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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1998
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CMS ENERGY CORPORATION CMS ENERGY TRUST II CMS ENERGY TRUST III
(Exact name of registrant as specified in (Exact name of registrant as specified (Exact name of registrant as specified
its charter) in its charter) in its charter)
MICHIGAN DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization) incorporation or organization)
38-2726431 52-6913761 TO BE APPLIED FOR
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
FAIRLANE PLAZA SOUTH ALAN M. WRIGHT ALAN M. WRIGHT
330 TOWN CENTER DRIVE, SUITE 1100 SENIOR VICE PRESIDENT AND CHIEF SENIOR VICE PRESIDENT AND CHIEF
DEARBORN, MICHIGAN 48126 FINANCIAL OFFICER FINANCIAL OFFICER
(313) 436-9200 CMS ENERGY CORPORATION CMS ENERGY CORPORATION
(Address, including zip code, and telephone FAIRLANE PLAZA SOUTH FAIRLANE PLAZA SOUTH
number, including, area code, of registrant's 330 TOWN CENTER DRIVE, SUITE 1100 330 TOWN CENTER DRIVE, SUITE 1100
principal offices) DEARBORN, MICHIGAN 48126 DEARBORN, MICHIGAN 48126
(313) 436-9200 (313) 436-9200
(Name, address, including zip code, (Name, address, including zip code,
and telephone number, including area and telephone number, including area
code, of agent for service) code, of agent for service)
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It is respectfully requested that the Commission send copies of all notices, orders and communications to:
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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
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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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
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER UNIT(1)(2)(3) PRICE(1)(2)(3) FEE(1)(2)
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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).......
Trust Preferred Securities of CMS Energy Trust III(5)......
Guarantee of CMS Energy Corporation with respect to
Trust Preferred Securities of CMS Energy Trust II
and CMS Energy Trust III(6)................................
Stock Purchase Contracts of CMS Energy Corporation(7)......
Stock Purchase Units of CMS Energy Corporation(7)..........
Total...................................................... $1,500,000,000 100% $1,500,000,000 $417,000
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(1) There are being registered hereunder such presently indeterminate principal
amount or number of shares of CMS Energy Corporation Common Stock, Class G
Common Stock, Subordinated Debentures, Stock Purchase Contracts and Stock
Purchase Units, as well as Trust Preferred Securities of CMS Energy Trust II
and CMS Energy Trust III, 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 or CMS Energy Trust III, 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 and CMS Energy Trust III, 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 or CMS Energy
Trust III), 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.
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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.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 15, 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
CMS ENERGY TRUST III
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY CMS ENERGY CORPORATION
OFFERING PRICE: $1,500,000,000
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We may offer, from time to time:
(i) shares of CMS Energy Common Stock,
(ii) shares of Class G Common Stock,
(iii) unsecured subordinated debt securities consisting of debentures,
convertible debentures, notes and other unsecured evidence of
indebtedness,
(iv) stock purchase contracts to purchase CMS Energy Common Stock, and
(v) stock purchase units, each representing ownership of a stock
purchase contract and unsecured subordinated debt securities 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 above.
For each type of securities listed above, the amount, price and terms will
be determined at or prior to the time of sale.
CMS Energy Trust II and CMS Energy Trust III, which are Delaware business
trusts, may offer trust preferred securities. The trust preferred securities
represent preferred undivided beneficial interests in the assets of CMS Energy
Trust II and CMS Energy Trust III in amounts, at prices and on terms to be
determined at or prior to the time of sale.
We will provide the specific terms of these securities in an accompanying
prospectus supplement or supplements. You should read this prospectus and the
accompanying prospectus supplement or supplements carefully before you invest.
CMS Energy Common Stock and Class G Common Stock are traded on the New York
Stock Exchange under the symbol "CMS". CMS Energy Common Stock and Class G
Common Stock sold pursuant to a prospectus supplement or supplements
accompanying this prospectus will also be listed for trading on the New York
Stock Exchange, subject to official notice of issuance.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
We intend to sell these securities through underwriters, dealers, agents or
directly to a limited number of purchasers. The names of, and any securities to
be purchased by or through, these parties, the compensation of these parties and
other special terms in connection with the offering and sale of these securities
will be provided in the related prospectus supplement or supplements.
This prospectus may not be used to consummate sales of any of these
securities unless accompanied by a prospectus supplement.
The date of this prospectus is December , 1998
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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 New York
Stock Exchange ("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 Trusts have been included herein.
CMS Energy and the Trusts do not consider that such financial statements would
be material to holders of Trust Preferred Securities because the Trust is a
newly organized special purpose 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 Trusts". Further, CMS
Energy believes that financial statements of the Trusts 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 Trusts (other than the beneficial interests
represented by the Trust Preferred Securities). See "CMS Energy Trusts,"
"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
Trusts is wholly-owned by CMS Energy, that the sole assets of the Trusts 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
Trusts' obligations under the Trust Preferred Securities issued by the Trusts.
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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:
(1) CMS Energy's Registration Statement on Form 8-B/A dated November 21,
1996;
(2) CMS Energy's Annual Report on Form 10-K for the year ended December 31,
1997;
(3) CMS Energy's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30, and September 30, 1998; and
(4) CMS Energy's Current Reports on Form 8-K dated June 23, July 30, October
2, and November 3, 1998.
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.
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CMS ENERGY CORPORATION
CMS Energy Corporation, a Michigan 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 all 68 counties of Michigan's Lower Peninsula,
is the largest subsidiary of CMS Energy. Consumers' customer base includes a mix
of residential, commercial and diversified industrial customers, the largest
segment of which is the automotive industry. Enterprises is engaged in several
domestic and international energy-related businesses including: (i) oil and gas
exploration and production; (ii) acquisition, development and operation of
independent power production facilities; (iii) energy marketing, services and
trading; (iv) storage, transmission and processing of natural gas; and (v)
international energy distribution.
CMS Energy conducts its principal operations through the following six
business segments: (i) electric utility operations; (ii) gas utility operations;
(iii) oil and gas exploration and production operations; (iv) independent power
production; (v) energy marketing, services and trading; and (vi) storage,
transmission and processing of natural gas. Consumers or Consumers' subsidiaries
are engaged in two segments: electric operations and gas operations. Consumers'
electric and gas businesses are principally regulated utility operations. CMS
Energy and its subsidiaries routinely evaluate, invest in, acquire and divest
energy-related assets and/or companies both domestically and internationally.
Consideration for such transactions may involve the delivery of cash or
securities.
CMS Energy's 1997 consolidated operating revenue was $4.8 billion. This
consolidated operating revenue was derived from its electric utility operations
(approximately 53%), its gas utility operations (approximately 25%), marketing,
services and trading (approximately 14%), independent power production and other
non-utility activities (approximately 4%), gas transmission, storage and
processing activities (approximately 2%), and oil and gas exploration and
production activities (approximately 2%). 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 gas or electricity to almost six
million of Michigan's nine and a half million residents in Michigan's Lower
Peninsula. Industries in Consumers' service area include automotive, metal,
chemical, food and wood products industries and a diversified group of other
industries. Consumers' 1997 consolidated operating revenue of $3.8 billion was
derived approximately 67% from its electric utility business, approximately 32%
from its gas utility business and approximately 1% 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. Consumers' nuclear operations are
subject to the jurisdiction of the Nuclear 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. See
"Incorporation of Certain Documents by Reference" and "Available Information"
above.
The address of the principal executive offices of CMS Energy is Fairlane
Plaza South, 330 Town Center Drive, Suite 1100, Dearborn, Michigan 48126. Its
telephone number is (313) 436-9200.
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CMS ENERGY TRUSTS
CMS Energy Trust II, and CMS Energy Trust III, statutory business trusts
formed under the Delaware Business Trust Act (the "Trust Act") (each, a "Trust"
and collectively, the "Trusts") pursuant to: (i) a trust agreement executed by
CMS Energy, as sponsor, and the trustees of the Trusts (the "CMS Trustees"); and
(ii) the filing of a certificate of trust with the Secretary of State of the
State of Delaware. Each 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 each Trust (the "Common Securities" and, together with the Trust
Preferred Securities, the "Trust Securities") in an aggregate liquidation amount
equal to approximately 3% of the total capital of the Trust. Each Trust exists
for the exclusive purposes of: (i) issuing the Trust Preferred Securities and
Common 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. Each Trust has a term of approximately 30
years, but may terminate earlier as provided in the Trust Agreement.
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 each of the Trust 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. Each of the guarantees 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.
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, 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 Trusts 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.
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The principal place of business of each Trust shall be c/o CMS Energy
Corporation, Fairlane Plaza South, 330 Town Center Drive, Suite 1100, Dearborn,
Michigan 48126-2712.
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USE OF PROCEEDS
The proceeds received by each of the Trusts 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, and for the nine months ended September 30, 1998 are as
follows:
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NINE MONTHS ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, 1998
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(UNAUDITED) 1997 1996 1995 1994 1993
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Ratio of earnings to fixed charges 1.68 1.78 1.96 1.90 2.07 1.75
Ratio of earnings to fixed charges
and preferred stock dividends 1.50 1.59 1.75 1.74 1.88 1.68
</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.
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DESCRIPTION OF SECURITIES
INTRODUCTION
Specific terms of the shares of Common Stock, par value $.01 per share
("CMS Energy Common Stock"), shares of Class G Common Stock, no par value
("Class G Common Stock"), unsecured subordinated debt securities (the
"Subordinated Debentures") consisting of debentures, convertible debentures,
notes and other unsecured evidence of indebtedness, Stock Purchase Contracts
(the "Stock Purchase Contracts") to purchase CMS Energy Common Stock, Stock
Purchase Units (the "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,
and trust preferred securities (the "Trust Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Trust, in respect
of which this prospectus is being delivered (collectively, 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 of 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.
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
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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
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
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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.
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
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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.
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
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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%.
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 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.
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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.
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
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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 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
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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)
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
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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 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).
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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
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
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not less than a majority in aggregate principal amount of the Subordinated
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 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.
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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
Each Trust may issue, from time to time, Trust Preferred Securities having
terms described in the prospectus supplement relating thereto. The Trust
Agreement of each 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 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.
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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 each 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 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 GUARANTEES
Set forth below is a summary of information concerning the Trust Preferred
Securities Guarantee (each, 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
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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 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
20
<PAGE> 23
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 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
21
<PAGE> 24
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.
22
<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 be issued separately or as part of Stock Purchase
Units consisting of a Stock Purchase Contract and Subordinated Debentures, Trust
Preferred Securities or debt obligations of third parties, including U.S.
Treasury securities, securing the holders' obligations to purchase the Common
Stock under 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 Trusts by
Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the
Trusts. Certain United States Federal income taxation matters may be passed upon
for CMS Energy and the Trust by either Theodore J. Vogel, tax counsel for CMS
Energy or 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, independent public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
With respect to the unaudited interim consolidated financial information for
the periods ended March 31, 1998 and 1997, June 30, 1998 and 1997, and September
30, 1998 and 1997, Arthur Andersen LLP has applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports thereon state that they did not audit and they
did not express an opinion on that interim consolidated financial information.
Accordingly, the degree of reliance on their report on that information should
be restricted in light of the limited nature of the review procedures applied.
In addition, the accountants are not subject to the liability provisions of
Section 11 of the Securities Act, for their reports on the unaudited interim
consolidated financial information because those reports are not a "report" or
"part" of the registration statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Securities Act.
Future consolidated financial statements of CMS Energy and the reports
thereon of Arthur Andersen LLP also will be incorporated by reference in this
prospectus in reliance upon the authority of that firm as experts in giving
those reports to the extent that said firm has audited said consolidated
financial statements and consented to the use of their reports thereon.
PLAN OF DISTRIBUTION
CMS Energy and/or the Trusts 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
23
<PAGE> 26
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 Trusts 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 Trusts
or through agents designated by CMS Energy and/or the Trusts 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 Trusts 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.
The CMS Energy Common Stock and the Class G Common Stock may be offered
other than through the facilities of a national securities exchange and other
than to or through a market marker other than on an exchange.
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 also be offered and sold, if so indicated in
the applicable prospectus supplement, in connection with a remarketing upon
their purchase, in accordance with a redemption or repayment pursuant to their
terms, or otherwise, by one or more firms ("remarketing firms"), acting as
principals for their own accounts or as agents for CMS Energy and/or the Trusts.
Any remarketing firm will be identified and the terms of its agreement, if any,
with its compensation will be described in the applicable prospectus supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Offered Securities remarketed
thereby. Remarketing firms may be entitled under agreements which may be entered
into with CMS Energy and/or the Trusts to indemnification or contribution by CMS
Energy and/or the Trusts against certain civil liabilities, including
liabilities under the Securities Act, and may be customers of, engage in
transactions or perform services for CMS Energy and its subsidiaries 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.
24
<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......... $417,000
*Listing on New York Stock Exchange..................... 75,000
*Trustees expenses...................................... 18,000
*Printing and Engraving................................. 200,000
*Services of counsel.................................... 50,000
*Services of independent public accountants, Arthur
Andersen LLP........................................... 25,000
*Rating Agency Fees, Collateral Agent's and Purchase.... 100,000
Contract Agent's Fees ..................................
*Blue Sky fees and expenses............................. 20,000
*Miscellaneous.......................................... 18,000
-------
Total.............................................. $910,000
========
</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 CMS Energy's Articles of Incorporation provides:
A director shall not be personally liable to the Corporation or its shareholders
for monetary damages for breach of duty as a director except (I) for a breach of
the director's duty of loyalty to the Corporation or its shareholders, (ii) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for a violation of Section 551 (I) of the
Michigan Business Corporation Act, and (iv) any action from which the director
derived an improper personal benefit. No amendment to or repeal of this Article
VIII, and no modification to its provisions by law, shall apply to, or have any
effect upon, the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment, repeal or modification.
Article IX of CMS Energy's Articles of Incorporation provides:
<PAGE> 28
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.
EXHIBIT NO. DESCRIPTION
----------- -----------
(1)(a) -- Form of Underwriting Agreement with respect
to the Offered Securities (other than the
Trust Preferred Securities).
(1)(b) -- Form of Underwriting Agreement with respect
to the Trust Preferred Securities.
*(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).)
II-3
<PAGE> 30
*(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) -- Certificate of Trust of CMS Energy Trust
III.
(4)(j) -- Form of Amended and Restated Trust Agreement
of CMS Energy Trust III.
*(4)(k) -- 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)(l) -- 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)(m) -- Form of Subordinated Debenture (included in
(4)(f).)
*(4)(n) -- Form of Trust Preferred Security (included
in (4)(h).)
*(4)(o) -- 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)(p) -- Form of Trust Preferred Securities Guarantee
Agreement of CMS Energy Trust III.
*(4)(q) -- 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
II-4
<PAGE> 31
earnings to fixed charges and preferred
stock dividends.
(15)(a) - Letter of Arthur Andersen LLP re: CMS Energy
unaudited interim financial information
for the period ended March 31, 1998.
(15(b) - Letter of Arthur Andersen LLP re: CMS Energy
unaudited interim financial information for
the periods ended June 30, and September 30,
1998.
(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.
(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.
(25)(d) -- Statement of Eligibility of Property Trustee
of CMS Energy Trust III.
(25)(e) -- Statement of Eligibility of the Trust
Preferred Security Guarantee Trustee of CMS
Energy Trust III.
- ----------
*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 Jackson, and State of Michigan, on the 15th day of
December, 1998.
CMS ENERGY CORPORATION
By:/s/ Alan 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 the
capacities and on the 15th day of December, 1998.
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
(i) Principal executive officer
/s/ William T. McCormick, Jr.
----------------------------------- Chairman of the Board, Chief
William T. McCormick, Jr. Executive Officer and Director
(ii) Principal financial officer:
/s/ Alan M. Wright
----------------------------------- Senior Vice President and
Alan M. Wright Chief Financial Officer
(iii) Controller or principal accounting officer
/s/ Preston D. Hopper
----------------------------------- Senior Vice President, Controller and
Preston D. Hopper Chief Accounting Officer
* Director
-----------------------------------
(John M. Deutch)
*
-----------------------------------
(James J. Duderstadt) Director
*
-----------------------------------
(Kathleen R. Flaherty) Director
*
-----------------------------------
(Victor J. Fryling) Director
</TABLE>
II-7
<PAGE> 34
<TABLE>
<S> <C>
*
-----------------------------------
(Earl D. Holton) Director
*
-----------------------------------
(William U. Parfet) Director
*
-----------------------------------
(Percy A. Pierre) Director
*
-----------------------------------
(Kenneth L. Way) Director
*
-----------------------------------
(Kenneth Whipple) Director
*
-----------------------------------
(John B. Yasinsky) Director
*By: Alan 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 Jackson, State of Michigan, on the 15th day of
December, 1998.
CMS ENERGY TRUST II
By: /s/ Alan M. Wright
------------------------------------
Alan M. Wright, Trustee
By: /s/ Thomas A. Mc Nish
------------------------------------
Thomas A. Mc Nish, Trustee
II-9
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CMS Energy Trust
III 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 Jackson, State of Michigan, on the 15th day of
December, 1998.
CMS ENERGY TRUST III
By: /s/ Alan M. Wright
------------------------------------
Alan M. Wright, Trustee
By: /s/ Thomas A. Mc Nish
------------------------------------
Thomas A. Mc Nish, Trustee
II-10
<PAGE> 37
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
(1)(a) -- Form of Underwriting Agreement with respect
to the Offered Securities (other than the
Trust Preferred Securities).
(1)(b) -- Form of Underwriting Agreement with respect
to the Trust Preferred Securities.
*(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).)
II-11
<PAGE> 38
*(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) -- Certificate of Trust of CMS Energy Trust
III.
(4)(j) -- Form of Amended and Restated Trust Agreement
of CMS Energy Trust III.
*(4)(k) -- 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)(l) -- 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)(m) -- Form of Subordinated Debenture (included in
(4)(f).)
*(4)(n) -- Form of Trust Preferred Security (included
in (4)(h).)
*(4)(o) -- 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)(p) -- Form of Trust Preferred Securities Guarantee
Agreement of CMS Energy Trust III
*(4)(q) -- 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
II-12
<PAGE> 39
earnings to fixed charges and preferred
stock dividends.
(15)(a) - Letter of Arthur Andersen LLP re: CMS Energy
unaudited interim financial - information
for the period ended March 31, 1998.
(15(b) Letter of Arthur Andersen LLP re: CMS Energy
unaudited interim financial information for
the periods ended June 30, and September 30,
1998.
(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.
(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.
(25)(d) -- Statement of Eligibility of Property Trustee
of CMS Energy Trust III.
(25)(e) -- Statement of Eligibility of the Trust
Preferred Security Guarantee Trustee of CMS
Energy Trust III.
- ----------
*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-13
<PAGE> 1
EXHIBIT 1(a)
_____________________Shares
CMS ENERGY CORPORATION
Common Stock ($.01 par value)
______________________
Underwriting Agreement
_____________ __, 199_
To the Representatives named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Dear Sirs:
CMS Energy Corporation, a Michigan corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined in Section 14
hereof) ________ shares of its Common Stock ($.01 par value) (the "Securities")
as indicated in Schedule II. The Underwriters have designated the
Representatives to execute this Agreement on their behalf and to act for them in
the manner provided in this Agreement.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), a registration statement on Form
S-3 (Registration No. ___________) including a prospectus relating to the
Securities, and such registration statement, has become effective under the Act.
The registration statement, at the time such registration statement, became
effective and as it may have been thereafter amended to the date of this
Agreement (including the documents then incorporated by reference therein) is
hereinafter referred to as the "Registration Statement." If the Company has
filed, or will file, an breviated registration statement to register additional
Securities pursuant to Rule 462(b) under the Act (the "Rule 462(b) Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462(b) Registration Statement. The
prospectus forming a part of the Registration Statement at the time the
Registration Statement became effective (including the documents then
incorporated by reference therein) is hereinafter referred to as the "Basic
Prospectus," provided that in the event that the Basic Prospectus shall have
been
<PAGE> 2
amended, revised or supplemented prior to the date of this Agreement, or if
the Company shall have supplemented the Basic Prospectus by filing any documents
pursuant to Section 13 or 14 or 15 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the time the Registration Statement became
effective and prior to the date of this Agreement, which documents are deemed to
be incorporated in the Basic Prospectus, the term "Basic Prospectus" shall also
mean such prospectus as so amended, revised or supplemented. The Basic
Prospectus, as it shall be revised or supplemented to reflect the final terms of
the offering and sale of the Securities by a prospectus supplement relating to
the Securities, and in the form to be filed with, or transmitted for filing to,
the Commission pursuant to Rule 424 under the Act, is hereinafter referred to as
the "Prospectus." Any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement or the Prospectus shall
be deemed to include only amendments or supplements to the Registration
Statement or Prospectus, as the case may be, and documents incorporated by
reference therein after the date of this Agreement and prior to the termination
of the offering of the Securities by the Underwriters.
1. Purchase and Sale: Upon the basis of the representations and
warranties and on the terms and subject to the conditions herein set forth, the
Company agrees to sell to the respective Underwriters, severally and not
jointly, and the respective Underwriters, severally and not jointly, agree to
purchase from the Company, at the purchase price of $ ________ a share (the
"Purchase Price"), the respective number of shares of Firm Securities set
opposite their names in Schedule II hereto.
The Company hereby agrees that, without the prior written consent of
_________________, the Company will not offer, sell, contract to sell or
otherwise dispose of any shares of common stock of the Company or any securities
convertible into or exercisable or exchangeable for common stock of the Company
other than the Securities for a period of ____ days after the date of this
Agreement, provided, that the Company may, in a manner generally consistent with
past practices regarding the numbers of shares issued by the Company from time
to time thereunder during such _____ day period, issue shares of CMS Energy
Common Stock and CMS Energy Class G Common Stock under its Stock Purchase Plan,
Performance Incentive Stock Plan, Employee Stock Ownership Plan and Employee
Savings and Incentive Plan.
The Company is advised by the Representatives that the Securities may
be offered by the Underwriters from time to time in one or more transactions
_____________________________________ on the New York Stock Exchange or on other
national securities exchanges on which the Company's Common Stock is traded, in
the over-the-counter market, through negotiated transactions or otherwise at
market prices prevailing at the time of the sale or at prices otherwise
negotiated.
2. Payment and Delivery: Payment for the Securities shall be made to the
Company or its order in Federal or other immediately available funds in New York
City (or such other place or places of payment as shall be agreed upon by the
Company and the Representatives in writing), upon the delivery of the Securities
at the offices of Skadden, Arps, Slate, Meagher and
2
<PAGE> 3
Flom LLP ("Skadden Arps"), 919 Third Avenue, New York, New York 10022 (or such
other place or places of delivery as shall be agreed upon by the Company and the
Representatives) to the Representatives for the respective accounts of the
Underwriters against receipt therefor signed by the Representatives on behalf of
themselves and as agent for the Underwriters. Such payment and delivery shall be
made at 10:00 A.M., New York time on _____________ (or on such later business
day as shall be agreed upon by the Company and the Representatives in writing),
unless postponed in accordance with the provisions of Section 10 hereof. The day
and time at which payment and delivery for the Securities are to be made is
herein called the "Time of Purchase."
Delivery of the Securities shall be made in definitive, fully
registered form in authorized denominations registered in such names as the
Representatives may request in writing to the Company not later than two full
business days prior to the Time of Purchase, or if no such request is received,
in the names of the respective Underwriters for the respective number of shares
of Securities, set forth opposite the name of each Underwriter in Schedule II,
in denominations selected by the Company.
