal amount of
equity, trust or convertible securities, or a combination thereof, of the
Corporation (plus an additional 20% for the purpose of covering underwriters'
over-allotments, price adjustments, or sale of additional securities).
Yours very truly,
/s/ William T. McCormick, Jr. /s/ Earl D. Holton
- -------------------------------- --------------------------------
William T. McCormick, Jr. Earl D. Holton
/s/ John M. Deutch /s/ William U. Parfet
- -------------------------------- --------------------------------
John M. Deutch William U. Parfet
/s/ James J. Duderstadt /s/ Percy A. Pierre
- -------------------------------- --------------------------------
James J. Duderstadt Percy A. Pierre
/s/ Kathleen R. Flaherty /s/ Kenneth Whipple
- -------------------------------- --------------------------------
Kathleen R. Flaherty Kenneth Whipple
/s/ Victor J. Fryling /s/ John B. Yasinsky
- -------------------------------- --------------------------------
Victor J. Fryling John B. Yasinsky
<PAGE> 1
EXHIBIT 25(a)
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CMS ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
Michigan 38-2726431
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(Address of principal executive offices) (Zip code)
----------------------
Subordinated Debentures
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 26th day of March, 1998.
THE BANK OF NEW YORK
By: /s/ THOMAS B. ZAKRZEWSKI
-----------------------------
Name: THOMAS B. ZAKRZEWSKI
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 5,004,638
Interest-bearing balances .......... 1,271,514
Securities:
Held-to-maturity securities ........ 1,105,782
Available-for-sale securities ...... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell...... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve.... 34,334,590
Assets held in trading accounts ...... 2,035,284
Premises and fixed assets (including
capitalized leases) ................ 671,664
Other real estate owned .............. 13,306
Investments in unconsolidated
subsidiaries and associated
companies .......................... 210,685
Customers' liability to this bank on
acceptances outstanding ............ 1,463,446
Intangible assets .................... 753,190
Other assets ......................... 1,784,796
-----------
Total assets ......................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,270,824
Noninterest-bearing ......12,160,977
Interest-bearing .........15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 14,687,806
Noninterest-bearing .........657,479
Interest-bearing .........14,030,327
Federal funds purchased and
Securities sold under agreements
to repurchase....................... 1,946,099
Demand notes issued to the U.S.
Treasury ........................... 283,793
Trading liabilities .................. 1,553,539
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,245,014
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,473,588
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 2,193,031
-----------
Total liabilities .................... 52,718,298
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 25,428
Cumulative foreign currency transla-
tion adjustments ................... ( 16,342)
-----------
Total equity capital ................. 4,818,697
-----------
Total liabilities and equity
capital ............................ $57,536,995
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
-
<PAGE> 1
EXHIBIT 25(b)
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CMS ENERGY TRUST II
(Exact name of obligor as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(Address of principal executive offices) (Zip code)
----------------------
Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 26th day of March, 1998.
THE BANK OF NEW YORK
By: /s/ THOMAS B. ZAKRZEWSKI
----------------------------------
Name: THOMAS B. ZAKRZEWSKI
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 5,004,638
Interest-bearing balances .......... 1,271,514
Securities:
Held-to-maturity securities ........ 1,105,782
Available-for-sale securities ...... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell...... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve.... 34,334,590
Assets held in trading accounts ...... 2,035,284
Premises and fixed assets (including
capitalized leases) ................ 671,664
Other real estate owned .............. 13,306
Investments in unconsolidated
subsidiaries and associated
companies .......................... 210,685
Customers' liability to this bank on
acceptances outstanding ............ 1,463,446
Intangible assets .................... 753,190
Other assets ......................... 1,784,796
-----------
Total assets ......................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,270,824
Noninterest-bearing ......12,160,977
Interest-bearing .........15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 14,687,806
Noninterest-bearing .........657,479
Interest-bearing .........14,030,327
Federal funds purchased and
Securities sold under agreements
to repurchase....................... 1,946,099
Demand notes issued to the U.S.
Treasury ........................... 283,793
Trading liabilities .................. 1,553,539
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,245,014
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,473,588
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 2,193,031
-----------
Total liabilities .................... 52,718,298
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 25,428
Cumulative foreign currency transla-
tion adjustments ................... ( 16,342)
-----------
Total equity capital ................. 4,818,697
-----------
Total liabilities and equity
capital ............................ $57,536,995
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
-
<PAGE> 1
EXHIBIT 25(c)
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
-----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-----------------------
CMS ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
Michigan 38-2726431
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(Address of principal executive offices) (Zip code)
-----------------------
Guarantee of Trust Preferred Securities of
CMS Energy Trust II
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE> 3
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 26th day of March, 1998.
THE BANK OF NEW YORK
By: /s/ THOMAS B. ZAKREWSKI
---------------------------
Name: THOMAS B. ZAKRZEWSKI
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 5,004,638
Interest-bearing balances .......... 1,271,514
Securities:
Held-to-maturity securities ........ 1,105,782
Available-for-sale securities ...... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell...... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve.... 34,334,590
Assets held in trading accounts ...... 2,035,284
Premises and fixed assets (including
capitalized leases) ................ 671,664
Other real estate owned .............. 13,306
Investments in unconsolidated
subsidiaries and associated
companies .......................... 210,685
Customers' liability to this bank on
acceptances outstanding ............ 1,463,446
Intangible assets .................... 753,190
Other assets ......................... 1,784,796
-----------
Total assets ......................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,270,824
Noninterest-bearing ......12,160,977
Interest-bearing .........15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 14,687,806
Noninterest-bearing .........657,479
Interest-bearing .........14,030,327
Federal funds purchased and
Securities sold under agreements
to repurchase....................... 1,946,099
Demand notes issued to the U.S.
Treasury ........................... 283,793
Trading liabilities .................. 1,553,539
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,245,014
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ...................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,473,588
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 2,193,031
-----------
Total liabilities .................... 52,718,298
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 25,428
Cumulative foreign currency transla-
tion adjustments ................... ( 16,342)
-----------
Total equity capital ................. 4,818,697
-----------
Total liabilities and equity
capital ............................ $57,536,995
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot |
Thomas A. Renyi |
Alan R. Griffith | Directors
-