The Company agrees to make the Securities available for inspection by
the Underwriters at the offices of Skadden, Arps at least 24 hours prior to the
Time of Purchase, in definitive, fully registered form, and as requested
pursuant to the preceding paragraph.
3. Conditions of Underwriters' Obligations: The several obligations of
the Underwriters hereunder are subject to the accuracy of the warranties and
representations on the part of the Company and to the following other
conditions:
(a) That all legal proceedings to be taken in connection with the
issue and sale of the Securities shall be reasonably satisfactory in form
and substance to ________________, counsel to the Underwriters.
(b) That, at the Time of Purchase, the Representatives shall be
furnished with the following opinions, dated the day of the Time of
Purchase:
(1) Opinion of Michael D. VanHemert, Esq., counsel to the
Company, substantially to the effect set forth in Exhibit A to this
Agreement; and
(2) Opinion of ______________, counsel to the Underwriters,
substantially to the effect set forth in Exhibit B to this Agreement.
(c) That on the date of the Time of Purchase the Representatives
shall have received a letter from Arthur Anderson LLP in form and substance
satisfactory to the Representatives, dated as of such date, (i) confirming
that they are independent public accountants within the meaning of the Act
and the related rules and regulations adopted by the Commission, (ii)
stating that in their opinion the financial statements examined by
3
<PAGE> 4
them and included or incorporated by reference in the Registration
Statement complied as to form in all material respects with the applicable
accounting requirements of the Commission, including the related rules and
regulations adopted by the Commission, and (iii) covering, as of a date not
more than four business days prior to the date of such letter, such other
matters as the Representatives reasonably request.
(d) That, between the date of the execution of this Agreement and
the Time of Purchase, no material and adverse change shall have occurred in
the business, properties or financial condition of the Company and its
subsidiaries (as defined in Rule 405 under the Act, and hereafter called
the "Subsidiaries"), taken as a whole, which, in the judgment of the
Representatives, after reasonable inquiries on the part of the
Representatives, impairs the marketability of the Securities (other than
changes referred to in or contemplated by the Registration Statement or
Prospectus).
(e) That, prior to the Time of Purchase, no stop order suspending
the effectiveness of the Registration Statement shall have been issued
under the Act by the Commission or proceedings therefor initiated or
threatened.
(f) That, at the Time of Purchase, the Company shall have
delivered to the Representatives a certificate of an executive officer of
the Company to the effect that, to the best of his knowledge, information
and belief there shall have been no material adverse change in the
business, properties or financial condition of the Company and its
Subsidiaries, taken as a whole, from that set forth in the Registration
Statement or Prospectus (other than changes referred to in or contemplated
by the Registration Statement or Prospectus).
(g) That the Company shall have performed such of its obligations
under this Agreement as are to be performed at or before the Time of
Purchase by the terms hereof.
(h) That any additional documents or agreements reasonably
requested by the Representatives or their counsel to permit the
Underwriters to perform their obligations or permit their counsel to
deliver opinions hereunder shall have been provided to them.
(i) That between the date of the execution of this Agreement and
the day of the Time of Purchase there has been no downgrading of the
investment ratings of any of the Company's securities or of Consumers
Energy Company's first mortgage bonds by Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. or Duff & Phelps Credit Rating Co., and
neither the Company nor Consumers Energy Company shall have been placed on
"credit watch" or "credit review" with negative implications by any of such
statistical rating organizations if any of such occurrences shall, in the
reasonable judgment of the Representatives, after reasonable inquiries on
the part of the Representatives, impair the marketability of the
Securities.
4
<PAGE> 5
(j) That any filing of the Prospectus and any supplements thereto
required pursuant to Rule 424 under the Act have been made in compliance
with Rule 424 in the time periods provided by Rule 424.
(k) That the Securities, at the Time of Purchase, shall have been
duly listed, subject to notice of issuance, on the New York Stock Exchange.
(l) That, prior to the Time of Purchase, the Company shall file a
Rule 462(b) Registration Statement and that such Rule 462(b) Registration
Statement shall have become effective under the Act.
4. Conditions of the Company's Obligations: The obligations of the
Company hereunder are subject to the satisfaction of the condition set forth in
Section 3(e).
5. Certain Covenants of the Company: In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To use its best efforts to cause any post-effective amendments
to the Registration Statement to become effective as promptly as possible.
During the time when a Prospectus is required to be delivered under the
Act, the Company will comply so far as it is able with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
to the extent necessary to permit the continuance of sales of or dealings
in the Securities in accordance with the provisions hereof and of the
Prospectus.
(b) To deliver to each of the Representatives a conformed copy of
the Registration Statement and any amendments thereto (including all
exhibits thereto) and full and complete sets of all comments of the
Commission or its staff and all responses thereto with respect to the
Registration Statement and any amendments thereto and to furnish to the
Representatives, for each of the Underwriters, conformed copies of the
Registration Statement and any amendments thereto without exhibits.
(c) As soon as the Company is advised thereof, the Company will
advise the Representatives and confirm the advice in writing of: (i) the
effectiveness of any amendment to the Registration Statement, (ii) any
request made by the Commission for amendments to the Registration Statement
or Prospectus or for additional information with respect thereto, (iii) the
suspension of qualification of the Securities for sale under Blue Sky or
state securities laws, and (iv) the entry of a stop order suspending the
effectiveness of the Registration Statement or of the initiation or threat
or any proceedings for that purpose and, if such a stop order should be
entered by the Commission, to make every reasonable effort to obtain the
lifting or removal thereof.
5
<PAGE> 6
(d) To deliver to the Underwriters, without charge, as soon as
practicable, and from time to time during such period of time (not
exceeding nine months) after the date of the Prospectus as they are
required by law to deliver a prospectus, as many copies of the Prospectus
(as supplemented or amended if the Company shall have made any supplements
or amendments thereto) as the Representatives may reasonably request; and
in case any Underwriter is required to deliver a prospectus after the
expiration of nine months after the date of the Prospectus, to furnish to
the Representatives, upon request, at the expense of such Underwriter, a
reasonable quantity of a supplemental prospectus or of supplements to the
Prospectus complying with Section 10(a)(3) of the Act.
(e) For such period of time (not exceeding nine months) after the
date of the Prospectus as the Underwriters are required by law to deliver a
prospectus in respect of the Securities, if any event shall have occurred
as a result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, or if it
becomes necessary to amend or supplement the Prospectus to comply with law,
to forthwith prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus and deliver to the Underwriters, without
charge, such number of copies thereof as may be reasonably requested.
(f) To make generally available to the Company's security holders,
as soon as practicable, an "earning statement" (which need not be audited
by independent public accountants) covering a twelve-month period
commencing after the effective date of the Registration Statement and
ending not later than 15 months thereafter, which shall comply in all
material respects with and satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(g) To use its best efforts to qualify the Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may designate and to pay (or cause to be paid), or
reimburse (or cause to be reimbursed) the Underwriters and their counsel
for, reasonable filing fees and expenses in connection therewith (including
the reasonable fees and disbursements of counsel to the Underwriters and
filing fees and expenses paid and incurred prior to the date hereof),
provided, however, that the Company shall not be required to qualify to do
business as a foreign corporation or as a securities dealer or to file a
general consent to service of process or to file annual reports or to
comply with any other requirements deemed by the Company to be unduly
burdensome.
(h) To pay all expenses, fees and taxes (other than transfer taxes
on sales by the respective Underwriters) in connection with the issuance
and delivery of the Securities, except that the Company shall be required
to pay the fees and disbursements (other than disbursements referred to in
paragraph (g) of this Section 5) of Skadden Arps, counsel to the
Underwriters, only in the events provided in paragraph (i) of this Section
5,
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<PAGE> 7
the Underwriters hereby agreeing to pay such fees and disbursements in any
other event, and that except as provided in Section (i), the Company shall
not be responsible for any out-of-pocket expenses of the Underwriters in
connection with their services hereunder.
(i) If the Underwriters shall not take up and pay for the
Securities due to the failure of the Company to comply with any of the
conditions specified in Section 3 hereof, or, if this Agreement shall be
terminated in accordance with the provisions of Section 11 hereof prior to
the Time of Purchase, to pay the reasonable fees and disbursements of
Skadden Arps, counsel to the Underwriters, and, if the Underwriters shall
not take up and pay for the Securities due to the failure of the Company to
comply with any of the conditions specified in Section 3 hereof, to
reimburse the Underwriters for their reasonable out-of-pocket expenses, in
an aggregate amount not exceeding a total of $3,000, incurred in connection
with the financing contemplated by this Agreement.
(j) Prior to the termination of the offering of the Securities, to
not file any amendment to the Registration Statement or supplement to the
Prospectus (including the Basic Prospectus) unless the Company has
furnished the Representatives and counsel to the Underwriters with a copy
for their review and comment a reasonable time prior to filing and has
reasonably considered any comments of the Representatives, or any such
amendment or supplement to which such counsel shall reasonably object on
legal grounds in writing, after consultation with the Representatives.
(k) To furnish the Representatives with copies of all documents
required to be filed with the Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act subsequent to the time the Registration Statement
becomes effective and prior to the termination of the offering of the
Securities.
(l) So long as may be required by law for distribution of the
Securities by the Underwriters or by any dealers that participate in the
distribution thereof, the Company will comply with all requirements under
the Exchange Act relating to the timely filing with the Commission of its
reports with the Commission of its reports pursuant to Section 13 of the
Exchange Act and of its proxy statements pursuant to Section 14 of the
Exchange Act.
6. Representations and Warranties of the Company: The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) The Registration Statement has become effective under the Act;
a true and correct copy of the Registration Statement in the form in which
it became effective has been delivered to each of the Representatives and
to the Representatives for each of the Underwriters (except that copies
delivered for the Underwriters excluded exhibits to such Registration
Statement); any filing of the Prospectus and any supplements thereto
required pursuant to Rule 424(b) has been or will be made in the manner
required by Rule
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<PAGE> 8
424(b) and within the time period required by Section 3(j) hereof; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purposes are pending before or, to the
knowledge of the Company, threatened by the Commission. On the initial
effective date of the Registration Statement, the Registration Statement
and the Basic Prospectus complied, or were deemed to have complied, on the
effective date of the Rule 462(b) Registration Statement, the Rule 462(b)
Registration Statement will comply, and on its respective issue date, each
preliminary prospectus filed pursuant to Rule 424(b) complied, and the
Basic Prospectus complied, and on its issue date, the Prospectus will
comply, or will be deemed to comply, in all material respects with the
applicable provisions of the Act and the related rules and regulations of
the Commission, none of the Registration Statement on its effective date,
the Basic Prospectus or its issue date, or any other preliminary
prospectus, on its issue date, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Prospectus, as of its issue date and, as amended or supplemented, if
applicable, as of the Time of Purchase, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that the Company makes no warranty or
representation to any Underwriter with respect to any statements or
omissions made therein in reliance upon and in conformity with information
furnished in writing to the Company by, or through the Representatives on
behalf of, any Underwriter expressly for use therein.
(b) The documents incorporated by reference in the Registration
Statement, any preliminary prospectus, the Basic Prospectus, when they were
filed (or, if an amendment with respect to any such document was filed,
when such amendment was filed) with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and any further
documents so filed and incorporated by reference will, when they are filed
with the Commission, conform in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder; none of such documents, when it was filed (or, if
an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
(c) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Michigan and
has all requisite authority to own or lease its properties and conduct its
business as described in the
8
<PAGE> 9
Prospectus and to consummate the transactions contemplated hereby, and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business as described in the
Prospectus or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its Subsidiaries taken as a whole. Each significant subsidiary (as
defined in Rule 405 under the Act, and hereinafter called a "Significant
Subsidiary") of the Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has all requisite authority to own or lease its properties
and conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business as described in the Prospectus or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries, taken
as a whole.
(d) The shares of Common Stock of the Company outstanding prior to
the issuance of the Securities have been duly authorized and are validly
issued, full paid and non-assessable.
(e) The Securities have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Securities
will not be subject to any preemptive or similar rights.
(f) The capital stock of the Company conforms in all material respects
to the description thereof in the Prospectus.
(g) Except for the outstanding shares of preferred stock of Consumers
Energy Company, the 8.36% Trust Originated Preferred Securities of
Consumers Power Company Financing I, the 8.20% Trust Originated Preferred
Securities of Consumers Energy Financing II, all of the outstanding capital
stock of each of Consumers Energy Company and CMS Enterprises Company is
owned directly or indirectly by the Company, free and clear of any security
interest, claim, lien, or other encumbrance or preemptive rights, and (ii)
there are no outstanding rights (including, without limitation, preemptive
rights), warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock or other equity interest in
any of Consumers Energy Company and CMS Enterprises Company or any
contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any such capital stock, any such convertible or
exchangeable securities or any such rights, warrants or options.
(h) Each of the Company and its Significant Subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has
9
<PAGE> 10
made all declarations and filings with, all federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to obtain or file would
not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
(i) No order, license, consent, authorization or approval of, or
exemption by, or the giving of notice to, or the registration with any
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, and no filing, recording,
publication or registration in any public office or any other place, was or
is now required to be obtained by the Company to authorize its execution or
delivery of, or the performance of its obligations under, this Agreement or
the Securities, except such as have been obtained or may be required under
state securities or Blue Sky laws or as referred to in the Basic
Prospectus.
(j) Neither the execution or delivery by the Company of, nor the
performance by the Company of its obligations under, this Agreement did or
will conflict with, result in a breach of any terms or provisions of, or
constitute a default or require the consent of any party under the
Company's Articles of Incorporation or by-laws, any material agreement or
instrument to which it is a party, any existing applicable law, rule or
regulation or any judgment, order or decree of any government, governmental
instrumentality or court, domestic of foreign, having jurisdiction over the
Company or any of its properties or assets, or did or will result in the
creation or imposition of any lien on the Company's properties or assets.
(k) Except as disclosed in the Basic Prospectus, there is no action,
suit, proceeding, inquiry or investigation (at law or in equity or
otherwise) pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary by any governmental authority that (i)
questions the validity, enforceability or performance of this Agreement or
the Securities or (ii) if determined adversely, is likely to have a
material adverse effect on the business or financial condition of the
Company and the Subsidiaries, taken as a whole, or material adversely
affect the ability of the Company to perform its obligations hereunder or
the consummation of the transactions contemplated by this Agreement.
(l) There has not been any material and adverse change in the
business, properties or financial condition of the Company and its
Subsidiaries, taken as a whole, from that set forth in the Registration
Statement (other than changes referred to in or contemplated by the
Registration Statement or the Basic Prospectus).
(m) Except as set forth in the Basic Prospectus, no event or condition
exists that constitutes, or with the giving of notice or lapse of time or
both would constitute, a default or any breach or failure to perform by the
Company or any of its Significant
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<PAGE> 11
Subsidiaries in any material respect under any indenture, mortgage, loan
agreement, lease or other material agreement or instrument to which the
Company or any of its Significant Subsidiaries is a party or by which it or
any of its Significant Subsidiaries, or any of their respective properties,
may be bound.
7. Representation and Warranties of Underwriters: Each Underwriter
warrants and represents that the information, if any, furnished in writing to
the Company through the Representatives expressly for use in the Registration
Statement and Prospectus is correct in all material respects to such
Underwriter. Each Underwriter, in addition to other information furnished to the
Company for use in the Registration Statement and Prospectus, herewith furnishes
to the Company for use in the Registration Statement and Prospectus, the
information stated herein with regard to the public offering, if any, by such
Underwriter and represents and warrants that such information is correct in all
material respects as to such Underwriter.
8. Indemnification:
(a) The Company agrees, to the extent permitted by law, to
indemnify and hold harmless each of the Underwriters and each person, if
any, who controls any such Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of
them may become subject under the Act or otherwise, and to reimburse the
Underwriters and such controlling person or persons, if any, for any legal
or other expenses incurred by them in connection with defending any action,
suit or proceeding (including governmental investigations) as provided in
Section 8(c) hereof, insofar as such losses, claims, damages, liabilities
or actions, suits or proceedings (including governmental investigations)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus as of its issue date (if used prior to the date of
the Basic Prospectus), the Basic Prospectus (if used prior to the date of
the Prospectus), the Prospectus, or, if the Prospectus shall be amended or
supplemented, in the Prospectus as so amended or supplemented (if such
Prospectus or such Prospectus as amended or supplemented is used after the
period of time referred to in Section 5(e) hereof, it shall contain or be
used with such amendments or supplements as the Company deems necessary to
comply with Section 10(a) of the Act), or arise out of or are based upon
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission which was made in such
preliminary Prospectus, Basic Prospectus, Registration Statement or
Prospectus, or in the Prospectus as so amended or supplemented, in reliance
upon and in conformity with information furnished in writing to the Company
by, or through the Representatives on behalf of, any Underwriter expressly
for use therein, and except that this indemnity shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) on
account of
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<PAGE> 12
any losses, claims, damages, liabilities or actions, suits or proceedings
arising from the sale of the Securities to any person if a copy of the
Prospectus, as the same may then be supplemented or amended (excluding,
however, any document then incorporated or deemed incorporated therein by
reference), was not sent or given by or on behalf of such Underwriter to
such person (i) with or prior to the written confirmation of sale involved
or (ii) as soon as available after such written confirmation, relating to
an event occurring prior to the payment for and delivery to such person of
the Securities involved in such sale, and the omission or alleged omission
or untrue statement or alleged untrue statement was corrected in the
Prospectus as supplemented or amended at such time.
The Company's indemnity agreement contained in this Section 8(a), and
the covenants, representations and warranties of the Company contained in
this Agreement, shall remain in full force and effect regardless of any
investigation made by or on behalf of any person, and shall survive the
delivery of and payment for the Securities hereunder, and the indemnity
agreement contained in this Section 8 shall survive any termination of this
Agreement. The liabilities of the Company in this Section 8(a) are in
addition to any other liabilities of the Company under this Agreement or
otherwise.
(b) Each underwriter agrees, severally and not jointly, to the
extent permitted by law, to indemnify, hold harmless and reimburse the
Company, its directors and such of its officers as shall have signed the
Registration Statement, each other Underwriter and each person, if any, who
controls the Company or any such other Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the same extent
and upon the same terms as the indemnity agreement of the Company set forth
in Section 8(a) hereof, but only with respect to alleged untrue statements
or omissions made in the Registration Statement, the Basic Prospectus or in
the Prospectus, as amended or supplemented, (if applicable) in reliance
upon and in conformity with information furnished in writing to the Company
by such Underwriter expressly for use therein.
The indemnity agreement on the part of each Underwriter contained in
this Section 8(b) and the representations and warranties of such Underwriter
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of the Company or any other person, and
shall survive the delivery of and payment for the Securities hereunder, and the
indemnity agreement contained in this Section 8(b) shall survive any termination
of this Agreement. The liabilities of each Underwriter in Section 8(b) are in
addition to any other liabilities of such Underwriter under this Agreement or
otherwise.
(c) If a claim is made or an action, suit or proceeding (including
governmental investigations) is commenced or threatened against any person
as to which indemnity may be sought under Section 8(a) or 8(b), such person
(the "Indemnified Person") shall notify the person against whom such
indemnity may be sought (the "Indemnifying Person") promptly after any
assertion of such claim threatening to institute an action, suit or
proceeding or if such an action, suit or proceeding is commenced against
such
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<PAGE> 13
Indemnified Person, promptly after such Indemnified Person shall have been
served with a summons or other first legal process, giving information as
to the nature and basis of the claim. Failure to so notify the Indemnifying
Person shall not, however, relieve the Indemnifying Person from any
liability which it may have on account of the indemnity under Section 8(a)
or 8(b) if the Indemnifying Person has not been prejudiced in any material
respect by such failure. Subject to the immediately succeeding sentence,
the Indemnifying Person shall assume the defense of any such litigation or
proceeding, including the employment of counsel and the payment of all
expenses, with such counsel being designated, subject to the immediately
succeeding sentence, in writing by the Representatives in the case of
parties indemnified pursuant to Section 8(b) and by the Company in the case
of parties indemnified pursuant to Section 8(a). Any Indemnified Person
shall have the right to participate in such litigation or proceeding and to
retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include (x) the Indemnifying Person and
(y) the Indemnified Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the same counsel
would be inappropriate due to actual or likely conflicts of interest
between them, in either of which cases the reasonable fees and expenses of
counsel (including disbursements) for such Indemnified Person shall be
reimbursed by the Indemnifying Person to the Indemnified Person. If there
is a conflict as described in clause (ii) above, and the Indemnified
Persons have participated in the litigation or proceeding utilizing
separate counsel whose fees and expenses have been reimbursed by the
Indemnifying Person and the Indemnified Persons, or any of them, are found
to be solely liable, such Indemnified Persons shall repay to the
Indemnifying Person such fees and expenses of such separate counsel as the
Indemnifying Person shall have reimbursed. It is understood that the
Indemnifying Person shall not, in connection with any litigation or
proceeding or related litigation or proceedings in the same jurisdiction as
to which the Indemnified Persons are entitled to such separate
representation, be liable under this Agreement for the reasonable fees and
out-of-pocket expenses of more than one separate firm (together with not
more than one appropriate local counsel) for all such Indemnified Persons.
Subject to the next paragraph, all such fees and expenses shall be
reimbursed by payment to the Indemnified Persons of such reasonable fees
and expenses of counsel promptly after payment thereof by the Indemnified
Persons.
In furtherance of the requirement above that fees and expenses of any
separate counsel of the Indemnified Persons shall be reasonable, the
Representatives and the Company agree that the Indemnifying Person's obligations
to pay such fees and expenses shall be conditioned upon the following:
(1) in case separate counsel is proposed to be retained by the
Indemnified Persons pursuant to clause (ii) of the preceding
paragraph, the Indemnified
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<PAGE> 14
Persons shall in good faith fully consult with the Indemnifying Person
in advance as to the selection of such counsel; and
(2) reimbursable fees and expenses of such separate counsel
shall be detailed and supported in a manner reasonably acceptable to
the Indemnifying Person (but nothing herein shall be deemed to require
the furnishing to the Indemnifying Person of any information,
including without limitation, computer print-outs of lawyers' daily
time entries, to the extent that, in the judgment of such counsel,
furnishing such information might reasonably be expected to result in
a waiver of any attorney-client privilege); and
(3) the Company and the Representatives shall cooperate in
monitoring and controlling the fees and expenses of separate counsel
for Indemnified Persons for which the Indemnifying Person is liable
hereunder, and the Indemnified Person shall use every reasonable
effort to cause such separate counsel to minimize the duplication of
activities as between themselves and counsel to the Indemnifying
Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 8, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
9. Contribution: If the indemnification provided for in Section 8 above
is unavailable to or insufficient to hold harmless an Indemnified Person under
such Section in respect of any losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in respect
thereof) referred to therein, then each Indemnifying Person under Section 8
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Person on the one hand and the Indemnified Person
on the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each Indemnifying Person shall contribute to such amount paid or
payable by such Indemnified Person in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of each
Indemnifying Person, if any, on the one hand and the Indemnified Person on the
other in connection with the statements or omissions which resulted in such
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<PAGE> 15
losses, claims, damages or liabilities (or action, suits or proceedings
(including governmental investigations) in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the total underwriting discounts
and commission received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus, bear to the aggregate public offering
price of the Securities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section 9. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental proceedings) in respect
thereof) referred to above in this Section 9 shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Person in
connection with investigating or defending any such action, suits or proceedings
(including governmental proceedings) or claim, provided that the provisions of
Section 8 have been complied with (in all material respects) in respect of any
separate counsel for such Indemnified Person. Notwithstanding the provisions of
this Section 9, no Underwriter shall be required to contribute any amount
greater than the excess of (i) the total price at which the Securities
underwritten by it and distributed to the public were offered to the public over
(ii) the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 9 to contribute are several in
proportion to their respective underwriting obligations and not joint.
The agreement with respect to contribution contained in Section 9
hereof shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any Underwriter, and shall survive
delivery of and payment for the Securities hereunder and any termination of this
Agreement.
10. Substitution of Underwriters: If any Underwriter under this agreement
shall fail or refuse (otherwise than for some reason sufficient to justify in
accordance with the terms hereof, the termination of its obligations hereunder)
to purchase the Securities which it had agreed to purchase on the Time of
Purchase, the Representatives shall immediately notify the Company and the
Representatives and the other Underwriters may, within 36 hours of the giving of
such notice, determine to purchase, or to procure one or more other members of
the National Association of Securities Dealers, Inc. ("NASD") (or, if not
members of the NASD, who are
15
<PAGE> 16
foreign banks, dealers or institutions not registered under the Securities
Exchange Act and who agree in making sales to comply with the NASD's Rules of
Fair Practice), satisfactory to the Company, to purchase, upon the terms herein
set forth, the number of shares of Securities which the defaulting Underwriter
had agreed to purchase. If any non-defaulting Underwriter or Underwriters shall
determine to exercise such right, the Representatives shall give written notice
to the Company of such determination within 36 hours after the Company shall
have received notice of any such default, and thereupon the Time of Purchase
shall be postponed for such period, not exceeding three business days, as the
Company shall determine. If in the event of such a default, the Representatives
shall fail to give such notice, or shall within such 36-hour period give written
notice to the Company that no other Underwriter or Underwriters, or others, will
exercise such right, then this Agreement may be terminated by the Company, upon
like notice given to the Representatives within a further period of 36 hours. If
in such case the Company shall not elect to terminate this Agreement, it shall
have the right, irrespective of such default:
(a) to require such non-defaulting Underwriters to purchase and
pay for the respective number of shares which they had severally agreed to
purchase hereunder, as hereinabove provided, and, in addition, the number
of shares of Securities which the defaulting Underwriter shall have so
failed to purchase up to a number of shares thereof equal to one-ninth
(1/9) of the respective number of shares of Securities which such
non-defaulting Underwriters have otherwise agreed to purchase hereunder;
and/or
(b) to procure one or more other members of the NASD (or, if not
members of the NASD, who are foreign banks, dealers or institutions not
registered under the Exchange Act and who agree in making sales to comply
with the NASD's Rules of Fair Practice), to purchase, upon the terms herein
set forth, the number of shares of Securities which such defaulting
Underwriter had agreed to purchase, or that portion thereof which the
remaining Underwriters shall not be obligated to purchase pursuant to the
foregoing clause (a).
In the event the Company shall exercise its rights under clause (a)
and/or (b) above, the Company shall give written notice thereof to the
Representatives within such further period of 36 hours, and thereupon the Time
of Purchase shall be postponed for such period, not exceeding five business
days, as the Company shall determine. In the event the Company shall be entitled
to but shall not elect to exercise its rights under clause (a) and/or (b), the
Company shall be deemed to have elected to terminate this Agreement.
Any action taken by the Company under this Section 10 shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement. Termination by the Company under this
Section 10 shall be without any liability on the part of the Company or any
non-defaulting Underwriting.
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<PAGE> 17
In the computation of any period of 36 hours referred to in this
Section 10, there shall be excluded a period of 24 hours in respect of each
Saturday, Sunday or legal holiday which would otherwise be included in such
period of time.
11. Termination of Agreement: This Agreement may be terminated at any time
prior to the Time of Purchase by the Representatives, if, prior to such time (i)
trading generally in securities on the New York Stock Exchange shall have been
suspended by the Commission or the New York Stock Exchange, (ii) trading of any
securities of the Company shall have been suspended on any exchange or
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by federal or New York State
authorities or (iv) there shall have occurred any outbreak or material
escalation of hostilities or any material adverse disruption in financial
markets or any other calamity or crisis, the effect of which on the financial
markets of the United States is such as to impair, in the Representatives'
reasonable judgment, after having made due inquiry, the marketability of the
Securities.
If the Representatives elect to terminate this Agreement, as provided
in this Section 11, the Representatives will promptly notify the Company and
each other Underwriter by telephone or telecopy, confirmed by letter. If this
Agreement shall not be carried out by any Underwriter for any reason permitted
hereunder, or if the sale of the Securities to the Underwriters as herein
contemplated shall not be carried out because the Company is not able to comply
with the terms hereof, the Company shall not be under any obligation under this
Agreement and shall not be liable to any Underwriter or to any member of any
selling group for the loss of anticipated profits from the transactions
contemplated by this Agreement and the Underwriters shall be under no liability
to the Company nor be under any liability under this Agreement to one another.
Notwithstanding the foregoing, the provisions of Sections 5(g), 5(i),
8 and 9 shall survive any termination of this Agreement.
12. Notices: All notices hereunder shall, unless otherwise expressly
provided, be in writing and be delivered at or mailed to the following addresses
or be sent by telecopy as follows: if to the Underwriters or the
Representatives, to the Representatives at the address or number, as
appropriate, designated in Schedule I hereto, and if the to the Company, to CMS
Energy Corporation, Attention: Senior Vice President and Chief Financial
Officer, Fairlane Plaza South, Suite 1100, 330 Town Center Drive, Dearborn,
Michigan 48126 (Telecopy: 313-436-9548).
13. Parties in Interest: The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters, the Company (including the
directors thereof and such of the officers thereof as shall have signed the
Registration Statement), and the controlling persons, if any, referred to in
Section 8 hereof, and their respective successors, assigns, executors and
administrators, and, except as expressly otherwise provided in Section 10
hereof, no other person shall acquire or have any right under or by virtue of
this Agreement.
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<PAGE> 18
14. Definition of Certain Terms: The term "Underwriters," as used
herein, shall be deemed to mean the several persons, firms or corporations named
in Schedule II hereto (including the Representatives herein mentioned, if so
named), and the term "Representatives," as used herein, shall be deemed to mean
the representative or representatives designated by, or in the manner authorized
by, the Underwriters in Schedule I hereto. All obligations of the corporation
named in Schedule I and Schedule II hereto, the term "Underwriters" and the term
"Representatives," as used herein, shall mean such person, firm or corporation.
If the firm or firms listed in Schedule I hereto are the same as the firm or
firms listed in Schedule II hereto, then the terms "Underwriters" and
"Representatives," as used herein, shall each be deemed to refer to such firm or
firms. The term "successors" as used in this Agreement shall not include any
purchaser, as such purchaser, of any of the Securities from any of the
respective Underwriters.
15. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
16. Counterparts: This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such respective counterparts shall together constitute
one and the same instrument.
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<PAGE> 19
If the foregoing is in accordance with your understanding, please sign
and return to us counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between each of the Underwriters and the Company.
Very truly yours,
CMS ENERGY CORPORATION
By:__________________________________________
Accepted as of: _____________ ___, 199_
By:_____________________________
Name:
Title:
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<PAGE> 20
Schedule I
__________________________
Attn:
20
<PAGE> 21
Schedule II
Number of Firm Shares
Underwriter to be Purchased
- ----------- ---------------------
___________________................................... ______________
Total............................. ______________
21
<PAGE> 1
EXHIBIT 1(b)
CMS ENERGY TRUST III
___ % TRUST PREFERRED SECURITIES
(liquidation amount $__ per preferred security)
fully and unconditionally guaranteed,
based on several obligations, by
CMS ENERGY CORPORATION
-------------------------------------------
UNDERWRITING AGREEMENT
_______ , 1999
[Name of Underwriter]
Ladies and Gentlemen:
CMS Energy Trust III, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), and CMS Energy Corporation, a
Michigan corporation, as depositor of the Trust and as guarantor (the
"Company"), propose that the Trust, subject to the terms and conditions stated
herein, issue and sell to the firms named in Schedule I hereto (the
"Underwriters") an aggregate of ______ __% Trust Preferred Securities
(liquidation amount $__ per preferred security), representing undivided
beneficial interests in the assets of the Trust, guaranteed on a subordinated
basis by the Company as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement (the
"Guarantee") between the Company and The Bank of New York, as trustee (the
"Guarantee Trustee").
The Firm Securities
1. Each of the Trust and the Company represents and warrants to,
and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-3 (Registration No.
_________) (the "Initial Registration Statement") in respect of the
Securities, the Debentures, the Guarantee and the Common Stock issuable
upon the conversion or exchange of the Securities and/or Debentures has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
or to be delivered to the Representatives and, excluding exhibits to
such registration statement, but including all documents incorporated
by reference in the prospectus included therein, to the Representatives
for each of the other Underwriters have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no
other document with respect to the Initial Registration Statement or
document incorporated by
<PAGE> 2
reference therein has heretofore been filed, or transmitted for filing,
with the Commission (other than prospectuses filed pursuant to Rule
424(b) of the rules and regulations of the Commission under the Act
each in the form heretofore delivered to the Representatives); no stop
order suspending the effectiveness of the Initial Registration
Statement is in effect and no proceedings for such purposes are pending
before or, to the knowledge of the Company, threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) under
the Act, is hereinafter called a "Preliminary Prospectus"); the various
parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the
registration statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective,
each as amended at the time such part of the registration statement
became effective, are hereinafter collectively called the "Registration
Statement"; the prospectus relating to the Securities, the Debentures,
the Guarantee and the Common Stock issuable upon the conversion or
exchange of the Securities and/or the Debentures, in the form in which
it has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date of this Agreement, is hereinafter
called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Initial
Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended
or supplemented shall be deemed to refer to the Prospectus as amended
or supplemented in relation to the Securities in the form in which it
is filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 4(a) hereof, including any documents
incorporated by reference therein as of the date of such filing);
(b) The Registration Statement and the Prospectus conform,
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter of
the Securities or through the Representatives on behalf of any
Underwriter expressly for use in the Prospectus as amended or
supplemented relating to such Securities or to any statements in or
omissions from that part of the Registration Statement that shall
constitute the Statements of Eligibility and Qualification under the
Trust Indenture Act (as defined herein) of the Debenture Trustee, the
Guarantee Trustee and the Property Trustee;
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<PAGE> 3
(c) The documents incorporated by reference in the
Registration Statement and the Prospectus, when they were filed (or, if
an amendment with respect to any such document was filed, when such
amendment was filed) with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and any further
documents so filed and incorporated by reference will, when they are
filed with the Commission, conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder; none of such documents, when filed
(or, if an amendment with respect to any such document was filed, when
such amendment was filed), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and no such
further document, when it is filed, will contain an untrue statement of
a material fact or will omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading;
(d) There has not been any material and adverse change in
the business, properties or financial condition of the Company and its
Subsidiaries (as defined in Rule 405 under the Act, and hereinafter
called the "Subsidiaries"), taken as a whole, from that set forth in
the Registration Statement (other than changes referred to in or
contemplated by the Registration Statement or the Prospectus);
(e) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Michigan and has all requisite authority to own or lease its
properties and conduct its business as described in the Prospectus and
to consummate the transactions contemplated hereby, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business as described in the
Prospectus or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole; each significant
subsidiary (as defined in Rule 405 under the Act, and hereinafter
called a "Significant Subsidiary") of the Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has all
requisite authority to own or lease its properties and conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business as described in the Prospectus or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole; and the Company has the requisite power
and authority to authorize the offering of the Debentures, the
Guarantee and the Common Stock issuable upon the conversion or exchange
of the Securities and/or the Debentures, to exercise, deliver and
perform this Agreement, and to issue, sell and deliver the Debentures,
the Guarantee and the Common Stock issuable upon the conversion or
exchange of the Securities and/or the Debentures;
(f) The shares of Common Stock of the Company issued and
outstanding prior to the issuance of the Securities have been duly
authorized and are validly issued, fully paid and non-assessable; the
shares of Common Stock issuable upon the conversion or exchange of the
Securities and/or the Debentures have been duly authorized and reserved
for issuance and, when
3
<PAGE> 4
issued and delivered in accordance with the provisions of the
Securities and/or the Indenture, will be validly issued, fully paid and
non-assessable; the issuance of the Common Stock upon the conversion or
exchange of the Securities and/or the Debentures will not be subject to
preemptive or other similar rights;
(g) The Securities have been duly and validly authorized
by the Trust, and, when the Securities are issued and delivered, such
Securities will be validly issued, fully paid and non-assessable
undivided beneficial interests in the assets of the Trust; the
Securities will conform in all material respects to the description
thereof contained in the Prospectus; the issuance of the Securities is
not subject to any preemptive or other similar rights; the Securities
will have the rights set forth in the Trust Agreement, and the terms of
the Securities are valid and binding on the Trust;
(h) The Common Securities have been duly and validly
authorized by the Trust and upon delivery by the Trust to the Company
against payment therefor as described in the Prospectus, will be duly
and validly issued undivided beneficial interests in the assets of the
Trust and will conform in all material respects to the description
thereof contained in the Prospectus; the issuance of the Common
Securities is not subject to preemptive or other similar rights; at
each Time of Delivery (as defined in Section 3 hereof), all of the
issued and outstanding Common
(i) Securities of the Trust will be directly owned by the
Company free and clear of any security interest, mortgage, pledge,
claim, lien or encumbrance (each, a "Lien"); and the Common Securities
and the Securities are the only interests authorized to be issued by
the Trust;
(j) Except for the outstanding shares of preferred stock
of Consumers Power Company and the 8.36% Trust Originated Preferred
Securities of Consumers Power Company Financing I, all of the
outstanding capital stock of each of Consumers Energy Company and CMS
Enterprises Company is owned directly or indirectly by the Company,
free and clear of any Lien, and there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options
to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in any of Consumers
Energy Company and CMS Enterprises Company or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the
issuance of any such capital stock, any such convertible or
exchangeable securities or any such rights, warrants or options;
(k) The capital stock of the Company, including the Common
Stock, conforms in all material respects to the description thereof in
the Prospectus;
(l) Each of the Company and its Significant Subsidiaries
has all necessary consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all declarations and
filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and
to conduct its business in the manner described in the Prospectus,
except to the extent that the failure to obtain or file would not have
a material adverse effect on the Company and its Subsidiaries, taken as
a whole;
4
<PAGE> 5
(m) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration
with any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, and no filing,
recording, publication or registration in any public office or any
other place, was or is now required to be obtained by the Company to
authorize its execution or delivery of, or the performance of its
obligations under, this Agreement, except such as have been obtained or
may be required under state securities or Blue Sky laws or as referred
to in the Prospectus in connection with the purchase and distribution
of the Securities, the Guarantee and the Debentures;
(n) The execution and delivery of this Agreement by the
Trust, the compliance by the Trust with all of the provisions of this
Agreement, the issuance and sale of the Securities and the Common
Securities by the Trust, the purchase of the Debentures by the Trust,
the distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement, the performance of this Agreement
and the consummation of the transactions contemplated by this Agreement
and by the Trust Agreement did not and will not conflict with, result
in a breach of any of the terms or provisions of, or constitute a
default or require the consent of any party under the Trust Agreement,
any material terms or provisions of any material agreement or
instrument to which the Trust is a party, any existing material
applicable law, rule or regulation or any judgment, order or decree of
any governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Trust or any of its properties or assets, or did
or will result in the creation or imposition of any Lien on the
Company's properties or assets;
(o) The execution and delivery of this Agreement by the
Company, the compliance by the Company with all of the provisions of
this Agreement, the issuance and sale of the Securities and the Common
Securities by the Trust, the sale of the Debentures by the Company to
the Trust, the issuance by the Company of the Guarantee, the execution,
delivery and performance by the Company of the Guarantor Agreements (as
defined below), the issuance by the Company of the Common Stock upon
the conversion or exchange of the Securities and/or the Debentures, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement, the performance of this Agreement
and the consummation of the transactions contemplated by this
Agreement and the Guarantor Agreements did not and will not conflict
with, result in a breach of any of the terms or provisions of, or
constitute a default or require the consent of any party under the
Company's Articles of Incorporation or by-laws, any material terms or
provisions of any material agreement or instrument to which the Company
is a party, any existing material applicable law, rule or regulation or
any judgment, order or decree of any governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
of its properties or assets, or did or will result in the creation or
imposition of any Lien on the Company's properties or assets;
(p) Except as disclosed in the Prospectus, there is no
action, suit, proceeding, inquiry or investigation (at law or in equity
or otherwise) pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary by any governmental authority
that (i) questions the validity, enforceability or performance of this
Agreement or the Securities or (ii) if determined adversely, is likely
to have a material adverse effect on the business or financial
condition of the Company and its Subsidiaries, taken as a whole, or
materially adversely affect the ability of the Company to perform its
obligations hereunder or the consummation of the transactions
contemplated by this Agreement;
5
<PAGE> 6
(q) Except as set forth in the Prospectus, no event or
condition exists that constitutes, or with the giving of notice or
lapse of time or both would constitute, a default or any breach or
failure to perform by the Company or any of its Significant
Subsidiaries in any material respect under any indenture, mortgage,
loan agreement, lease or other material agreement or instrument to
which the Company or any of its Significant Subsidiaries is a party or
by which it or any of its Significant Subsidiaries, or any of their
respective properties, may be bound;
(r) Neither the Company, the Trust nor any of the
Subsidiaries is and, after giving effect to the offering and sale of
the Securities, will not be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment
Company Act"). The Trust is not required to be registered under the
Investment Company Act;
(s) The Securities and the shares of Common Stock issuable
upon the conversion or exchange of the Securities and/or the Debentures
have been approved for listing on the New York Stock Exchange, subject
to notice of issuance;
(t) The Trust has been duly created and is validly
existing as a statutory business trust in good standing under the
Business Trust Act of the State of Delaware (the "Delaware Business
Trust Act") with the trust power and authority to own property and
conduct its business as described in the Prospectus, and has conducted
and will conduct no business other than the transactions contemplated
by this Agreement and described in the Prospectus; the Trust is not a
party to or bound by any agreement or instrument other than this
Agreement, the Trust Agreement between the Company and the CMS Trustees
named therein and the agreements and instruments contemplated by the
Trust Agreement and described in the Prospectus; based on expected
operations and current law, the Trust is not and will not be classified
as an association taxable as a corporation for United States federal
income tax purposes; and, to the knowledge of each of the Company and
the Trust, the Trust is not a party to or subject to any action, suit
or proceeding of any nature;
(u) The Guarantee, the Debentures, the Trust Agreement and
the Indenture (collectively, the "Guarantor Agreements") have each been
duly authorized and when validly executed and delivered by the Company
and, in the case of the Guarantee, by the Guarantee Trustee and, in the
case of the Trust Agreement, by the CMS Trustees and, in the case of
the Indenture, by the Debenture Trustee, and, in the case of the
Debentures, when validly authenticated and delivered by the Debenture
Trustee and, in the case of the Guarantee, upon due execution,
authentication and delivery of the Debentures and upon payment
therefor, will constitute valid and binding obligations of the Company,
enforceable in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity); the Debentures are entitled to
the benefits of the Indenture; the Indenture has been duly qualified
under the Trust Indenture Act of 1939 (the "Trust Indenture Act"); and
(v) Each of the Preferred Securities, Guarantee,
Debentures and the relationship among each of them will conform in all
material respects to the description thereof contained in the
Prospectus.
6
<PAGE> 7
2. Subject to the terms and conditions herein set forth, (a) the
Trust and the Company agree that the Trust shall issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust, at a purchase price per share of $___ per Security, the
number of Securities set forth opposite the name of such Underwriter in Schedule
I hereto.
As compensation to the Underwriters for their commitments hereunder,
and in view of the fact that the proceeds of the sale of the Securities will be
used by the Trust to purchase the Debentures of the Company, the Company at each
Time of Delivery will pay to _________., for the accounts of the several
Underwriters, an amount equal to $___ per Security for the Securities to be
delivered by the Company hereunder at the Time of Delivery.
3. The Securities to be purchased by each Underwriter shall be
delivered by or on behalf of the Trust to _____________., through the facilities
of The Depository Trust Company ("DTC"), for the account of such Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by certified or official bank check or checks, payable to the order of
the Trust in federal or other immediately available funds. The Trust will cause
the certificates representing the Securities to be made available for checking
and packaging at least twenty-four hours prior to the Time of Delivery (as
defined below) at the office of DTC or its designated custodian (the "Designated
Office"). The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Trust with the DTC or its designated
custodian. The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on _________, 1999 or such other time and date as
_____________ and the Trust and the Company may agree upon in writing. Such time
and date are herein called the "Time of Delivery".
(a) At each Time of Delivery, the Company will pay, or
cause to be paid, the commission payable at such Time of Delivery to
the Underwriters under Section 2 hereof in immediately available funds.
(b) The documents to be delivered at the Time of Delivery
by or on behalf of the parties hereto pursuant to Section 6 hereof,
including the cross-receipt for the Securities and any additional
documents requested by the Underwriters pursuant to Section 6(m)
hereof, will be delivered at such time and date at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York 10022-3897 (the "Closing Location"), and the Securities will
be delivered at the Designated Office, all at the Time of Delivery. A
meeting will be held at the Closing Location prior to the Time of
Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for
review by the parties hereto. For the purposes of this Section 3, "New
York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to
close.
4. The Trust and the Company, jointly and severally, agree with
each of the Underwriters:
(a) To prepare the Prospectus as amended and supplemented
in relation to the Securities in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Act not
later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 424(b); prior
to the Time of Delivery, to make no further amendment or any supplement
to the Registration Statement or Prospectus as amended or supplemented
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<PAGE> 8
unless the Company has furnished the Representatives and counsel to the
Underwriters with a copy for their review and comment a reasonable time
prior to filing and has reasonably considered any comments of the
Representatives, and to make no such amendment or supplement to which
such counsel shall reasonably object on legal grounds in writing, after
consultation with the Representatives; to timely file all reports and
any definitive proxy or information statements required to be filed by
the Trust or the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Securities, and during such same period to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any prospectus relating to the Securities, of the suspension
of the qualification of the Securities, the Debentures or the shares of
Common Stock, if any, issuable upon the conversion or exchange of the
Securities and/or the Debentures for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending
or supplementing of the Regis- tration Statement or Prospectus or for
additional information; and, in the event of the issuance of any such
stop order or of any such order preventing or suspending the use of any
prospectus relating to the Securities or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Prior to 10:00 a.m., New York City time, on the New
York Business Day next succeeding the date of this Agreement and from
time to time during the period of time (not exceeding nine months)
after the date of the Prospectus when a Prospectus is required to be
delivered under the Act to furnish the Underwriters in New York City
with copies of the Prospectus as amended or supplemented in such
quantities as the Representatives may reasonably request, and, if the
delivery of a prospectus is required at any time after the expiration
of nine months in connection with the offering or sale of the
Securities, the Debentures or the shares of Common Stock, if any,
issuable upon the conversion or exchange of the Securities and/or the
Debentures and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act or the
Exchange Act, to prepare and file such document and to furnish without
charge to each Underwriter as many copies as the Representatives may
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(c) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act;
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<PAGE> 9
(d) To make generally available to the Company's
securityholders, as soon as practicable but in any event not later than
eighteen months after the effective date of the Registration Statement,
an "earning statement" (which need not be audited by independent public
accountants) covering a twelve-month period commencing after the
effective date of the Registration Statement and ending not later than
15 months thereafter, which shall comply in all material respects with
the provisions of Section 11(a) of the Act and Rule 158 under the Act);
(e) To use its best efforts to qualify the Securities, the
Debentures, the Guarantee and the shares of Common Stock issuable upon
conversion or exchange of the Securities and/or the Debentures for
offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may designate, to comply with such
laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Securities, and to pay (or cause to be paid), or
reimburse (or cause to be reimbursed) the Underwriters and their
counsel for, reasonable filing fees and expenses in connection
therewith (including the reasonable fees and disbursements of counsel
to the Underwriters and filing fees and expenses paid and incurred
prior to the date hereof), provided, however, that the Company shall
not be required to qualify to do business as a foreign corporation or
as a securities dealer or to file a general consent to service of
process or to file annual reports or to comply with any other
requirements deemed by the Company to be unduly burdensome;
(f) During the period beginning from the date hereof and
continuing for a period of 90 days after the issuance of the
Securities, not to offer, sell, contract to sell or otherwise dispose
of (i) any Securities or any preferred stock or any other securities of
the Company which are substantially similar to the Securities,
including any guarantee of such securities, or any securities
convertible into or exchangeable for or representing the right to
receive any of the foregoing securities, or (ii) any shares of any
class of Common Stock of the Company, other than shares of Common Stock
issuable upon conversion of the Securities or pursuant to the Company's
Stock Purchase Plan, the Performance Incentive Stock Plan, the Employee
Stock Ownership Plan and the Employee Savings and Incentive Plan,
without the prior written consent of the Representatives;
(g) To issue the Guarantee concurrently with the issuance
and sale of the Securities as contemplated herein;
(h) To use the net proceeds received by it from the sale
of the Securities in the case of the Trust, and the Debentures, in the
case of the Company, pursuant to this Agreement in the manner specified
in the Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list, subject to notice of
issuance, the Securities and the shares of Common Stock issuable upon
the conversion or exchange of the Securities and/or, if the Securities
are exchanged for Debentures, Debentures on the New York Stock
Exchange; and
(j) To reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling
the Company to satisfy any obligation to issue shares of its Common
Stock upon the conversion or exchange of the Securities and/or the
Debentures.
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<PAGE> 10
5. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Trust's and the Company's counsel and
accountants in connection with the registration of the Securities and the shares
of Common Stock issuable upon conversion of the Securities and/or the Debentures
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of any delivery to the
Underwriters of any Blue Sky Memorandum; (iii) all expenses in connection with
the qualification of the Securities, the Debentures and the shares of Common
Stock issuable upon the conversion or exchange of the Securities and/or the
Debentures for offering and sale under state securities laws as provided in
Section 4(e) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey(s) up to an aggregate amount not to exceed $5,000; (iv) any fees
charged by securities rating services for rating the Securities; (v) the cost of
preparing the certificates for the Securities and the Debentures; (vi) the fees
and expenses of the CMS Trustees, the Debenture Trustee and the Guarantee
Trustee and any other agent thereof and the fees and disbursements of their
counsel (it being understood that as among the Company and the Trust and such
trustees, such fees and expenses shall not exceed $5,000); (vii) the cost and
charges of any transfer agent or registrar or dividend disbursing agent; and
(viii) all other reasonable costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Section 7 hereof, the Underwriters will pay all of their own costs
and expenses, including, without limitation, the fees of their counsel, transfer
taxes on resale of any of the Securities by them, and any advertising expenses
connected with any offers they may make.
6. The obligations of the Underwriters shall be subject, in the
discretion of the Representatives, to the condition that all representations and
warranties and other statements of the Trust and the Company herein are, at and
as of each Time of Delivery, true and correct, the condition that the Trust and
the Company shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation
to the Securities shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance
with Section 4(a) hereof; if the Company has elected to rely upon Rule
462(b), the Rule 462(b) Registration Statement shall have become
effective by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the
Representatives' reasonable satisfaction;
(b) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Underwriters, shall have furnished to the Representatives such
written opinion or opinions (a draft of each such opinion is attached
as Annex II(a) hereto), dated the Time of Delivery, with respect to the
incorporation of the Company and the formation of the Trust, insofar as
the federal laws of the United States and the laws of the State of New
York or the General Corporation Law of the State of Delaware or the
Delaware Business Trust Act are concerned, the validity of the
Securities, the Debentures, the Guarantee and the Prospectus, as well
as such other related matters as the
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<PAGE> 11
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) Michael D. Van Hemert, Assistant General Counsel to
the Company, shall have furnished to the Representatives his written
opinion or opinions (a draft of each such opinion is attached as Annex
II(b) hereto), dated the Time of Delivery, in form and substance
satisfactory to the Representatives, to the effect that:
(i) The Company is a duly organized and validly existing
corporation in good standing under the laws of
Michigan, with power and authority (corporate and
other) to own its properties and conduct its business
as described in the Prospectus, as amended and
supplemented;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, as amended or supplemented,
and all of the issued shares of capital stock of the
Company (including the Securities) have been duly and
validly authorized and issued and are fully paid and
non-assessable; the shares of Common Stock issuable
upon the conversion or exchange of the Securities
and/or Debentures have been duly authorized and
reserved for issuance and, if and when issued and
delivered in accordance with the provisions of the
Trust Agreement and the Indenture, will be validly
issued, fully paid and non- assessable, and will
conform to the description of the Common Stock
contained in the Prospectus in all material respects;
and the issuance of such Common Stock is not subject
to any preemptive or other similar rights;
(iii) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company
or any of its Subsidiaries is a party or of which any
property of the Company or any of its Subsidiaries is
the subject which, if determined adversely to the
Company or any of its Subsidiaries, would in the
aggregate have a material adverse effect on the
current or future consolidated financial position,
securityholders' equity or results of operations of
the Company and its Subsidiaries; and to the best of
such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities
or threatened by others;
(iv) Each of this Agreement, the Indenture and the
Guarantee have been duly authorized, executed and
delivered by the Company; and the Debentures have been
duly authenticated in accordance with the Indenture
and delivered and paid for in accordance herewith;
(v) To the best knowledge of such counsel, there are no
outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments or sale or
Liens related to or entitling any person to purchase
or otherwise to acquire any shares of the capital
stock of, or other ownership interest in, any
Significant Subsidiary;
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<PAGE> 12
(vi) The issuance and sale of the Securities being
delivered at the Time of Delivery, the compliance by
the Company with all the provisions of this Agreement
and the consummation of the transactions contemplated
herein, the issuance and sale of the Securities and
the Common Securities by the Trust, the sale of the
Debentures by the Company to the Trust, the issuance
by the Company of the Guarantee, the execution,
delivery and performance by the Company of the
Guarantor Agreements, the issuance by the Company of
the Common Stock upon the conversion or exchange of
the Securities and/or the Debentures, the distribution
of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement and the
performance of this Agreement and the consummation of
the transactions contemplated by this Agreement and
the Guarantor Agreements will not conflict with or
result in a breach or violation of any of the material
terms or provisions of, or constitute a default under,
any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to
such counsel to which the Company or any of its
Subsidiaries is a party or by which the Company is
bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject (except
for such breaches or violations or defaults that would
not have a material adverse effect on the business,
property or financial condition of the Trust or of the
Company and its Subsidiaries, taken as a whole), nor
will such action result in any violation of the
provisions of the Articles of Incorporation or by-laws
of the Company or any statute or any currently
existing order, rule or regulation known to such
counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its
Subsidiaries or any of its properties (other than the
securities or Blue Sky laws of the various states, as
to which such counsel need express no opinion);
(vii) No consent, approval, authorization, order,
registration or qualification of or with any such
court or governmental agency or body is required for
the issuance and sale of the Securities or the
consummation by the Company of the transactions
contemplated herein, except such as have been
obtained under the Act and such consents, approvals,
authorizations, registrations or qualifications as
may be required under state securities or Blue Sky
laws (as to which such counsel need express no
opinion) in connection with the purchase and
distribution of the Securities;
(viii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its respective
charters or bylaws or in default in the performance or
observance of any material obligation, agreement,
covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party
or by which it or any of its properties may be bound,
except for such violations or defaults the existence
of which would not have a material adverse effect on
the Company and its Subsidiaries, taken as a whole;
(ix) The statements made in the Prospectus under the
captions "Description of the Preferred Securities",
"Description of the Guarantee", "Description of the
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<PAGE> 13
Debentures", and "Relationship Among the Preferred
Securities, the Debenture and the Guarantee", insofar
as such statements constitute summaries of legal
matters or documents referred to therein, are accurate
in all material respects; the Securities, the
Debentures, the Guarantee, the Trust Agreement, the
Indenture and the Common Securities conform as to
legal matters to the description thereof and to the
statements in regard thereto contained in the
Registration Statement and the Prospectus;
(x) The Company is not an "investment company" within the
meaning of the Investment Company Act. The Trust is
not required to be registered under the Investment
Company Act;
(xi) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the
[operating statistics,] financial statements, notes,
auditors' reports and related schedules therein, and
any other financial [or statistical] data included or
incorporated by reference therein, as to which such
counsel need express no opinion), when they became
effective or were filed with the Commission, as the
case may be, complied as to form in all material
respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; [and they
have no reason to believe that any of such documents,
when they became effective or were so filed, as the
case may be, contained, in the case of a registration
statement which became effective under the Act, an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not
misleading, or, in the case of other documents which
were filed under the Act or the Exchange Act with the
Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made when such
documents were so filed, not misleading];
(xii) The Registration Statement and the Prospectus as
amended or supplemented, and any further amendments
and supplements thereto made by the Company prior to
the Time of Delivery (other than the [operating
statistics,] financial statements, notes, auditors'
reports and related schedules and any other financial
[or statistical] data included or incorporated by
reference therein, as to which such counsel need
express no opinion), comply as to form in all material
respects with the requirements of the Act and the
rules and regulations thereunder; although they do not
assume any responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement or the Prospectus,
except for those referred to in the opinion in
subsection (ix) of this Section 6(c), they have no
reason to believe that, as of its effective date, the
Registration Statement or any further amendment
thereto made by the Company prior to the Time of
Delivery (other than the [operating statistics,]
financial statements, notes, auditors' reports and
related schedules and any other financial [or
statistical] data included or incorporated by
reference therein, as to which such counsel need
express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading or that, as of its
date, the Prospectus as amended or supplemented or any
further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the
[operating statistics,] financial statements, notes,
auditors' reports and related schedules and any other
financial [or statistical] data included or
incorporated by reference therein, as to which such
counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state
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<PAGE> 14
a material fact necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading or that, as of the Time
of Delivery, either the Registration Statement or the
Prospectus as amended or supplemented or any further
amendment or supplement thereto made by the Company
prior to the Time of Delivery (other than the
[operating statistics,] financial statements, notes,
auditors' reports and related schedules and any other
financial [or statistical] data included or
incorporated by reference therein, as to which such
counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a
material fact necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading; and they do not know
of any amendment to the Registration Statement
required to be filed or any contracts or other
documents of a character required to be filed as an
exhibit to the Registration Statement or required to
be incorporated by reference into the Prospectus as
amended or supplemented or required to be described in
the Registration Statement or the Prospectus as
amended or supplemented which are not filed or
incorporated by reference or described as required;
(xiii) Upon due execution, authentication and delivery of the
Securities and upon payment therefor, the Guarantor
Agreements will be legally valid and binding
obligations of the Company enforceable in accordance
with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights
generally or by general principles of equity
(regardless of whether enforcement is considered in a
proceeding at law or in equity); the Debentures are
entitled to the benefits of the Indenture; the
Indenture has been duly qualified under the Trust
Indenture Act; and
(xiv) To the best of such counsel's knowledge, the Trust is
not a party to or bound by any agreement or instrument
other than this Agreement, the Trust Agreement and the
agreements and instruments contemplated by the Trust
Agreement and described in the Prospectus; and to the
best of such counsel's knowledge, there are no legal
or governmental proceedings pending to which the Trust
is a party or of which any property of the Trust is
the subject and no such proceedings are threatened or
contemplated by governmental authorities or threatened
by others.
(d) The foregoing opinions may be limited to the laws of
Delaware, Michigan and the federal law of the United States. In giving
such opinion, such counsel may rely, as to matters of Delaware law,
upon the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
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<PAGE> 15
Delaware counsel to the Trust and the Company, in which case the
opinion shall state that such counsel believes that you and he are
entitled to so rely.
(e) Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to the Trust and the Company, shall have furnished to the
Representatives such opinion or opinions (a draft of each such opinion
is attached as Annex II(c) hereto), dated the Time of Delivery, in form
and substance satisfactory to the Representatives, to the effect that:
(i) The Trust will be classified as a grantor trust and
not as an association taxable as a corporation; and
(ii) The discussion set forth in the Prospectus under the
captions _____________ is a fair and accurate summary
of the matters addressed therein, based upon the
assumptions stated or referred to therein.
(f) Skadden, Arps, Slate, Meagher & Flom LLP, special
Delaware counsel to the Trust and the Company, shall have furnished to
the Representatives, the Company and the Trust their written opinion or
opinions (a draft of each such opinion is attached as Annex II(d)
hereto), dated the Time of Delivery, in form and substance satisfactory
to the Representatives, to the effect that:
(i) This Agreement has been duly authorized, executed and
delivered by the Trust;
(ii) The Trust has been duly created and is validly
existing in good standing as a business trust under
the Delaware Business Trust Act and has the business
trust power and authority to conduct its business as
described in the Registration Statement and the
Prospectus;
(iii) The Trust Agreement has been duly authorized, executed
and delivered by each of the Company and the Trust,
and constitutes a valid and binding agreement of each
of the Company and the Trust, enforceable against the
Company in accordance with its terms, except as
enforcement thereof may be limited by (a) bankruptcy,
insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (b)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or
at law);
(iv) Under the Delaware Business Trust Act and the Trust
Agreement, the Trust has the power and authority to
(a) execute and deliver, and to perform its
obligations pursuant to, this Agreement, and (b) issue
and perform its obligations under the Securities and
Common Securities;
(v) The execution and delivery by the Trust of this
Agreement, and the perfor mance by the Trust of its
obligations thereunder, have been duly authorized by
all necessary action on the part of the Trust;.
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<PAGE> 16
(vi) The Securities have been duly authorized for issuance
by the Trust and, when executed and authenticated by
the property trustee in accordance with the terms of
the Trust Agreement and delivered and paid for in
accordance with this Agreement, will be fully paid and
non-assessable undivided beneficial interests in the
assets of the Trust and will entitle the holders
thereof to the benefits of this Agreement except to
the extent that enforcement of the Trust Agreement may
be limited by (a) bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent
transfers), reorganization, morato rium or other
similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles
of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law); and
the holders of the Securities will be entitled to the
same limitation of personal liability extended to
stockholders of private corporations for profit
organized under the General Corporation Law of the
State of Delaware, except that the holders of
Securities may be obligated, pursuant to the Trust
Agreement, to make payments, including (i) to provide
indemnity and/or security in connection with and pay
taxes or governmental charges arising from transfers
of the Securities and (ii) to provide security and
indemnity in connection with requests of or directions
to the property trustee to exercise its rights and
powers under the Trust Agreement; the issuance of the
Securities is not subject to preemptive or other
similar rights under the Delaware Business Trust Act
or the Trust Agreement;
(vii) The Common Securities have been duly authorized for
issuance by the Trust and, when executed and
authenticated by the property trustee in accordance
with the terms of the Trust Agreement and delivered
and paid in accordance with the Common Securities
Purchase Agreement, dated as of , , between the
Company and the Trust, will be validly issued,
undivided beneficial interests in the assets of the
Trust; the issuance of the Common Securities is not
subject to preemptive or other similar rights under
the Delaware Business Trust Act or the Trust
Agreement;
(viii) None of the execution and delivery by the Trust of, or
the performance by the Trust of its obligations under,
this Agreement, or the issuance and sale of the
Securities by the Trust in accordance with the terms
of this Agreement or the consummation of the other
transactions contemplated hereby, will contravene any
provision of applicable law or the Trust Agreement or
any agreement or other instrument governed by the laws
of the State of Delaware binding upon the Trust as set
forth in the Trust's certificate, or any judgment,
order or decree applicable to the Trust as set forth
in the Trust's certificate, of any governmental
authority; and
(ix) No governmental approval is required for the issuance
and sale of the Securities and the Common Securities
by the Trust pursuant to this Agree ment or the
consummation of the other transactions contemplated
hereby, except such as have been obtained and made.
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<PAGE> 17
(g) [On the date of the Prospectus and also] at the Time
of Delivery, the independent accountants of the Company who have
certified the financial statements of the Company and its consolidated
Subsidiaries included or incorporated by reference in the Registration
Statement shall have furnished to the Representatives a letter, dated
as of such date, (i) confirming that they are independent public
accountants within the meaning of the Act and the applicable published
rules and regulations of the Commission thereunder, (ii) stating that
in their opinion the financial statements examined by them and included
or incorporated by reference in the Registration Statement complied as
to form in all material respects with the applicable accounting
requirements of the Commission, including applicable published rules
and regulations of the Commission, and (iii) covering, as of a date not
more than five business days prior to the date of such letter, such
other matters as the Representatives reasonably request;
(h) That, between the date of the execution of this
Agreement and the Time of Delivery, no material and adverse change
shall have occurred in the business, properties or financial condition
of the Company and its Subsidiaries, taken as a whole, which, in the
judgment of the Representatives, impairs the marketability of the
Securities (other than changes referred to in or contemplated by the
Registration Statement or Prospectus);
(i) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's debt securities or
preferred stock by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Act, [and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities or preferred stock or the Company's financial strength or
claims paying ability];
(j) The Trust Agreement, the Guarantee and the Indenture
shall have been executed and delivered, in each case in a form
reasonably satisfactory to the Representatives;
(k) The Securities and the shares of Common Stock issuable
upon the conversion or exchange of the Securities and/or Debentures
shall have been duly listed, subject to notice of issuance, on the New
York Stock Exchange;
(l) The Company shall have complied with the provisions of
Section 4(b) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(m) The Trust and the Company shall have furnished or
caused to be furnished to the Representatives at the Time of Delivery
certificates of officers of the Trust and the Company to the effect
that to the best of such person's knowledge, information and belief (i)
there has been no material adverse change in the business, properties
or financial condition of the Company and its Subsidiaries, taken as a
whole or the Trust from that set forth in the Registration Statement or
Prospectus (other than changes referred to in or contemplated by the
Registration Statement or Prospectus), (ii) the representations and
warranties of the Trust and the Company herein at and as of such Time
of Delivery are true and correct, (iii) the Trust and the Company have
complied with all agreements and satisfied all conditions on their part
to be performed or satisfied at or prior to the Time of Delivery, and
(iv) no stop order suspending the effectiveness of the
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<PAGE> 18
Registration Statement has been issued and no proceedings for that
purpose have been initiated or threatened by the Commission.
7. The obligations of the Company and the Trust shall be subject,
in the discretion of the Company and the Trust, to the condition that the
Registration Statement shall be effective under the Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the Act or proceedings therefor initiated or threatened by the
Commission.
8. (a) The Trust and the Company, jointly and severally, will, to
the extent permitted by law, indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with [investigating or] defending any such
action or claim as such expenses are incurred; provided, however, that (i)
neither the Trust nor the Company shall be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Securities, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the Trust
and the Company by any Underwriter through the Representatives expressly for use
in the Prospectus as amended or supplemented relating to such Securities or with
any statements in or omissions from that part of the Registration Statement that
shall constitute the Statements of Eligibility and Qualification under the Trust
Indenture Act of the Debenture Trustee, the Guarantee Trustee and the Property
Trustee, and except that this indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account of any
losses, claims, damages, liabilities or actions, suits or proceedings arising
from the sale of the Securities to any person if a copy of the Prospectus, as
the same may then be supplemented or amended (excluding, however, any document
then incorporated or deemed incorporated therein by reference), was not sent or
given by or on behalf of such Underwriter to such person (i) with or prior to
the written confirmation of sale involved or (ii) as soon as available after
such written confirmation, relating to an event occurring prior to the payment
for and delivery to such person of the Securities involved in such sale, and the
omission or alleged omission or untrue statement or alleged untrue statement was
corrected in the Prospectus as supplemented or amended at such time.
(b) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Trust and the Company against any
losses, claims, damages or liabilities to which the Trust and the
Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus,
any preliminary prospectus supplement, the Registration Statement, the
Prospectus as amended or supplemented and any other prospectus relating
to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein
18
<PAGE> 19
not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the
Prospectus as amended or supplemented and any other prospectus relating
to the Securities, or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Trust and
the Company by such Underwriter through the Representatives expressly
for use therein; and will reimburse the Trust and the Company for any
legal or other expenses reasonably incurred by the Trust and the
Company in connection with [investigating or] defending any such action
or claim as such expenses are incurred.
(c) If a claim is made or an action, suit or proceeding
(including governmental investigations) is commenced or threatened
against any person as to which indemnity may be sought under subsection
(a) or (b), such person (the "Indemnified Person") shall notify the
person against whom such indemnity may be sought (the "Indemnifying
Person"), promptly after any assertion of such claim threatening to
institute an action, suit or proceeding or if such an action, suit or
proceeding is commenced against such Indemnified Person, promptly after
such Indemnified Person shall have been served with a summons or other
first legal process, giving information as to the nature and basis of
the claim. Failure to so notify the Indemnifying Person shall not,
however, relieve the Indemnifying Person from any liability which it
may have on account of the indemnity under subsection (a) or (b) if the
Indemnifying Person has not been prejudiced in any material respect by
such failure. Subject to the immediately succeeding sentence, the
Indemnifying Person shall assume the defense of any such litigation or
proceeding,including the employment of counsel and the payment of all
expenses, with such counsel being designated, subject to the
immediately succeeding sentence, in writing by the Representatives in
the case of parties indemnified pursuant to subsection (b) and by the
Company in the case of parties indemnified pursuant to subsection (a).
Any Indemnified Person shall have the right to participate in such
litigation or proceeding and to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include (x) the Indemnifying Person and (y) the
Indemnified Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the same counsel
would be inappropriate due to actual or likely conflicts of interest
between them, in either of which cases the reasonable fees and expenses
of counsel (including disbursements) for such Indemnified Person shall
be reimbursed by the Indemnifying Person to the Indemnified Person. If
there is a conflict as described in clause (ii) above, and the
Indemnified Persons have participated in the litigation or proceeding
utilizing separate counsel whose fees and expenses have been reimbursed
by the Indemnifying Person and the Indemnified Persons, or any of them,
are found to be solely liable, such Indemnified Persons shall repay to
the Indemnifying Person such fees and expenses of such separate counsel
as the Indemnifying Person shall have reimbursed. It is understood that
the Indemnifying Person shall not, in connection with any litigation or
proceeding or related litigation or proceedings in the same
jurisdiction as to which the Indemnified Persons are entitled to such
separate representation, be liable under this Agreement for the
reasonable fees and out-of-pocket expenses for more than one separate
firm (together with not more than one appropriate local counsel) for
all such Indemnified Persons. Subject to the next paragraph, all such
fees and expenses shall be reimbursed by payment to the Indemnified
Persons of such reasonable fees and expenses of counsel promptly after
payment
19
<PAGE> 20
thereof by the Indemnified Persons. Such firms shall be selected and
designated in writing by ____________.
9. In furtherance of the requirement above that fees and expenses
of any separate counsel for the Indemnified Persons shall be reasonable, the
Representatives and the Company agree that the Indemnifying Person's obligations
to pay such fees and expenses shall be conditioned upon the following:
(a) in case separate counsel is proposed to be retained by
the Indemnified Persons pursuant to clause (ii) of the preceding
paragraph, the Indemnified Persons shall in good faith fully consult
with the Indemnifying Person in advance as to the selection of such
counsel;
(b) reimbursable fees and expenses of such separate
counsel shall be detailed and supported in a manner reasonably
acceptable to the Indemnifying Person (but nothing herein shall be
deemed to require the furnishing to the Indemnifying Person of any
information, including without limitation, computer print-outs of
lawyers' daily time entries, to the extent that, in the judgment of
such counsel, furnishing such information might reasonably be expected
to result in a waiver of any attorney-client privilege); and
(c) the Company and the Representatives shall cooperate in
monitoring and controlling the fees and expenses of separate counsel
for Indemnified Persons for which the Indemnifying Person is liable
hereunder, and the Indemnified Person shall use every reasonable
effort to cause such separate counsel to minimize the duplication of
activities as between themselves and counsel to the Indemnifying
Person.
The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 8, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.
(d) If the indemnification provided for in this Section 7
is unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Trust and the Company on the one hand and the Underwriters on
the other from the offering of the Securities. If, however, the
allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give
the notice required under subsection (c) above and such failure
resulted in the indemnifying party being prejudiced in a material way,
then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault
of the Trust and the Company on the one hand and the Underwriters
20
<PAGE> 21
on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Trust and the
Company on the one hand and such Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from such
offering (before deducting expenses) received by the Trust and the
Company and the total underwriting discounts and commissions received
by such Underwriters. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Trust and
the Company on the one hand or such Underwriters on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Trust, the Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim, provided that the
provisions of subsection (c) have been complied with (in all material
respects) in respect of any separate counsel for such indemnified
party. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount greater than the
excess of (i) the total price at which the Securities underwritten by
it and distributed to the public were offered to the public over (ii)
the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligations of the Underwriters
in this subsection (d) to contribute are several in proportion to their
respective underwriting obligations with respect to such Securities and
not joint.
(e) The obligations of the Trust and the Company under
this Section 7 shall be in addition to any liability which the Trust
and the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the
Company, each Regular Trustee and to each person, if any, who controls
the Trust and the Company within the meaning of the Act.
10. If any Underwriter under this Agreement shall fail or refuse
(otherwise than for some reason sufficient to justify in accordance with the
terms hereof, the termination of its obligations hereunder) to purchase the
Securities which it had agreed to purchase on the Time of Purchase, the
Representatives shall immediately notify the Company and the Representatives and
the other Underwriters may, within 36 hours of the giving of such notice,
determine to purchase, or to procure one or more other members of the National
Association of Securities Dealers, Inc. ("NASD") (or, if not members of the
NASD, who are foreign banks, dealers or institutions not registered under the
Exchange Act and who agree in making sales to comply with the NASD's Rules of
Fair Practice), satisfactory in the Company to purchase, upon the terms herein
set forth, the principal amount of Securities which the defaulting
21
<PAGE> 22
Underwriter had agreed to purchase. If any non-defaulting Underwriter or
Underwriters shall determine to exercise such right, the Representatives shall
give written notice to the Company of such determination within 36 hours after
the Company shall have received notice of any such default, and thereupon the
Time of Purchase shall be postponed for such period, not exceeding three
business days, as the Company shall determine. If in the event of such a
default, the Representatives shall fail to give such notice, or shall within
such 36-hour period give written notice to the Company that no other Underwriter
or Underwriters, or others, will exercise such right, then this Agreement may be
terminated by the Company, upon like notice given to the Representatives within
a further period of 36 hours. If in such case the Company shall not elect to
terminate this Agreement, it shall have the right, irrespective of such default:
(a) to require such non-defaulting Underwriters to
purchase and pay for the respective principal amounts of Securities
which they had severally agreed to purchase hereunder, as hereinabove
provided, and, in addition, the principal amount of Securities which
the defaulting Underwriter shall have so failed to purchase up to a
principal amount thereof equal to one-ninth (1/9) of the respective
principal amounts of Securities which such non-defaulting Underwriters
have otherwise agreed to purchase hereunder; and/or
(b) to procure one or more other members of the NASD (or,
if not members of the NASD, who are foreign banks, dealers or
institutions not registered under the Exchange Act and who agree in
making sales to comply with the NASD's Rules of Fair Practice), to
purchase, upon the terms herein set forth, the principal amount of
Securities which such defaulting Underwriter had agreed to purchase, or
that portion thereof which the remaining Underwriters shall not be
obligated to purchase pursuant to the foregoing clause (a).
In the event the Company shall exercise its rights under clause (a)
and/or (b) above, the Company shall give written notice thereof to the
Representatives within such further period of 36 hours, and thereupon the Time
of Purchase shall be postponed for such period, not exceeding five business
days, as the Company shall determine. In the event the Company shall be entitled
to but shall not elect to exercise its rights under clause (a) and/or (b), the
Company shall be deemed to have elected to terminate this Agreement.
Any action taken by the Company under this Section 9 shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement. Termination by the Company under this Section
9 shall be without any liability on the part of the Company or any
non-defaulting Underwriter.
In the computation of any period of 36 hours referred to in this
section 9, there shall be excluded a period of 24 hours in respect of each
Saturday, Sunday or legal holiday which would otherwise be included in such
period of time.
11. The respective indemnities, agreements, representations,
warranties and other statements of the Trust and the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Trust, the Company, or any officer, director, Regular
Trustee or controlling person of the Trust or the Company, and shall survive
delivery of and payment for the Securities.
22
<PAGE> 23
12. This Agreement may be terminated at any time prior to the Time
of Delivery by the Representatives if, prior to such time, any of the following
events shall have occurred: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange; (ii) a suspension or
material limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this Clause (v) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities on the terms and in the manner contemplated in the Prospectus;
If the Representatives elect to terminate this Agreement, as
provided in this Section 11, the Representatives will promptly notify the
Company and each other Underwriter by telephone or telecopy, confirmed by
letter. If this Agreement shall not be carried out by any Underwriter for any
reason permitted hereunder, or if the sale of the Securities to the Underwriters
as herein contemplated shall not be carried out because the Company is not able
to comply with the terms hereof, the Company shall not be under any obligation
under this Agreement and shall not be liable to any Underwriter or to any member
of any selling group for the loss of anticipated profits from the transactions
contemplated by this Agreement and the Underwriters shall be under no liability
to the Company nor be under any liability under this Agreement to one another.
Notwithstanding the foregoing, the provisions of Sections 5
and 7 shall survive any termination of this Agreement.
13. In all dealings hereunder, the Representatives shall act on
behalf of each of the Underwriters, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Representatives jointly or by on behalf of the
Representatives.
All statements, requests, notices and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered or sent by
mail, telex or facsimile transmission to the Representa tives in care of
_______________; and if to the Trust or the Company shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Secretary; provided, however, that any
notice to an Underwriter pursuant to Section 7(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Trust and the Company by
the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Trust, the Company and, to the extent provided
in Sections 7 and 9 hereof, the officers, directors and administrative trustees
of the Trust, the Company and each person who controls the Trust, the Company or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Securities from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
15. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
23
<PAGE> 24
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. This Agreement may be executed by any one or more of the
parties hereto and thereto in any number of counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall together
constitute one and the same instrument.
24
<PAGE> 25
If the foregoing is in accordance with your understanding,
please sign and return to us one for the Trust, the Company and one for each of
the Representatives plus one for each counsel counterparts hereof.
Very truly yours,
CMS ENERGY TRUST III
By:_________________________________________
Name:
Title: Administrative Trustee
CMS ENERGY CORPORATION
By:_________________________________________
Name:
Title:
Accepted as of the date hereof:
[Underwriters]
BY:_______________________________________________________
25
<PAGE> 1
EXHIBIT 4(i)
CERTIFICATE OF TRUST
OF
CMS ENERGY TRUST III
The undersigned, the trustees of CMS Energy Trust III, desiring to form
a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
1. The name of the business trust being formed hereby is CMS
Energy Trust III (the "Trust").
2. The name and business address of the trustee of the Trust with
a principal place of business in the State of Delaware is as
follows:
The Bank of New York (Delaware),
a Delaware banking corporation
White Clay Center, Route 273
Newark, Delaware 19711
Dated: December 10, 1998
/s/ Alan M. Wright
--------------------------------
Alan M. Wright, as Trustee
/s/ Thomas A. McNish
--------------------------------
Thomas A. McNish, as Trustee
The Bank of New York (Delaware),
as Trustee
/s/ Walter N. Gitlin
--------------------------------
Name: Walter N. Gitlin
Title: Authorized Signatory
<PAGE> 1
EXHIBIT 4(J)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
CMS ENERGY CORPORATION
AS SPONSOR,
THE BANK OF NEW YORK
AS PROPERTY TRUSTEE,
THE BANK OF NEW YORK (DELAWARE)
AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF ___, 1999
CMS ENERGY TRUST III
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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ARTICLE 1
DEFINED TERMS
<S> <C> <C>
SECTION 1.1. Definitions .............................................................. 2
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. Name ..................................................................... 15
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business............... 16
SECTION 2.3. Organizational Expenses .................................................. 16
SECTION 2.4. Issuance of the Preferred Securities ..................................... 16
SECTION 2.5. Subscription and Purchase of Debentures; Issuance of the Common
Securities .............................................. 16
SECTION 2.6. Declaration of Trust ..................................................... 17
SECTION 2.7. Authorization to Enter into Certain Transactions ......................... 17
SECTION 2.8. Assets of Trust .......................................................... 22
SECTION 2.9. Title to Trust Property .................................................. 23
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1. Payment Account .......................................................... 23
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. Distributions ............................................................ 23
SECTION 4.2. Redemption ............................................................... 24
SECTION 4.3. Conversion ............................................................... 28
SECTION 4.4. Special Event Exchange or Redemption ..................................... 32
SECTION 4.5. Subordination of Common Securities ....................................... 35
SECTION 4.6. Payment Procedures ....................................................... 35
SECTION 4.7. Tax Returns and Reports .................................................. 36
SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust .............................. 36
SECTION 4.9. Payments under Indenture ................................................. 36
</TABLE>
i
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PAGE
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ARTICLE 5
TRUST SECURITIES CERTIFICATES
<TABLE>
<S> <C> <C>
SECTION 5.1. Initial Ownership ........................... 37
SECTION 5.2. The Trust Securities Certificates .......... 37
SECTION 5.3. Delivery of Trust Securities Certificates .. 37
SECTION 5.4. Registration of Transfer and Exchange of
Preferred Securities ............. 38
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates .......... 39
SECTION 5.6. Persons Deemed Securityholders ............. 40
SECTION 5.7. Access to List of Securityholders' Names
and Addresses .................... 40
SECTION 5.8. Maintenance of Office or Agency ............ 41
SECTION 5.9. Appointment of Paying Agent ................ 41
SECTION 5.10. Ownership of Common Securities by Sponsor .. 42
SECTION 5.11. Global Securities; Non-Global Securities;
Common
Securities Certificate ..................... 42
SECTION 5.12. Notices to Clearing Agency ................. 44
SECTION 5.13. Definitive Preferred Securities
Certificates ..................... 44
SECTION 5.14. Rights of Securityholders .................. 45
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights ................. 45
SECTION 6.2. Notice of Meetings .......................... 48
SECTION 6.3. Meetings of Preferred Security-holders ...... 48
SECTION 6.4. Voting Rights ............................... 49
SECTION 6.5. Proxies, Etc ................................ 49
SECTION 6.6. Securityholder Action by Written Consent .... 50
SECTION 6.7. Record Date for Voting and Other Purposes ... 50
SECTION 6.8. Acts of Securityholders ..................... 50
SECTION 6.9. Inspection of Records....................... 52
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
</TABLE>
ii
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<TABLE>
PAGE
----
<S> <C> <C>
SECTION 7.1. Representations and Warranties of the Property
Trustee and the Delaware Trustee........................... 53
SECTION 7.2. Representations and Warranties of Sponsor ................. 54
ARTICLE 8
THE TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities ....................... 55
SECTION 8.2. Notice of Defaults ........................................ 57
SECTION 8.3. Certain Rights of Property Trustee ....................... 60
SECTION 8.4. Not Responsible for Recitals or Issuance
of Securities .................................. 63
SECTION 8.5. May Hold Securities ....................................... 63
SECTION 8.6. Compensation; Indemnity; Fees.............................. 63
SECTION 8.7. Property Trustee Required; Eligibility of Trustees......... 64
SECTION 8.8. Conflicting Interests ..................................... 65
SECTION 8.9. Resignation and Removal; Appointment of
Successor ...................................... 65
SECTION 8.10. Acceptance of Appointment by Successor ................... 67
SECTION 8.11. Merger, Conversion, Consolidation or Succession
to Business .................................... 69
SECTION 8.12. Preferential Collection of Claims Against Sponsor or
Trust .......................................... 69
SECTION 8.13. Reports by Property Trustee .............................. 69
SECTION 8.14. Reports to the Property Trustee .......................... 70
SECTION 8.15. Evidence of Compliance with Conditions
Precedent ...................................... 70
SECTION 8.16. Number of Trustees ....................................... 70
SECTION 8.17. Delegation of Power ...................................... 71
ARTICLE 9
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination upon Expiration Date .......................... 71
SECTION 9.2. Early Termination ......................................... 71
SECTION 9.3. Termination ............................................... 72
SECTION 9.4. Liquidation ............................................... 72
</TABLE>
iii
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<TABLE>
PAGE
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<S> <C> <C>
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements
of the Trust.................................................................... 74
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Securityholders .......................... 76
SECTION 10.2. Amendment ........................................................ 76
SECTION 10.3. Separability ..................................................... 78
SECTION 10.4. GOVERNING LAW .................................................... 78
SECTION 10.5. Payments Due on Non-Business Day ................................. 78
SECTION 10.6. Successors ....................................................... 79
SECTION 10.7. Headings ......................................................... 79
SECTION 10.8. Reports, Notices and Demands ..................................... 79
SECTION 10.9. Agreement Not to Petition ........................................ 80
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act .......... 80
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND INDENTURE . 81
ARTICLE 1
DEFINED TERMS
SECTION 1.1. Definitions ....................................................... 2
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. Name .............................................................. 17
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business ....... 17
SECTION 2.3. Organizational Expenses ........................................... 17
SECTION 2.4. Issuance of the Preferred Securities .............................. 17
SECTION 2.5. Subscription and Purchase of Debentures; Issuance of the Common
Securities ........................................................ 17
SECTION 2.6. Declaration of Trust .............................................. 18
SECTION 2.7. Authorization to Enter into Certain Transactions .................. 18
SECTION 2.8. Assets of Trust ................................................... 24
SECTION 2.9. Title to Trust Property ........................................... 24
</TABLE>
iv
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ARTICLE 3
PAYMENT ACCOUNT
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 3.1. Payment Account................................................................... 24
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. Distributions ..................................................................... 25
SECTION 4.2. Redemption ........................................................................ 26
SECTION 4.3. Conversion ........................................................................ 29
SECTION 4.4. Special Event Exchange or Redemption .............................................. 33
SECTION 4.5. Subordination of Common Securities ................................................ 36
SECTION 4.6. Payment Procedures ................................................................ 37
SECTION 4.7. Tax Returns and Reports ........................................................... 37
SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust ....................................... 37
SECTION 4.9. Payments under Indenture .......................................................... 38
ARTICLE 5
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership ................................................................. 38
SECTION 5.2. The Trust Securities Certificates ................................................. 38
SECTION 5.3. Delivery of Trust Securities Certificates ......................................... 39
SECTION 5.4. Registration of Transfer and Exchange of
Preferred Securities; ............................................................. 40
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates ........................................................... 47
SECTION 5.6. Persons Deemed Securityholders .................................................... 47
SECTION 5.7. Access to List of Securityholders' Names and Addresses ............................ 48
SECTION 5.8. Maintenance of Office or Agency ................................................... 48
SECTION 5.9. Appointment of Paying Agent ....................................................... 49
SECTION 5.10. Ownership of Common Securities by Sponsor ......................................... 49
SECTION 5.11. Global Securities; Non-Global Securities;
Common Securities Certificate ..................................................... 50
SECTION 5.12. Notices to Clearing Agency ........................................................ 51
SECTION 5.13. Definitive Preferred Securities Certificates ...................................... 52
SECTION 5.14. Rights of Securityholders ......................................................... 52
</TABLE>
v
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<TABLE>
PAGE
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ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
<S> <C> <C>
SECTION 6.1. Limitations on Voting Rights ............................................................ 54
SECTION 6.2. Notice of Meetings ...................................................................... 57
SECTION 6.3. Meetings of Preferred Security-holders .................................................. 57
SECTION 6.4. Voting Rights ........................................................................... 58
SECTION 6.5. Proxies, Etc. ........................................................................... 58
SECTION 6.6. Securityholder Action by Written Consent ................................................ 58
SECTION 6.7. Record Date for Voting and Other Purposes ............................................... 59
SECTION 6.8. Acts of Securityholders ................................................................. 59
SECTION 6.9. Inspection of Records ................................................................... 61
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee........................................................................ 61
SECTION 7.2. Representations and Warranties of Sponsor .............................................. 63
ARTICLE 8
THE TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities .................................................... 63
SECTION 8.2. Notice of Defaults ..................................................................... 66
SECTION 8.3. Certain Rights of Property Trustee ..................................................... 69
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities ................................. 71
SECTION 8.5. May Hold Securities .................................................................... 72
SECTION 8.6. Compensation; Indemnity; Fees .......................................................... 72
SECTION 8.7. Property Trustee Required; Eligibility of Trustees ..................................... 73
SECTION 8.8. Conflicting Interests .................................................................. 73
SECTION 8.9. Resignation and Removal; Appointment of Successor ...................................... 74
SECTION 8.10. Acceptance of Appointment by Successor ................................................. 76
SECTION 8.11. Merger, Conversion, Consolidation or Succession to Business ............................ 77
</TABLE>
vi
<PAGE> 8
<TABLE>
PAGE
----
<S> <C> <C>
SECTION 8.12. Preferential Collection of Claims Against Sponsor or Trust ........................ 78
SECTION 8.13. Reports by Property Trustee ....................................................... 78
SECTION 8.14. Reports to the Property Trustee ................................................... 79
SECTION 8.15. Evidence of Compliance with Conditions Precedent .................................. 79
SECTION 8.16. Number of Trustees ................................................................ 79
SECTION 8.17. Delegation of Power ............................................................... 80
ARTICLE 9
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination upon Expiration Date .................................................. 80
SECTION 9.2. Early Termination ................................................................. 80
SECTION 9.3. Termination ....................................................................... 81
SECTION 9.4. Liquidation ....................................................................... 81
SECTION 9.5. Mergers, Consolidations, Amalgamations or
Replacements of the Trust ......................................................... 83
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Securityholders ........................................... 85
SECTION 10.2. Amendment ......................................................................... 85
SECTION 10.3. Separability ...................................................................... 87
SECTION 10.4. GOVERNING LAW ..................................................................... 87
SECTION 10.5. Payments Due on Non-Business Day .................................................. 87
SECTION 10.6. Successors ........................................................................ 87
SECTION 10.7. Headings .......................................................................... 88
SECTION 10.8. Reports, Notices and Demands ...................................................... 88
SECTION 10.9. Agreement Not to Petition ......................................................... 89
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act ............................ 89
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture ........................................................ 90
EXHIBIT A Certificate of Trust of CMS Energy Trust III
EXHIBIT B Form of Common Securities of CMS Energy Trust III
EXHIBIT C Form of Preferred Securities of CMS Energy Trust III
EXHIBIT D Notice of Conversion
</TABLE>
vii
<PAGE> 9
FINANCIAL TRUST*
Certain Sections of this Trust Agreement
relating to Sections 310 through 318
of the Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE TRUST AGREEMENT
ACT SECTION SECTION
<S> <C> <C>
Section 310 (a)(1) ............................................. 8.7
(a)(2) ............................................. 8.7
(a)(4) ............................................. 2.7(a)(ii)
(b) ............................................. 8.8
Section 311 (a) ............................................. 8.12
(b) ............................................. 8.12
Section 312 (a) ............................................. 5.7
(b) ............................................. 5.7
(c) ............................................. 5.7
Section 313 (a) ............................................. 8.13(a)
(c) ............................................. 10.8
(d) ............................................. 8.13(c)
(a)(4) ............................................. 8.13(b)
(b) ............................................. 8.13(b)
Section 314 (a) ............................................. 8.14
(b) ............................................. Not Applicable
(c)(1) ............................................. 8.15
(c)(2) ............................................. 8.15
(c)(3) ............................................. Not Applicable
(d) ............................................. Not Applicable
(e) ............................................. 1.1, 8.15
Section 315 (a) ............................................. 8.1(a), 8.3(a)
(b) ............................................. 8.2, 10.8
(c) ............................................. 8.1(a)
(d) ............................................. 8.1, 8.3
(e) ............................................. Not Applicable
Section 316 (a) ............................................. Not Applicable
(a)(1)(A) ............................................. Not Applicable
(a)(1)(B) ............................................. Not Applicable
(a)(2) ............................................. Not Applicable
(b) ............................................. Not Applicable
(c) ............................................. 6.7
Section 317 (a)(1) ............................................. Not Applicable
(b) ............................................. 5.9
Section 318 (a) ............................................. 10.10
</TABLE>
- -----------------
* Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
<PAGE> 10
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ___,
1999 among (i) CMS Energy Corporation, a Michigan corporation (including any
successors or assigns, "the Sponsor"), (ii) The Bank of New York, a New York
banking corporation, as property trustee (in such capacity, the "Property
Trustee" and, in its personal capacity and not in its capacity as Property
Trustee, the "Bank"), (iii) The Bank of New York (Delaware), a corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (in such capacity, the "Delaware Trustee"), (iv) Alan M. Wright, an
individual, and Thomas A. McNish, an individual, each of whose address is c/o
CMS Energy Corporation, Fairlane Plaza South 330 Town Center Drive, Suite 1100,
Dearborn, Michigan 48126 (each, an "Administrative Trustee" and, collectively,
the "Administrative Trustees" and, collectively with the Property Trustee and
Delaware Trustee, the "Trustees") and (v) the several Holders as hereinafter
defined.
W I T N E S S E T H:
WHEREAS, the Sponsor and certain of the Trustees have heretofore
duly declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into of that certain Trust Agreement, dated as of
December 10, 1998 (the "Original Trust Agreement"), and by the execution and
filing by certain of the Trustees with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on December 10, 1998, attached as
Exhibit A, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in the Debentures (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued; and
WHEREAS, the Sponsor and the Trustees desire to amend and restate
the Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance and sale of the Common Securities by the
Trust to the Sponsor, (ii) the issuance and sale of the Preferred Securities by
the Trust pursuant to the Underwriting Agreement and (iii) the acquisition by
<PAGE> 11
the Trust from the Sponsor of all of the right, title and interest in the
Debentures;
NOW THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, each party, for the benefit of the other party
and for the benefit of the Holders of the Preferred Securities, hereby amends
and restates the Original Trust Agreement in its entirety and agrees as follows:
ARTICLE 1
DEFINED TERMS
SECTION 1.1. Definitions . For all purposes of this Trust
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to the Trust Securities,
the amount of Additional Interest (as defined in the Indenture) paid by the
Sponsor on the Debentures.
2
<PAGE> 12
"Additional Sums" means, with respect to the Trust Securities,
the amount of Additional Sums (as defined in the Indenture) paid by the Sponsor
on the Debentures.
"Administrative Trustee" means each of Alan M. Wright and Thomas
A. McNish, each solely in his capacity as Administrative Trustee of the Trust
formed and continued hereunder and not in his individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor in interest in such capacity, or any successor Administrative Trustee
appointed as herein provided.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person, provided, however that an Affiliate
of the Sponsor shall not be deemed to include the Trust. For the purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Certificate or beneficial interest therein, the
rules and procedures of the Clearing Agency for such security to the extent
applicable to such transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication
or composition of or in respect of such Person under any applicable Federal
3
<PAGE> 13
or State bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of its
property or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or similar official) of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due and its willingness to be adjudicated a
bankrupt, or the taking of corporate action by such Person in furtherance
of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means either the board of directors of the
Sponsor or any committee of that board duly authorized to act hereunder.
"Book-Entry Preferred Securities Certificates" means a beneficial
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"Business Day" means any day other than a Saturday or Sunday or a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
Corporate Trust Office of the Property Trustee or the
4
<PAGE> 14
corporate trust office of the Debenture Trustee, is closed for business.
"Certificate Depository Agreement" means the agreement among the
Trust, the Sponsor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates, as the same may be amended and supplemented from time to time.
"Certificated Preferred Security" has the meaning specified in
Section 5.2.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the first Time of Delivery (as defined in
the Underwriting Agreement), which date is also the date of execution and
delivery of this Trust Agreement.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit B.
"Common Security" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount with respect to the assets of
the Trust of $___
5
<PAGE> 15
and having the rights provided therefor in this Trust Agreement, including
the right to receive Distributions and a Liquidation Distribution as
provided herein.
"Common Stock" means common stock, $.01 par value per share, of
the Sponsor.
"Conversion Agent" has the meaning specified in Section 4.3.
"Conversion Date" has the meaning specified in Section 4.3.
"Conversion Expiration Date" means the date selected by the
Sponsor not less than 30 days nor more than 60 days after the date on which the
Sponsor issues a press release announcing its intention to terminate the
conversion rights of the Holders.
"Conversion Price" has the meaning specified in Section 4.3.
"Corporate Trust Office" means the principal corporate trust
office of the Property Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date hereof is located
at 101 Barclay Street, Floor 21W, New York, New York 10286, Attention: Corporate
Trust Administration.
"Current Market Price", with respect to Common Stock, means for
any day the last reported sale price, regular way, on such day, or, if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the New York
Stock Exchange Composite Transactions Tape, or, if Common Stock is not listed or
admitted to trading on the New York Stock Exchange on such day, on the principal
national securities exchange on which Common Stock is listed or admitted to
trading, if Common Stock is listed on a national securities exchange, or the
Nasdaq National Market, or, if Common Stock is not quoted or admitted to trading
on such quotation system, on the principal quotation system on which Common
Stock may be listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or quotation
system, the
6
<PAGE> 16
average of the closing bid and asked prices of Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by the Board of Directors.
"Debenture Event of Default" means an "Event of Default" as
defined in the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures
to be redeemed under the Indenture, the date fixed for redemption thereof under
the Indenture.
"Debenture Trustee" means The Bank of New York, a New York
banking corporation, as trustee under the Indenture.
"Debentures" means $__________ aggregate principal amount of the
Sponsor's __% convertible subordinated debentures issued pursuant to the
Indenture.
"Definitive Preferred Securities Certificates" means either or
both (as the context requires) of (a) Preferred Securities Certificates issued
in certificated, fully registered form as provided in Section 5.11(a) and (b)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. (Section.) 3801, et. seq., as it may be amended from
time to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor Delaware trustee appointed as herein provided.
7
<PAGE> 17
"Direct Action" has the meaning specified in Section 6.8.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"Early Termination Event" has the meaning specified in Section
9.2.
"Event of Default" means the occurrence of a Debenture Event of
Default, whatever the reason for such Debenture Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body.
"Exchange Notice" has the meaning specified in Section 4.4(b).
"Expiration Date" has the meaning specified in Section 9.1.
"Global Certificate" means a Preferred Security that is
registered in the Securities Register in the name of a Clearing Agency or a
nominee thereof.
"Guarantee" means the Guarantee Agreement executed and delivered
by the Sponsor and The Bank of New York, a New York banking corporation, as
guarantee trustee, contemporaneously with the execution and delivery of this
Trust Agreement, for the benefit of the Holders of the Preferred Securities, as
amended from time to time.
"Holder" means a Person in whose name a Trust Securities
Certificate representing a Trust Security is registered, such Person being a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Indenture" means the Indenture, dated as of June 1, 1997,
between the Sponsor and the Debenture
8
<PAGE> 18
Trustee as amended by the First Supplemental Indenture, as amended or
supplemented from time to time.
"Investment Company Event" means the receipt by the Property
Trustee, on behalf of the Trust, of an Opinion of Counsel, rendered by a law
firm having a national tax and securities practice (which Opinion of Counsel
shall not have been rescinded by such law firm), to the effect that, as a result
of the occurrence of a change in law or regulation or a change in interpretation
or application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law") that there is more
than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the 1940 Act, which
Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities under this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
deed of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Liquidation Amount" means an amount with respect to the assets
of the Trust equal to $ per Trust Security.
"Liquidation Date" means each date on which Debentures or cash
are to be distributed to Holders of Trust Securities in connection with a
termination and liquidation of the Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section
9.4(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
"Notice of Conversion" means the notice given by a holder of
Preferred Securities to the Conversion Agent directing the Conversion Agent to
exchange such Preferred Security for Debentures and to convert such
9
<PAGE> 19
Debentures into Common Stock on behalf of such holder. Such notice is
substantially in the form set forth in Exhibit D.
"Officers' Certificate" means a certificate signed by (i) the
Chairman of the Board, a Vice Chairman, the President or a Vice President, and
by (ii) the Treasurer, an Assistant Treasurer, the Controller, the Secretary or
an Assistant Secretary, of the Sponsor, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 8.15 shall
be the principal executive, financial or accounting officer of the Sponsor. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant of condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Trust, the Property Trustee or the Sponsor, and who may be an
employee of any thereof, and who shall be acceptable to the Property Trustee.
Any Opinion of Counsel delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each individual signing the Opinion of Counsel
has read the covenant or condition and the definitions relating thereto;
10
<PAGE> 20
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each individual in rendering the Opinion of
Counsel;
(c) a statement that each individual has made such examination or
investigation as is necessary to enable such individual to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
"Optional Redemption Price" means, except as set forth below,
with respect to the Preferred Securities, the following percentages of the
Liquidation Amounts thereof, and accumulated and unpaid Distributions, if any,
to the date fixed for redemption if redeemed during the twelve-month period
commencing _____ in each of the following years indicated:
<TABLE>
<CAPTION>
Year Redemption Price Year Redemption Price
---- ---------------- ---- ----------------
<S> <C> <C> <C>
</TABLE>
In the event of a redemption of Trust Securities upon the
occurrence of a Tax Event, Trust Securities shall be redeemed at the redemption
price of $__ per Trust Security and all accumulated and unpaid Distributions, if
any to the date fixed for redemption.
In the event of a redemption of Trust Securities pursuant to
Section 4.2(a)(ii), Trust Securities shall be redeemed as the redemption price
specified therein.
"Original Trust Agreement" has the meaning specified in the
recitals to this Trust Agreement.
11
<PAGE> 21
"Outstanding", when used with respect to Trust Securities, means,
as of the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Securities Registrar
or delivered to the Securities Registrar for cancellation or tendered for
conversion;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Trust Securities; provided
that, if such Trust Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in
lieu of which other Trust Securities have been executed and delivered
pursuant to Section 5.5:
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Trust Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Trust
Securities owned by the Sponsor, any Trustee or any Affiliate of the Sponsor or
any Trustee shall be disregarded and deemed not to be Outstanding, except that
(a) in determining whether any Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Trust Securities that such Trustee knows to be so owned shall be so disregarded
and (b) the foregoing shall not apply at any time when all of the Outstanding
Trust Securities are owned by the Sponsor, one or more of the Trustees and/or
any such Affiliate. Trust Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Securities Registrar the pledgee's right so to act with
respect to such Trust Securities and that the pledgee is not the Sponsor or any
Affiliate of the Sponsor.
"Owner" means each Person who is the beneficial owner of a
Book-Entry Preferred Securities Certificate as reflected in the records of the
Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account
12
<PAGE> 22
with such Clearing Agency (directly or indirectly, in accordance with the rules
of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 5.9.
"Payment Account" means a segregated non-interest bearing
corporate trust account maintained by the Property Trustee with the Bank in its
trust department for the benefit of the Securityholders in which all amounts
paid in respect of the Debentures will be held and from which the Property
Trustee shall make payments to the Securityholders in accordance with Section
4.1.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
C.
"Preferred Security" means an undivided beneficial interest in
the assets of the Trust, having a Liquidation Amount with respect to the assets
of the Trust of $__ and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, each Debenture Redemption Date.
"Redemption Price" means, with respect to any Trust Security, $__
per Trust Security, plus accumulated and unpaid Distributions (including any
Additional Sums) to the date of redemption.
13
<PAGE> 23
"Relevant Trustee" has the meaning specified in Section 8.9.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 5.4.
"Securityholder" or "Holder" means a Person in whose name a Trust
Security or Securities is registered in the Securities Register; any such Person
shall be deemed to be a beneficial owner within the meaning of the Delaware
Business Trust Act.
"Special Event" means a Tax Event or an Investment Company Event.
"Sponsor" has the meaning specified in the preamble to this Trust
Agreement.
"Successor Property Trustee" has the meaning specified in Section
8.9.
"Successor Delaware Trustee" has the meaning specified in Section
8.9.
"Successor Securities" has the meaning specified in Section 9.5.
"Tax Event" means the receipt by the Property Trustee, on behalf
of the Trust, of an Opinion of Counsel, rendered by a law firm having a national
tax and securities practice (which Opinion of Counsel shall not have been
rescinded by such law firm), to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under this Trust Agreement, there is more than an
insubstantial risk in each case after the date thereof that (i) the Trust is, or
will be within 90 days after the date thereof, subject to United State Federal
income tax with respect to income received or
14
<PAGE> 24
accrued on the Debentures, (ii) interest payable by the Sponsor on the
Debentures is not, or will not be, within 90 days after the date hereof,
deductible, in whole or in part, for United States Federal income tax purposes
or (iii) the Trust is, or will be within 90 days after the date thereof, subject
to more than de minimus amount of other taxes, duties, assessments or other
governmental charges.
"Trust" means the Delaware business trust continued hereby and
identified on the cover page of this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented in accordance
with the applicable provisions hereof, including all exhibits hereto, including,
for all purposes of this Trust Agreement any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on
deposit in, or owing to, the Payment Account and (c) all proceeds and rights in
respect of the foregoing to be held by the Property Trustee pursuant to the
terms of this Trust Agreement for the benefit of the Securityholders.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates, the Global Certificates or the Certificated Preferred
Securities.
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"Trustees" means, collectively, the Property Trustee, the
Delaware Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated
as of, 1999 among the Trust, the Sponsor and the Underwriters named therein.
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. Name. The Trust continued hereby shall be known as
"CMS Energy Trust III", as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business. The address of the Delaware Trustee in the State of Delaware is White
Clay Center, Route 273, Newark, Delaware 19711: Corporate Trust, or such other
address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Securityholders and the Sponsor. The principal executive
office of the Trust is Fairlane Plaza South 330 Town Center Drive, Suite 1100
Dearborn, Michigan 48126.
SECTION 2.3. Organizational Expenses. The Sponsor shall pay
organizational expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Sponsor shall make no claim upon the Trust Property for the payment
of such expenses.
SECTION 2.4. Issuance of the Preferred Securities. On, 1999 the
Sponsor and an Administrative Trustee on behalf of the Trust executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 5.2 and deliver to the
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Underwriters named therein Preferred Securities Certificates, in an aggregate
amount of _________ Preferred Securities having an aggregate Liquidation Amount
of $_________, against receipt of the aggregate purchase price of such Preferred
Securities of $__________, which amount the Administrative Trustees shall
promptly deliver to the Property Trustee.
SECTION 2.5. Subscription and Purchase of Debentures; Issuance of
the Common Securities. Contemporaneously with the execution and delivery of
this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall
subscribe to and purchase from the Sponsor Debentures, registered in the name of
the Property Trustee (in its capacity as such) and having an aggregate principal
amount equal to $_________, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Sponsor the sum of $__________. Contemporaneously therewith, an Administrative
Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2
and deliver to the Sponsor Common Securities Certificates registered in the name
of the Sponsor, in an aggregate amount of _________ Common Securities having an
aggregate Liquidation Amount of $________ against receipt of the aggregate
purchase price of such Common Securities from the Sponsor of the sum of
$_________, which amount the Administrative Trustees shall promptly deliver to
the Property Trustee.
SECTION 2.6. Declaration of Trust. The exclusive purposes and
functions of the Trust are (a) to issue and sell Trust Securities and use the
proceeds from such sale to acquire the Debentures, (b) to distribute the Trust's
income as provided in this Trust Agreement and (c) to engage in only those other
activities necessary or incidental thereto. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, pledge any of its
assets or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States Federal income tax
purposes as a grantor trust. The Sponsor hereby appoints the Trustees as
trustees of the Trust, to have all the rights, powers and duties to the extent
set forth herein, and the Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property in trust upon and
subject to the conditions set forth herein for the benefit of the Trust
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and the Securityholders. The Administrative Trustees shall have all rights,
powers and duties set forth herein and in accordance with applicable law with
respect to accomplishing the purposes of the Trust. The Delaware Trustee shall
not be entitled to exercise any powers, nor shall the Delaware Trustee have any
of the duties and responsibilities, of the Property Trustee or the
Administrative Trustees set forth herein. The Delaware Trustee shall be one of
the Trustees of the Trust for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Delaware Business Trust Act.
SECTION 2.7 Authorization to Enter into Certain Transactions.
The Trustees shall conduct the affairs of the Trust in accordance with the terms
of this Trust Agreement. Subject to the limitations set forth in Section 2.6 and
paragraph (b) of this Section, and in accordance with the following provisions
(i) and (ii), the Trustees shall have the exclusive power, duty and the
authority to cause the Trust to engage in the following activities:
(i) As among the Trustees, each Administrative Trustee shall have the
power and authority to act on behalf of the Trust with respect to the
following matters:
(A) to issue and sell the Trust Securities, provided, however,
that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities, and,
provided, further, that there shall be no interests in the Trust other
than the Trust Securities, and the issuance of Trust Securities shall
be limited to simultaneous issuance of both Preferred Securities and
Common Securities on the Closing Date, subject to the issuance of
Trust Securities pursuant to Section 5.5 and Successor Securities
pursuant to Section 9.5;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Underwriting Agreement and the
Certificate Depository Agreement and such other agreements as may be
necessary or incidental to the purposes and function of the Trust;
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(C) to assist in the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under state
securities or blue sky laws, and the qualification of this Trust
Agreement as a trust indenture under the Trust Indenture Act;
(D) to assist in the listing of the Preferred Securities upon
such securities exchange or exchanges as shall be determined by the
Sponsor and the registration of the Preferred Securities under the
Securities Exchange Act of 1934, as amended, and the preparation and
filing of all periodic and other reports and other documents pursuant
to the foregoing (only to the extent that such listing or registration
is requested by the Sponsor);
(E) to appoint a Paying Agent, a Securities Registrar and an
authenticating agent in accordance with this Trust Agreement;
(F) to the extent provided in this Trust Agreement, to wind up
the affairs of and liquidate the Trust and prepare, execute and file
the certificate of cancellation with the Secretary of State of the
State of Delaware;
(G) unless otherwise determined by the Sponsor, the Property
Trustee or the Administrative Trustees, or as otherwise required by
the Delaware Business Trust Act or the Trust Indenture Act, to execute
on behalf of the Trust (either acting alone or together with any other
Administrative Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this Trust Agreement;
and
(H) to take any action incidental to the foregoing as the
Trustees may from time to time determine is necessary or advisable to
give effect to the terms of this Trust Agreement including, but not
limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the 1940 Act;
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(ii) causing the Trust to be classified for United States
Federal income tax purposes as a grantor trust; and
(iii) cooperating with the Sponsor to ensure that the
Debentures will be treated as indebtedness of the Sponsor for
United States Federal income tax purposes;
provided that such action does not adversely affect in any material
respect the interests of Securityholders except as otherwise provided
in Section 10.2(a).
(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of and taking title to the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Payment Account;
(D) the distribution from the Trust Property of amounts owed
to the Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default, other notices and
other information regarding the Trust Securities and the Debentures to
the Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance
with the terms of this Trust Agreement;
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(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
(I) after an Event of Default, the taking of any action
incidental to the foregoing as the Property Trustee may from time to
time determine is necessary or advisable to give effect to the terms
of this Trust Agreement and protect and conserve the Trust Property
for the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder);
(J) subject to this Section 2.7(a)(ii), the Property Trustee
shall have none of the duties, liabilities, powers or the authority of
the Administrative Trustees set forth in Section 2.7(a)(i); and
(K) to act as Paying Agent and/or Securities Registrar to
the extent appointed as such hereunder.
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trust shall not, and the Trustees shall not and shall
cause the Trust not to (i) invest any proceeds received by the Trust from
holding the Debentures (rather, the Trustees shall distribute all such proceeds
to the Securityholders pursuant to the terms of this Trust Agreement and the
Trust Securities), acquire any investments or engage in any activities not
authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Securityholders, except as expressly provided
herein, (iii) take any action that would cause the Trust to fail or cease to
qualify as a "grantor trust" for United States Federal income tax purposes, (iv)
make any loans or incur any indebtedness for borrowed money or issue any other
debt, (v) take or consent to any action that would result in the
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placement of a Lien on any of the Trust Property, (vi) possess any power or
otherwise act in such a way as to vary the Trust assets or the terms of the
Trust Securities in any way whatsoever except as permitted by the terms of this
Trust Agreement, or (vii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Trust
Securities. The Administrative Trustees shall defend all claims and demands of
all Persons at any time claiming any Lien on any of the Trust Property adverse
to the interest of the Trust or the Securityholders in their capacity as
Securityholders.
(c) In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the right and responsibility to assist the Trust with respect
to, or effect on behalf of the Trust, with the following actions (and any
actions taken by the Sponsor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to file by the Trust with the Commission and to execute on behalf
of the Trust a registration statement on the appropriate form in relation
to the Preferred Securities, including any amendments thereto;
(ii) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to
do any and all such acts, other than actions which must be taken by or on
behalf of the Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any documents to
be executed and filed by the Trust or on behalf of the Trust, as the
Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such States;
(iii) to the extent necessary, to prepare for filing by the Trust with
the Commission and to execute on behalf of the Trust a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, including any amendments thereto;
(iv) any other actions necessary or incidental to carry out any of the
foregoing activities.
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(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act, or taxed as a corporation
for United States Federal income tax purposes and so that the Debentures will be
treated as indebtedness of the Sponsor for United States Federal income tax
purposes. In this connection, the Sponsor and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
Certificate of Trust or this Trust Agreement, that each of the Sponsor and the
Administrative Trustees determines in their discretion to be necessary or
desirable for such purposes, so long as such action does not adversely affect in
any material respect the interests of the Holders of the Preferred Securities
except as otherwise provided in Section 10.2(a).
SECTION 2.8. Assets of Trust. The assets of the Trust shall consist of
only the Trust Property.
SECTION 2.9. Title to Trust Property. Legal title to all Trust Property
shall be vested at all times in the Property Trustee (in its capacity as such)
and shall be held and administered by the Property Trustee for the benefit of
the Trust and the Securityholders in accordance with this Trust Agreement. The
Securityholder shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1 Payment Account. On or prior to the Closing Date, the Property
Trustee shall establish the Payment Account. The Property Trustee and any agent
of the Property Trustee shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits in and withdrawals from the Payment Account in accordance with this
Trust Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the Payment
Account for the exclusive benefit of
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the Securityholders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4 1 Distributions. Distributions on the Trust Securities shall be
cumulative, and shall accrue from the date of original issuance, or the most
recent Distribution Date (as defined herein) and, except in the event that the
Sponsor exercises its right to defer the payment of interest on the Debentures
pursuant to the Indenture, shall be payable quarterly in arrears on __________,
_________, _________ and ________ of each year, commencing on _______, ____
(which dates correspond to the interest payment dates on the Debentures), when,
as and if available for payment by the Property Trustee, as further described in
paragraph (c) of this Section 4.1. If any date on which Distributions are
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distributions shall be made on the next succeeding day which is
a Business Day (and no interest shall accrue for the period from and after such
date until the next succeeding Business Day) with the same force and effect as
if made on such date (each date on which Distributions are payable in accordance
with this Section 4.1(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and the Distributions on the Trust Securities shall be payable
at a rate of ___% per annum of the Liquidation Amount of the Trust Securities,
such rate being the rate of interest payable on the Debentures to be held by the
Property Trustee. The amount of Distributions payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. For periods
less than a full quarter, Distributions shall reflect interest on Debentures
computed on the basis of the actual number of elapsed days in such period based
on
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a 30-day month. The amount of Distributions payable for any period shall
include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee from the Payment Account and shall be payable on each Distribution Date
only to the extent that the Trust has funds then on hand and available in the
Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
the date which is the fifteenth day (whether or not a Business Day) next
preceding such Distribution Date.
SECTION 4.2. Redemption. Upon an optional redemption (as set forth in the
Indenture) of Debentures, the proceeds from such redemption shall be applied to
redeem Trust Securities having an aggregate Liquidation Amount equal to the
aggregate principal amount of the Debentures so redeemed by the Sponsor,
including pursuant to Section 4.4, at the Optional Redemption Price, and upon a
mandatory redemption (as set forth in the Indenture) of Debentures, the proceeds
from such redemption shall be applied to redeem Trust Securities, having an
aggregate Liquidation Amount equal to the aggregate principal amount of the
Debentures so redeemed by the Sponsor, at the Redemption Price.
(ii) If at any time following the Conversion Expiration Date,
less than five percent (5%) in principal amount of the Debentures
originally issued by the Sponsor remain outstanding, such Debentures
are redeemable, at the option of the Sponsor, in whole but not in
part, at a redemption price equal to the aggregate principal amount
thereof, and all accrued and unpaid interest; in such event, the
proceeds from such redemption shall be applied to redeem the
Outstanding Trust Securities.
(b) Notice of redemption (which notice will be irrevocable) shall be given
by the Property Trustee by first-class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the Redemption Date to the
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Sponsor and each Holder of Trust Securities to be redeemed, at such Holder's
address as it appears in the Securities Register. All notices of redemption
shall state:
(i) the Redemption Date;
(ii) the Redemption Price or the Optional Redemption Price,
as the case may be;
(iii) the CUSIP number;
(iv) if less than all of the Outstanding Trust Securities
are to be redeemed, the identification and the aggregate Liquidation Amount
of the particular Trust Securities to be redeemed;
(v) If the Preferred Securities are convertible, (A) that a
Holder of Preferred Securities who desires to convert such Preferred
Securities called for redemption must satisfy the requirements for
conversion contained in Section 4.3 below, (B) the Conversion Price and
(C), if previously determined, the Conversion Expiration Date;(vi) that
on the Redemption Date the Redemption Price or the Optional Redemption
Price, as the case may be, will become due and payable upon each such Trust
Security to be redeemed and that Distributions thereon will cease to accrue
on and after said date; and
(vii) the place or places where such Trust Securities are to
be surrendered for payment of the Redemption Price or the Optional
Redemption Price, as the case may be.
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price or the Optional Redemption Price, as the case may be,
with the proceeds from the contemporaneous redemption of Debentures. Redemptions
of the Trust Securities shall be made and the Redemption Price or the Optional
Redemption Price, as the case may be, shall be payable on each Redemption Date
only to the extent that the Trust has funds then on hand and available in the
Payment Account for the payment of such Redemption Price or the Optional
Redemption Price, as the case may be.
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(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, subject to Section 4.2(c), the Property Trustee will, so long as and to
the extent the Preferred Securities are in book-entry-only form, irrevocably
deposit with the Clearing Agency for the Preferred Securities funds sufficient
to pay the applicable Redemption Price. If the Preferred Securities are no
longer in book-entry only form, the Property Trustee, subject to Section 4.2(c),
will irrevocably deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price or Optional Redemption Price, as the case may be, on
such Preferred Securities held in certificated form and will give the Paying
Agent irrevocable instructions and authority to pay the Redemption Price or the
Optional Redemption Price, as the case may be, to the Holders thereof upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then, upon the date of such deposit, all rights of Securityholders holding Trust
Securities so called for redemption will cease, except the right of such
Securityholders to receive the Redemption Price or the Optional Redemption
Price, as the case may be, but without interest, and such Trust Securities will
cease to be Outstanding. In the event that any date on which any Redemption
Price or the Optional Redemption Price, as the case may be, is payable is not a
Business Day, then payment of the Redemption Price or the Optional Redemption
Price, as the case may be, payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such date.
(e) If less than all the Outstanding Trust Securities are to be redeemed on
a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to
be redeemed shall be allocated on a pro rata basis (based on Liquidation
Amounts) among the Common Securities and the Preferred Securities that are to be
redeemed. The particular Preferred Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Property Trustee from
the Outstanding Preferred Securities
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not previously called for redemption, by lot or by such other method as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $ or an integral multiple of $ in
excess thereof) of the liquidation amount of the Preferred Securities. The
Property Trustee shall promptly notify the Securities Registrar and the
Conversion Agent in writing of the Preferred Securities selected for redemption
and, in the case of any Preferred Securities selected for partial redemption,
the Liquidation Amount thereof to be redeemed; it being understood that, in the
case of Preferred Securities registered in the name of and held of record by the
Clearing Agency (or any successor) or any nominee, the distribution of the
proceeds of such redemption will be made in accordance with the procedures of
the Clearing Agency or its nominee. For all purposes of this Trust Agreement,
unless the context otherwise requires, all provisions relating to the redemption
of Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the Liquidation
Amount of Preferred Securities which has been or is to be redeemed. In the event
of any redemption in part, the Trust shall not be required to (i) issue,
register the transfer of or exchange of any Preferred Security during a period
beginning at the opening of business 15 days before any selection for redemption
of Preferred Securities and ending at the close of business on the earliest date
in which the relevant notice of redemption is deemed to have been given to all
holders of Preferred Securities to be so redeemed or (ii) register the transfer
of or exchange of any Preferred Securities so selected for redemption, in whole
or in part, except for the unredeemed portion of any Preferred Securities being
redeemed in part.
SECTION 4.3. Conversion. The Holders of Trust Securities, subject to the
limitations set forth in this Section, shall have the right at any time prior to
the Conversion Expiration Date, at their option, to cause the Conversion Agent
to convert Trust Securities, on behalf of the converting Holders, into shares of
Common Stock in the manner described herein on and subject to the following
terms and conditions:
(i) The Trust Securities will be convertible into fully paid and
nonassessable shares of Common Stock pursuant to the Holder's
direction to the Conversion Agent to exchange such Trust Securities
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for a portion of the Debentures, and immediately convert such amount
of Debentures into fully paid and nonassessable shares of Common Stock
at an initial rate of ______ shares of Common Stock for each Trust
Security (which is equivalent to a conversion price of $_____ per $___
principal amount of Debentures), subject to certain adjustments set
forth in the Indenture (as so adjusted, "Conversion Price").
(ii) In order to convert Trust Securities into Common Stock, the
Holder of such Trust Securities shall submit to the Conversion Agent
an irrevocable Notice of Conversion to convert Trust Securities on
behalf of such Holder, together, if the Trust Securities are in
certificated form, with such certificates. The Notice of Conversion
shall (i) set forth the number of Trust Securities to be converted and
the name or names, if other than the Holder, in which the shares of
Common Stock should be issued and (ii) direct the Conversion Agent (a)
to exchange such Trust Securities for a portion of the Debentures held
by the Property Trustee (at the rate of exchange specified in the
preceding paragraph) and (b) to immediately convert such Debentures,
on behalf of such Holder, into Common Stock (at the conversion rate
specified in the preceding paragraph). The Conversion Agent shall
notify the Property Trustee of the Holder's election to exchange Trust
Securities for a portion of the Debentures held by the Property
Trustee and the Property Trustee shall, upon receipt of such notice,
deliver to the Conversion Agent the appropriate principal amount of
Debentures for exchange in accordance with this Section. The
Conversion Agent shall thereupon notify the Sponsor of the Holder's
election to convert such Debentures into shares of Common Stock.
Holders of Trust Securities at the close of business on a Distribution
payment record date will be entitled to receive the Distribution paid
on such Trust Securities on the corresponding Distribution Date
notwithstanding the conversion of such Trust Securities following such
record date but prior to such Distribution Date. Except as provided
above, neither the Trust nor the Sponsor will make, or be required to
make, any payment, allowance or ad-
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justment upon any conversion on account of any accumulated and unpaid
Distributions whether or not in arrears accrued on the Trust
Securities surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Common Stock issued
upon such conversion. Trust Securities shall be deemed to have been
converted immediately prior to the close of business on the day on
which an irrevocable Notice of Conversion relating to such Trust
Securities is received by the Conversion Agent in accordance with the
foregoing provision (the "Conversion Date"). The Person or Persons
entitled to receive the Common Stock issuable upon conversion of the
Debentures shall be treated for all purposes as the record holder or
holders of such Common Stock on the date of conversion. As promptly as
practicable on or after the Conversion Date, the Sponsor shall issue
and deliver at the office of the Conversion Agent a certificate or
certificates for the number of full shares of Common Stock issuable
upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to
receive the same, unless otherwise directed by the Holder in the
notice of conversion and the Conversion Agent shall distribute such
certificate or certificates to such Person or Persons.
(iii) On and after _______, _____, the Sponsor may, at its
option, cause the conversion rights of holders of the Debentures (and
the corresponding conversion rights of Holders of Trust Securities) to
expire; provided, however, that the Sponsor may exercise this option
only if for 20 trading days within any period of 30 consecutive
trading days, including the last trading day of such period, the
Current Market Price of Common Stock exceeds ____% of the Conversion
Price.
In order to exercise its option to terminate the conversion
rights of the Debentures, the Sponsor must issue a press release for
publication on the Dow Jones News Service announcing the Conversion
Expiration Date prior to the opening of business on the second trading
day after any period in which the condition in the preceding sentence
has
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been met, but in no event prior to _______. The press release shall
announce the Conversion Expiration Date (which may not occur sooner
than 30 nor more than 60 days after the Sponsor issues the press
release announcing its intention to terminate the conversion rights of
the Debentures) and provide the current Conversion Price and Current
Market Price of Common Stock, in each case as of the close of business
on the trading day next preceding the date of the press release.
Conversion rights will terminate at the close of business on the
Conversion Expiration Date.
The Sponsor, or at the request of the Sponsor, the Property
Trustee shall send notice of the expiration of conversion rights by
first-class mail to the Holders of the Trust Securities and the
holders of the Debentures not more than four Business Days after the
Sponsor issues the press release or, if the Property Trustee is
requested to send such notice, which shall be on the date of such
press release, after the Sponsor delivers written instructions to the
Property Trustee containing the information required by the next
sentence to be in the notice. Such mailed notice of the expiration of
the conversion rights of the Holders shall state: (A) the Conversion
Expiration Date; (B) the Conversion Price of the Trust Securities and
the Current Market Price of the Common Stock, in each case as of the
close of business on the Business Day next preceding the date of the
notice of expiration of the conversion rights of the Holders; (C) the
place or places at which Trust Securities may be surrendered prior to
the Conversion Expiration Date for certificates representing shares of
Common Stock; and (D) such other information or instructions as the
Sponsor deems necessary or advisable to enable a Holder to exercise
its conversion right hereunder. No defect in the notice of expiration
of the conversion rights of the Holders or in the mailing thereof with
respect to any Trust Security shall affect the validity of such notice
with respect to any other Trust Security. As of the close of business
on the Conversion Expiration Date, the Debentures (and
correspondingly, the Trust Securities) shall no longer be convertible
into Common Stock. In
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the event that the Sponsor does not exercise its option to terminate
the conversion rights of the Debentures, the Conversion Expiration
Date with respect to the Trust Securities will be the close of
business two Business Days preceding the date set for redemption of
the Trust Securities upon the mandatory or optional redemption of the
Debentures.
(iv) Each Holder of a Trust Security by its acceptance thereof
initially appoints The Bank of New York not in its individual capacity
but solely as conversion agent (the "Conversion Agent") for the
purpose of effecting the conversion of Trust Securities in accordance
with this Section. In effecting the conversion and transactions
described in this Section, the Conversion Agent shall be acting as
agent of the Holders of Trust Securities directing it to effect such
conversion transactions. The Conversion Agent is hereby authorized (i)
to exchange Trust Securities from time to time for Debentures held by
the Trust in connection with the conversion of such Trust Securities
in accordance with this Section and (ii) to convert all or a portion
of the Debentures into Common Stock and thereupon to deliver such
shares of Common Stock in accordance with the provisions of this
Section and to deliver to the Property Trustee any new Debenture or
Debentures for any resulting unconverted principal amount delivered to
the Conversion Agent by the Debenture Trustee.
(v) No fractional shares of Common Stock will be issued as a
result of conversion, but, in lieu thereof, such fractional interest
will be paid in cash by the Sponsor to the Conversion Agent in an
amount equal to the Current Market Price of the fractional share of
the Common Stock, and the Conversion Agent will in turn make such
payment to the Holder or Holders of Trust Securities so converted.
(vi) Nothing in this Section 4.3 shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Trust
Securities or as set forth in this Agreement or otherwise re-
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quired of the Property Trustee or the Trust to pay any amounts on
account of such withholdings.
SECTION 4.4. Special Event Exchange or Redemption. If a Special Event
shall occur and be continuing, the Property Trustee shall direct the Conversion
Agent to exchange all Outstanding Trust Securities for Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Trust
Securities to be exchanged and with accrued interest in an amount equal to any
unpaid Distribution (including any Additional Amounts) on the Trust Securities;
provided, however, that, in the case of a Tax Event, the Sponsor shall have the
right to (i) direct that less than all, or none, as appropriate, of the Trust
Securities be so exchanged if and for so long as the Sponsor shall have elected
to pay any Additional Sums (as defined in the Indenture) such that the amount
received by Holders of Trust Securities not so exchanged in respect of
Distributions and other distributions are not reduced as a result of such Tax
Event, and shall not have revoked any such election or failed to make such
payments or (ii) cause the Trust Securities to be redeemed in the manner set
forth below. If a Tax Event shall occur or be continuing, the Sponsor shall have
the right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures, in whole or in part, for cash upon the later of (i) 90 days
following the occurrence of such Tax Event or (ii) ________. Promptly following
such redemption, Trust Securities with an aggregate liquidation amount equal to
the aggregate principal amount of the Debentures so redeemed will be redeemed by
the Trust at the Optional Redemption Price on a pro rata basis.
(b) Notice of any exchange pursuant to this Section 4.4 (an "Exchange
Notice") of the Trust Securities, which Exchange Notice shall be irrevocable,
will be given by the Property Trustee by first-class mail to the Sponsor and to
each record Holder of Trust Securities to be exchanged not fewer than 30 nor
more than 60 days prior to the date fixed for exchange thereof. For purposes of
the calculation of the date of exchange and the dates on which notices are given
pursuant to this paragraph (b), an Exchange Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage prepaid, to
each Holder. Each Exchange Notice shall be addressed to each Holder of Trust
Securities at the address of such Holder appearing in the books and records of
the Trust. Each Exchange Notice shall state: (A) the exchange date; (B) the
aggregate
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Liquidation Amount and any unpaid Distributions (including any Additional
Amounts) on the Trust Securities to be exchanged and the aggregate principal
amount and any accrued interest on the Debentures to be exchanged therefor; (C)
that on the exchange date the Trust Securities to be so exchanged shall be
exchanged for Debentures and that Distributions on the Trust Securities so
exchanged will cease to accumulate on and after said date; and (D) the identity
of the Conversion Agent, if any, and the place or places where each Trust
Certificate to be exchanged is to be surrendered in exchange for Debentures. No
defect in the Exchange Notice or in the mailing thereof with respect to any
Trust Security shall affect the validity of the exchange proceedings for any
other Trust Security.
(c) In the event that fewer than all the Outstanding Preferred Securities
are to be exchanged, then, on the exchange date, (i) if all of the Outstanding
Preferred Securities are represented by Definitive Preferred Securities
Certificates, the particular Preferred Securities to be exchanged will be
selected by the Property Trustee from the Outstanding Preferred Securities not
previously called for redemption or exchange on a pro rata basis, (ii) if all of
the Outstanding Preferred Securities are represented by Book-Entry Preferred
Securities Certificates, the Property Trustee shall provide for the selection
for exchange of a portion of the Global Certificate representing the Book-Entry
Preferred Securities Certificates on a pro rata basis and (iii) if Outstanding
Trust Securities are represented by both Definitive Preferred Securities
Certificates and Book-Entry Preferred Securities Certificates, the Property
Trustee shall select the portion of the Global Certificate representing the
Book-Entry Preferred Securities Certificates and the particular Outstanding
Preferred Securities represented by Definitive Preferred Securities Certificates
to be exchanged on a pro rata basis. In the case of clause (ii) or (iii) above,
the particular Book-Entry Preferred Securities Certificates to be exchanged
shall be selected in accordance with the applicable rules and procedures for the
Clearing Agency in whose name, or whose nominee's name, such global certificate
is then held. Any Preferred Securities Certificate that is to be exchanged only
in part shall be surrendered with due endorsement or by a written instrument of
transfer fully executed by the Holder thereof (or its attorney duly authorized
in writing) and the Trust shall prepare and deliver to such Holder, without
service charge, a new Preferred Securities Certificate or Certificates in aggre-
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gate stated Liquidation Amount equal to, and in exchange for, the unredeemed
portion of the Preferred Securities Certificate so surrendered. The Common
Securities shall be exchanged in a similar manner.
(d) In the event of an exchange pursuant to this Section 4.4, on
the date fixed for any such exchange, (i) if the Preferred Securities are
represented by Book-Entry Preferred Securities Certificates, the Clearing Agency
of its nominee, as the record Holder of the Preferred Securities, will exchange
through the Conversion Agent the Global Certificate representing the Preferred
Securities to be exchanged for a registered Global Certificate or certificates
representing the Debentures to be delivered upon such exchange, (ii) if the
Preferred Securities are represented by Definitive Preferred Securities
Certificates, the certificates representing the Preferred Securities to be so
exchanged will be deemed to represent Debentures having a principal amount equal
to the aggregate stated Liquidation Amount of such Preferred Securities until
such certificates are presented to the Conversion Agent for exchange for
definitive certificates representing Debentures and (iii) all rights of the
Holders of the Preferred Securities so exchanged will cease, except for the
right of such Holders to receive Debentures. The Common Securities shall be
exchanged in a similar manner
(e) Each Holder, by becoming a party to this Agreement pursuant
to Section 10.11 of this Agreement, will be deemed to have agreed to be bound by
these exchange provisions in regard to the exchange of Trust Securities for
Debentures pursuant to the terms described above.
(f) Nothing in this Section 4.4 shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Trust Securities or as
set forth in this Agreement or otherwise require the Property Trustee or the
Trust to pay any amounts on account of such withholdings.
SECTION 4.5. Subordination of Common Securities. Payment of
Distributions (including Additional Amounts, if applicable) on, and the
Redemption Price of, the Trust Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of the Trust Securities; provided, however, that
if on any Distribution Date or Redemption Date an Event of Default shall have
occurred and be continuing, no payment of any Distribution (including Additional
Amounts,
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if applicable) on, or the Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities, shall have
been made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or the
Redemption Price of, Preferred Securities then due and payable.
SECTION 4.6. Payment Procedures. Payments in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register or, if
the Preferred Securities are held by a Clearing Agency, such Distributions shall
be made to the Clearing Agency in immediately available funds, in accordance
with the Certificate Depositary Agreement on the applicable Distribution Dates.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Holder of the
Common Securities.
SECTION 4.7. Tax Returns and Reports. The Administrative
Trustees shall prepare (or cause to be prepared), at the Sponsor's expense, and
file all United States Federal, State and local tax and information returns and
reports required to be filed by or in respect of the Trust. In this regard, the
Administrative Trustees shall (a) prepare and file (or cause to be prepared or
filed) Form 1041 or the appropriate Internal Revenue Service form required to be
filed in respect of the Trust in each taxable year of the Trust and (b) prepare
and furnish (or cause to be prepared and furnished) to each Securityholder a
Form 1099 or the appropriate Internal Revenue Service form required to be
furnished to such Securityholder or the information required to be provided on
such form. The Administrative Trustees shall provide the Sponsor and the
Property Trustee with a copy of all such returns, reports and schedules promptly
after such filing or furnishing. The Trustees shall comply with United States
Federal withholding and backup withholding tax laws and information reporting
requirements with
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respect to any payments to Securityholders under the Trust Securities.
SECTION 4.8. Payment of Taxes, Duties, Etc. of the Trust. Upon receipt
under the Debentures of Additional Sums, the Property Trustee, upon receipt of
written notice from the Sponsor or the Administrative Trustees, shall promptly
pay from such Additional Sums any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
SECTION 4.9. Payments under Indenture. Any amount payable hereunder to
any Holder of Preferred Securities (and any Owner with respect thereto) shall be
reduced by the amount of any corresponding payment such Holder (or Owner) has
directly received pursuant to Section 5.7 of the Indenture in accordance with
the terms of Section 6.8 hereof.
ARTICLE 5
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership. Upon the formation of the Trust and
until the issuance of the Trust Securities, and at any time during
which no Trust Securities are Outstanding, the Sponsor shall be the
sole beneficial owner of the Trust.
SECTION 5.2. The Trust Securities Certificates. The Preferred
Securities Certificates shall be issued in minimum denominations of $___
Liquidation Amount and integral multiples of $___ in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $___
Liquidation Amount and integral multiples thereof. The consideration received by
the Trust for the issuance of the Trust Securities shall constitute a
contribution to the capital of the Trust and shall not constitute a loan to the
Trust. Initially the Preferred Securities will be represented by one or more
certificates in registered, global form (the "Global Certificate"). The Trust
Securities Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of at least one Administrative Trustee and authenticated by
the Property Trustee. Trust Securities Certificates bearing the manual or
facsimile
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signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be validly issued
and entitled to the benefit of this Trust Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
delivery of such Trust Securities Certificates or did not hold such offices at
the date of delivery of such Trust Securities Certificates. A transferee of a
Trust Securities Certificate shall become a Securityholder, and shall be
entitled to the rights and subject to the obligations of a Securityholder
hereunder, upon due registration of such Trust Securities Certificate in such
transferee's name pursuant to Section 5.4.
SECTION 5.3. Delivery of Trust Securities Certificates. On the
Closing Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and
2.5, to be executed on behalf of the Trust and delivered to or upon the written
order of the Sponsor, signed by its Chairman of the Board, any Vice Chairman,
its President, any Senior Vice President or any Vice President, Treasurer or
Assistant Treasurer or Controller without further corporate action by the
Sponsor, in authorized denominations.
A Trust Security Certificate shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Trust Security Certificate has
been authenticated under this Trust Agreement. Upon a written order of the Trust
signed by one Administrative Trustee, the Property Trustee shall authenticate
the Trust Security Certificates for original issue.
The Property Trustee may appoint an authenticating agent acceptable to
the Administrative Trustees to authenticate Trust Security Certificates. An
authenticating agent may authenticate Trust Security Certificates whenever the
Property Trustee may do so. Each reference in this Trust Agreement to
authentication by the Property Trustee includes authentication by such agent. An
authenticating agent has the same rights as the Property Trustee to deal with
the Sponsor or an Affiliate with respect to the authentication of Trust
Securities.
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SECTION 5.4. Registration of Transfer and Exchange of Preferred
Securities. The Securities Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 5.8, a Securities Register in
which, subject to such reasonable regulations as it may prescribe, the
Securities Registrar shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates (subject to Section 5.10 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Preferred Securities Certificates as herein provided. The Property
Trustee shall be the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Security
at an office or agency of the Sponsor designated pursuant to Section 5.8 for
such purpose, the Sponsor shall execute, and the Property Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Preferred Securities of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Trust Agreement.
At the option of the Holder, and subject to the other provisions of
this Section 5.4, Preferred Securities may be exchanged for other Preferred
Securities of any authorized denomination and of a like Liquidation Amount, upon
surrender of the Preferred Securities to be exchanged at any such office or
agency. Whenever any Preferred Securities are so surrendered for exchange, the
Sponsor shall execute, and the Property Trustee shall authenticate and deliver,
the Preferred Securities which the Holder making the exchange is entitled to
receive.
All Preferred Securities issued upon any registration of transfer or
exchange of Preferred Securities shall be the valid obligations of the Sponsor,
evidencing the same debt, and entitled to the same benefits under this Trust
Agreement, as the Securities surrendered upon such registration of transfer or
exchange.
Every Preferred Security presented or surrendered for registration of
transfer or for exchange shall (if so requested by the Sponsor or the Securities
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Sponsor and the Secu-
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rities Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for authentication and delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like denomination.
In connection with the issuance of any new Trust Securities Certificate under
this Section, the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicative Trust Securities Certificate issued
pursuant to this Section shall constitute conclusive evidence of an undivided
beneficial interest in the assets of the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Trust Securities Certificate shall be found
at any time.
SECTION 5.6. Persons Deemed Securityholders. The Property Trustee
and the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
Distributions and for all other purposes whatsoever, and neither the Property
Trustee nor the Securities Registrar shall be bound by any notice to the
contrary.
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SECTION 5.7. Access to List of Securityholders' Names and Addresses.
The Administrative Trustees or the Sponsor shall furnish or cause to be
furnished (unless the Property Trustee is acting as Securities Registrar with
respect to the Trust Securities under the Trust Agreement) a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Securityholders as of the most recent record date (a) to the Property
Trustee, quarterly at least 5 Business Days before each Distribution Date, and
(b) to the Property Trustee, promptly after receipt by the Sponsor of a request
therefor from the Property Trustee in order to enable the Property Trustee to
discharge its obligations under this Trust Agreement, in each case to the extent
such information is in the possession or control of the Administrative Trustees
or the Sponsor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or under
the Trust Securities, and the corresponding rights of the Trustee shall be as
provided in the Trust Indenture Act, except to the extent Section 3819 of the
Delaware Business Trust Act would require greater access to such information, in
which case the latter shall apply. Each Holder, by receiving and holding a Trust
Securities Certificate, and each Owner shall be deemed to have agreed not to
hold the Sponsor, the Property Trustee or the Administrative Trustees
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 5.8. Maintenance of Office or Agency. The Securities
Registrar shall maintain in The City of New York an office or offices or agency
or agencies where Preferred Securities Certificates may be surrendered for
registration of transfer, exchange or conversion and where notices and demands
to or upon the Trustees in respect of the Trust Securities Certificates may be
served. The Securities Registrar initially designates 101 Barclay Street, Floor
21W, New York, New York 10286, Attention: Corporate Trust Administration, as its
principal corporate trust office for such purposes. The Securities Registrar
shall give prompt written notice to the Sponsor and to the Securityholders of
any change in the location of the Securities Register or any such office or
agency.
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SECTION 5.9. Appointment of Paying Agent. In the event that the
Preferred Securities are not in book-entry form only, the Trust shall maintain
in the Borough of Manhattan, City of New York, an office or agency (the "Paying
Agent") where the Preferred Securities may be presented for payment. The Paying
Agent shall make Distributions to Securityholders from the Payment Account and
shall report the amounts of such Distributions to the Property Trustee and the
Administrative Trustees. Any Paying Agent shall have the revocable power to
withdraw funds from the Payment Account for the purpose of making the
Distributions referred to above. The Administrative Trustees may revoke such
power and remove the Paying Agent if such Trustees determine in their sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Trust Agreement in any material respect. The Paying Agent shall
initially be the Property Trustee, and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the Sponsor.
Any Person acting as Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Sponsor. In the
event that the Property Trustee shall no longer be the Paying Agent or a
successor Paying Agent shall resign or its authority to act be revoked, the
Administrative Trustees shall appoint a successor that is acceptable to the
Property Trustee and the Sponsor to act as Paying Agent (which shall be a bank
or trust company). Each successor Paying Agent or any additional Paying Agent
shall agree with the Trustees that, as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to each Securityholder. The Paying Agent
shall return all unclaimed funds to the Property Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 shall apply to
the Property Trustee also in its role as Paying Agent, for so long as the
Property Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 5.10. Ownership of Common Securities by Sponsor. On the
Closing Date provided for in Section 2.5,
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the Sponsor shall acquire and retain beneficial and record ownership of the
Common Securities. To the fullest extent permitted by law, any attempted
transfer of the Common Securities shall be void. The Administrative Trustees
shall cause each Common Securities Certificate issued to the Sponsor to contain
a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
SECTION 5.11. Global Securities; Non-Global Securities; Common
Securities Certificate. (a) Each Global Certificate authenticated under this
Trust Agreement shall be registered in the name of the Clearing Agency
designated by the Sponsor for such Global Certificate or a nominee thereof and
delivered to such Clearing Agency or a nominee thereof or custodian therefor,
and each such Global Certificate shall constitute a Preferred Security for all
purposes of this Trust Agreement.
(b) If a Global Certificate is to be exchanged for Certificated
Preferred Securities or canceled in whole, it shall be surrendered by or on
behalf of the Clearing Agency, its nominee or custodian to the Property Trustee,
as Securities Registrar, for exchange or cancellation as provided in this
Article 5. If any Global Certificate is to be exchanged for Certificated
Preferred Securities or cancelled in part, or if another Preferred Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Certificate, in each case, as provided in Section 5.4, then either (i) such
Global Certificate shall be so surrendered for exchange or cancellation as
provided in this Article 5 or (ii) the principal amount thereof shall be reduced
or increased by an amount equal to the portion thereof to be so exchanged or
cancelled, or equal to the principal amount of such Certificated Preferred
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Property
Trustee, as Securities Registrar, whereupon the Property Trustee, in accordance
with the Applicable Procedures, shall instruct the Clearing Agency or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Certificate, the Property
Trustee shall, subject to Section 5.4 and as otherwise provided in this Article
5, authenticate and deliver any Preferred Securities issuable in exchange for
such Global Certificate (or any portion thereof) to or upon the order of, and
registered in such names as may be directed by, the Clearing Agency or its
authorized repre-
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sentative. Upon the request of the Property Trustee in connection with the
occurrence of any of the events specified in the preceding paragraph, the
Sponsor shall promptly make available to the Property Trustee a reasonable
supply of Preferred Securities that are not in the form of Global Certificates.
The Property Trustee shall be entitled to rely upon any order, direction or
request of the Clearing Agency or its authorized representative which is given
or made pursuant to this Article 5 if such order, direction or request is given
or made in accordance with the Applicable Procedures.
(c) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Certificate or any portion thereof, whether pursuant to this Article 5 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Certificate, unless such Preferred Security is registered in the name of
a Person other than the Clearing Agency for such Global Certificate or a nominee
thereof.
(d) The Clearing Agency or its nominee, as registered owner of a
Global Certificate, shall be the holder of such Global Certificate for all
purposes under the Trust Agreement and the Preferred Securities, and owners of
beneficial interests in a Global Certificate shall hold such interests pursuant
to the Applicable Procedures. Accordingly, any such Owner's beneficial interest
in a Global Certificate will be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee or its participants and such owners of beneficial interests in a Global
Certificate will not be considered the owners or holders of such Global
Certificate for any purpose of this Trust Agreement or the Preferred Securities.
(e) A single Common Securities Certificate representing the Common
Securities shall be issued to the Sponsor in the form of a definitive Common
Securities Certificate.
SECTION 5.12. Notices to Clearing Agency. To the extent that a notice
or other communication to the Owners is required under this Trust Agreement,
unless and until Definitive Preferred Securities Certificates shall have been
issued to Owners pursuant to Section 5.13, the Trustees shall give all such
notices and communications specified
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herein to be given to Owners to the Clearing Agency, and shall have no
obligations to provide notices directly to the Owners.
SECTION 5.13. Definitive Preferred Securities Certificates.
Notwithstanding any other provision in this Trust Agreement other than as
provided for in Section 5.4(b)(vi), no Global Certificate may be exchanged in
whole or in part for Preferred Securities registered, and no transfer of a
Global Certificate in whole or in part may be registered, in the name of any
Person other than the Clearing Agency for such Global Certificate or a nominee
thereof unless (i) such Clearing Agency (A) has notified the Sponsor that it is
unwilling or unable to continue as Clearing Agency for such Global Certificate
or (B) has ceased to be a clearing agency registered as such under the
Securities Exchange Act of 1934, as amended, and in either case the Trust and
the Sponsor thereupon fails to appoint a successor Clearing Agency, (ii) the
Trust and the Sponsor, at their option, notify the Property Trustee in writing
that it elects to cause the issuance of the Preferred Securities in certificated
form or (iii) there shall have occurred and be continuing an Event of Default or
any event which after notice or lapse of time or both would be an Event of
Default. In all cases, Certificated Preferred Securities delivered in exchange
for any Global Certificate or beneficial interests therein will be registered in
the names, and issued in any approved denominations, requested by or on behalf
of the Clearing Agency (in accordance with its customary procedures).
SECTION 5.14. Rights of Securityholders. The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as such)
in accordance with Section 2.9, and the Securityholders shall not have any right
or title therein other than the undivided beneficial interest in the assets of
the Trust conferred by their Trust Securities and they shall have no right to
call for any partition or division of property, profits or rights of the Trust
except as described below. The Trust Securities shall be personal property
giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar rights and,
when issued and delivered to Securityholders against payment of the purchase
price therefor, will be fully paid and nonassessable by the Trust. The Holders
of the Trust Securities,
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in their capacities as such, shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights. (a) Except as provided in
this Section, in Section 8.9 and 10.2 and in the Indenture and as otherwise
required by law, no Holder of Preferred Securities shall have any right to vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) Subject to Section 8.2 hereof, if an Event of Default with
respect to the Preferred Securities has occurred and been subsequently cured,
waived or otherwise eliminated, the provisions of Section 6.1(b)(ii) hereof
shall apply. During (x) the period commencing on the date of the occurrence of
an Event of Default with respect to the Preferred Securities and ending on the
date when such Event of Default is cured, waived or otherwise eliminated, or (y)
any period not described in either the preceding sentence or the preceding
clause (x), the provisions of Section 6.1(b)(i) shall apply.
(i) The holders of a majority in aggregate liquidation amount
of the Preferred Securities will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Property Trustee or to exercise any trust or power conferred upon the
Property Trustee under the Trust Agreement, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder
of the Debentures but excluding the right to direct the Property Trustee to
consent to an amendment, modification or termination of the Indenture
(which shall be as provided below). So long as any Debentures are held by
the Property Trustee, the Trustees shall not (A) direct the time, method
and place of conducting any proceeding for any remedy available to the
Deben-
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ture Trustee, or executing any trust or power conferred on the Debenture
Trustee with respect to such Debentures, (B) waive any past default which
is waivable under Section 5.10 of the Indenture, (C) exercise any right to
rescind or annul a declaration that the principal of all the Debentures
shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the
Holders of a majority in aggregate Liquidation Amount of all Outstanding
Preferred Securities (except in the case of clause (D), which consent, in
the event that no Event of Default shall occur and be continuing, shall be
of the Holders of all Trust Securities, voting together as a single class);
provided, however, that where a consent under the Indenture would require
the consent of each holder of Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior written consent of
each Holder of Preferred Securities. The Trustees shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities, except by a subsequent vote of the Holders of the
Preferred Securities. The Property Trustee shall notify all Holders of
record of the Preferred Securities of any notice of default received from
the Debenture Trustee with respect to the Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees
shall, at the expense of the Sponsor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation or partnership for
United States Federal income tax purposes on account of such action.
(ii) Subject to Section 8.2 of this Trust Agreement and only
after the Event of Default with respect to the Preferred Securities has
been cured, waived, or otherwise eliminated the holders of a majority in
aggregate liquidation amount of the Common Securities will have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee or to exercise any trust or power
conferred upon the Property Trustee under the Trust Agreement, including
the right to
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direct the Property Trustee to exercise the remedies available to it as a
holder of the Debentures but excluding the right to direct the Property
Trustee to consent to an amendment, modification or termination of the
Indenture (which shall be as provided below). So long as any Debentures are
held by the Property Trustee, the Trustees shall not (A) direct the time,
method and place of conducting any proceeding for any remedy available to
the Debenture Trustee, or executing any trust or power conferred on the
Debenture Trustee with respect to such Debentures, (B) waive any past
default which is waivable under Section 5.10 of the Indenture, (C) exercise
any right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of a majority in aggregate Liquidation Amount of
all Common Securities (except in the case of clause (D), which consent, in
the event that no Event of Default shall occur and be continuing, shall be
of the Holders of all Trust Securities, voting together as a single class);
provided, however, that where a consent under the Indenture would require
the consent of each holder of Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior written consent of
each Holder of Common Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the Holders of the Common
Securities, except by a subsequent vote of the Holders of the Common
Securities. The Property Trustee shall notify all Holders of record of the
Common Securities of any notice of default received from the Debenture
Trustee with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Common Securities, prior to
taking any of the foregoing actions, the Trustees shall, at the expense of
the Sponsor, obtain an Opinion of Counsel experienced in such matters to
the effect that the Trust will not be classified as an association taxable
as a corporation or partnership for United States Federal income tax
purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Trustees otherwise propose to
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effect the dissolution, winding-up or termination of the Trust, other than
pursuant to the terms of this Trust Agreement, then the Holders of Outstanding
Preferred Securities as a class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of a majority in aggregate Liquidation Amount of the
Outstanding Preferred Securities.
SECTION 6.2. Notice of Meetings. Notice of all meetings of the
Holders of the Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Property Trustee pursuant to Section 10.8 to each
Preferred Securityholder of record, at its registered address, at least 15 days
and not more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.
SECTION 6.3. Meetings of Preferred Security-holders. No annual
meeting of Securityholders is required to be held. The Administrative Trustees,
however, shall call a meeting of Securityholders to vote on any matter upon the
written request of the Preferred Securityholders of record of 25% of the
Preferred Securities (based upon their Liquidation Amount) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of Preferred Securities to vote on any
matters as to which such Holders are entitled to vote.
Holders of record of 50% of the Preferred Securities (based upon their
Liquidation Amount), present in person or by proxy, shall constitute a quorum at
any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Holders
of record of Preferred Securities present, in person or by proxy, holding more
than a majority of the Preferred Securities (based upon their Liquidation
Amount) held by Holders of record of Preferred Securities present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
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SECTION 6.4. Voting Rights. Securityholders shall be entitled to one
vote for each $___ of Liquidation Amount represented by their Trust Securities
in respect of any matter as to which such Securityholders are entitled to vote.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Sponsor, the Trustees or any
affiliate of any Trustee shall, for purposes of such vote or consent, be treated
as if such Preferred Securities were not outstanding.
SECTION 6.5. Proxies, Etc. At any meeting of Securityholders, any
Securityholders entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of the Property
Trustee, proxies may be solicited in the name of the Property Trustee or one or
more officers of the Property Trustee. Only Securityholders of record shall be
entitled to vote. When Trust Securities are held jointly by several Persons, any
one of them may vote at any meeting in person or represented by proxy in respect
of such Trust Securities, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Trust Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution.
SECTION 6.6. Securityholder Action by Written Consent. Any action
which may be taken by Securityholders at a meeting may be taken without a
meeting if Securityholders holding more than a majority of all Outstanding Trust
Securities (based upon their Liquidation Amount) entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
express provision of this Trust Agreement) shall consent to the action in
writing.
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SECTION 6.7. Record Date for Voting and Other Purposes. For the
purposes of determining the Securityholders who are entitled to notice of and
to vote at any meeting or by written consent, or to participate in any
Distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Property Trustee may from time to time fix a date, not more than 90
days prior to the date of any meeting of Securityholders or the payment of
Distributions or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
SECTION 6.8. Acts of Securityholders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
or Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders or Owners in person
or by an agent duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to an Administrative Trustee. Such instrument or
instruments (and the action embodied therein and evidence thereby) are herein
sometimes referred to as the "Act" of the Securityholders or Owners signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 8.1) conclusive in favor of the
Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgements of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in
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any other manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article 6, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Upon the occurrence and continuation of an Event of Default, the
holders of Preferred Securities shall rely on the enforcement by the Property
Trustee of its rights as holder of the Debentures against the Sponsor. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a holder of Preferred Securities, such holder may proceed to
enforce such rights directly against the Sponsor. Notwithstanding the foregoing,
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Sponsor to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the Redemption Date), then a holder
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of Preferred Securities shall have the right to institute a proceeding directly
against the Sponsor, for enforcement of payment to such holder of the principal
amount of or interest on Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of such holder after
the respective due date specified in the Debentures (a "Direct Action"). In
connection with any such Direct Action, the rights of the Sponsor will be
subrogated to the rights of any holder of the Preferred Securities to the extent
of any payment made by the Sponsor to such holder of Preferred Securities as a
result of such Direct Action.
A Securityholder may institute a legal proceeding directly against the
Sponsor under the Guarantee to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Trust or any Person or entity.
SECTION 6.9. Inspection of Records. Upon rea sonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust shall
be open to inspection by Securityholders during normal business hours for any
purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee
and the Delaware Trustee. The Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself, hereby represents and warrants for the
benefit of the Sponsor and the Securityholders that (each such representation
and warranty made by the Property Trustee and the Delaware Trustee being made
only with respect to itself):
(a) the Property Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) the Delaware Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
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(c) each of the Property Trustee and the Delaware Trustee has full
corporate power, authority and legal right to execute, deliver and perform its
obligations under this Trust Agreement and has taken all necessary action to
authorize the execution, delivery and performance by it of this Trust Agreement;
(d) this Trust Agreement has been duly authorized, executed and
delivered by each of the Property Trustee and the Delaware Trustee and
constitutes the valid and legally binding agreement of the Property Trustee and
the Delaware Trustee enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(e) the execution, delivery and performance by each of the Property
Trustee and the Delaware Trustee of this Trust Agreement have been duly
authorized by all necessary corporate or other action on the part of the
Property Trustee and the Delaware Trustee and does not require any approval of
stockholders of the Property Trustee or the Delaware Trustee and such execution,
delivery and performance will not (i) violate either of the Property Trustee's
or the Delaware Trustee's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or result
in the creation or imposition of any Lien on any properties included in the
Trust Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States or the
State of Delaware, as the case may be, governing the banking, corporate, or
trust powers of the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property Trustee or
the Delaware Trustee;
(f) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action
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with respect to, any governmental authority or agency under any existing Federal
law governing the banking, corporate or trust powers of the Property Trustee or
the Delaware Trustee, as the case may be, under the laws of the United States or
the State of Delaware;
(g) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
SECTION 7.2. Representations and Warranties of Sponsor. The Sponsor
hereby represents and warrants for the benefit of the Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date on
behalf of the Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement
and the Securityholders will be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Trust (or the Trustees on behalf of the Trust) under the laws of the State
of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Property Trustee or the Delaware
Trustee, as the case may be, of this Trust Agreement.
ARTICLE 8
THE TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities. (a) The duties and
responsibilities of the Trustees shall be as provided by this Trust Agreement
and, in the case of
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the Property Trustee, by the Trust Indenture Act. The Property Trustee, before
the occurrence of any Event of Default and after the curing or waiving of all
Events of Default that may have occurred, shall undertake to perform only such
duties and obligations as are specifically set forth in this Trust Agreement and
the Trust Indenture Act and no implied covenants shall be read into this Trust
Agreement against the Property Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 8.2) of which a
responsible officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such rights and powers vested in it by this Trust
Agreement and the Trust Indenture Act, and use the same degree of care and skill
in its exercise, as a prudent individual would exercise or use under the
circumstances in the conduct of his or her own affairs. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require the Trustees to
expend or risk their own funds or otherwise incur any financial liability in the
performance of any of their duties hereunder, or in the exercise of any of their
rights or powers, if they shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this Section. Nothing in this Trust Agreement shall be construed
to release the Administrative Trustees from liability for their own grossly
negligent action, their own grossly negligent failure to act, or their own
willful misconduct. To the extent that, at law or in equity, an Administrative
Trustee has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to the Securityholders, such Administrative Trustee shall not be
liable to the Trust or to any Securityholder for such Administrative Trustee's
good faith reliance on the provisions of this Trust Agreement. The provisions of
this Trust Agreement, to the extent that they restrict the duties and
liabilities of the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Sponsor and the Securityholders to replace such other
duties and liabilities of the Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust
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Property and only to the extent that there shall be sufficient revenue or
proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Securityholder,
by its acceptance of a Trust Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 8.1(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority Liquidation Amount of the Trust
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under this Trust
Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such property as fiduciary assets, subject to
the protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) The Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the Sponsor and
money held by
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the Property Trustee need not be segregated from other funds held by it
except in relation to the Payment Account maintained by the Property
Trustee pursuant to Section 3.1 and except to the extent otherwise required
by law; and
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Sponsor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of the Administrative
Trustees or the Sponsor.
SECTION 8.2. Notice of Defaults. (a) Within ten days after the
occurrence of any Event of Default actually known to the Property Trustee, the
Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the holders of Preferred
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived, provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures, the Property Trustee shall be protected in withholding such notice
if and so long as the Board of Directors, the executive committee, or a trust
committee of directors and/or responsible officers of the Property Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders of the Preferred Securities.
(b) Within ten days after the receipt of notice of the Sponsor's
exercise of its right to extend the interest payment period for the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Securityholders, unless such exercise shall have been revoked.
(c) The Holders of a majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Debenture
Event of Default:
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(i) is not waivable under the Indenture, the Event of Default
under the Trust Agreement shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority") to
be waived under the Indenture, the Event of Default under the Trust
Agreement may only be waived by the vote of the Holders of the same
proportion in liquidation amount of the Preferred Securities that the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding.
The provisions of Section 6.1(b) and this Section 8.2(c) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Trust Agreement
and the Preferred Securities, as permitted by the Trust Indenture Act. Upon such
waiver, any such default shall cease to exist, and any Event of Default with
respect to the Preferred Securities arising therefrom shall be deemed to have
been cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or an Event of Default with respect to
the Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Preferred Securities of an Event of Default with respect to
the Preferred Securities shall also be deemed to constitute a waiver by the
Holders of the Common Securities of any such Event of Default with respect to
the Common Securities for all purposes of this Trust Agreement without any
further act, vote, or consent of the Holders of the Common Securities.
(d) The Holders of a majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Debenture
Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Trust Agreement as provided below in this Section 8.2(d),
the Event of Default under the Trust Agreement shall also not be waivable;
or
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(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Trust Agreement as provided
below in this Section 8.2(d), the Event of Default under the Trust
Agreement may only be waived by the vote of the Holders of the same
proportion in liquidation amount of the Common Securities that the relevant
Super Majority represents of the aggregate principal amount of the
Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the Preferred Securities
will have the right to direct the Property Trustee in accordance with the terms
of the Securities. The provisions of Section 6.1(b) and this Section 8.2(d)
shall be in lieu of Sections 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Trust Agreement and the Preferred Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 8.2(d),
upon such waiver, any such default shall cease to exist and any Event of Default
with respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(e) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this Trust
Agreement. The foregoing provisions of this Section 8.2(e) shall be in lieu
of Sections 316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)
(B) of the Trust Indenture Act is hereby expressly excluded from this Trust
Agreement and the Preferred Securities, as permitted by the Trust Indenture Act.
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SECTION 8.3. Certain Rights of Property Trustee. Subject to the
provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if no Event of Default has occurred and is continuing and, (i) in
performing its duties under this Trust Agreement the Property Trustee is
required to decide between alternative courses of action or (ii) in construing
any of the provisions in this Trust Agreement the Property Trustee finds the
same ambiguous or inconsistent with any other provisions contained herein or
(iii) the Property Trustee is unsure of the application of any provision of this
Trust Agreement, then, except as to any matter as to which the Holders of
Preferred Securities are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Sponsor requesting
written instructions of the Sponsor as to the course of action to be taken and
the Property Trustee shall take such action, or refrain from taking such action,
as the Property Trustee shall be instructed in writing to take, or to refrain
from taking, by the Sponsor; provided, however, that if the Property Trustee
does not receive such instructions of the Sponsor within ten Business Days after
it has delivered such notice, or such reasonably shorter period of time set
forth in such notice (which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement as it shall deem
advisable and in the best interests of the Securityholders, in which event the
Property Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
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(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate and an
Opinion of Counsel which, upon receipt of such request, shall be promptly
delivered by the Sponsor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to accomplish any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel (which counsel may
be counsel to the Sponsor or any of its Affiliates, and may include any of its
employees) and the advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon and in
accordance with such advice; and the Property Trustee shall have the right at
any time to seek instructions concerning the administration of this Trust
Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolutions, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by Holders of record of 25% or
more of the Preferred Securities (based upon their Liquidation Amount), but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
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(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys or an Affiliate, provided that the Property Trustee shall be
responsible for its own negligence or recklessness with respect to selection of
any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Trust Securities,
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates shall not
be taken as the statements of the Trustees, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Sponsor of the proceeds of the Debentures.
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SECTION 8.5. May Hold Securities. Except as provided in the
definition of the term "Outstanding" in Article 1, any Trustee or any other
agent of any Trustee or the Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Section 8.8 and
8.12, may otherwise deal with the Trust with the same rights it would have if it
were not a Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Sponsor agrees:
(a) to pay the Trustees from time to time such compensation as the
parties shall agree in writing from time to time for all services rendered by
them hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith;
(c) to the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates (referred
to herein as an "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 of 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 this 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
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negligence or willful misconduct with respect to such acts or omissions; and
(d) no Trustee may claim any lien or charge on any Trust Property as
a result of any amount due pursuant to this Section 8.6.
SECTION 8.7. Property Trustee Required; Eligibility of Trustees.
(a) There shall at all times be a Proper ty Trustee hereunder with respect to
the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to
the Trust Securities. The Delaware Trustee shall either be (i) a natural person
who is at least 21 years of age and a resident of the State of Delaware or (ii)
a legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests. If the Property Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Property Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the
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provisions of, the Trust Indenture Act and this Trust Agreement.
SECTION 8.9. Resignation and Removal; Appointment of Successor. (a)
Subject to Sections 8.9(b) and 8.9(c), Trustees (the "Relevant Trustee") may be
appointed or removed without cause at any time:
(i) until the issuance of any Trust Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a majority in liquidation amount of the Common Securities voting
as a class.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as a Property Trustee under Section 8.7 (a "Successor Property Trustee")
has been appointed and has accepted such appointment by instrument executed by
such Successor Property Trustee and delivered to the Trust, the Sponsor and the
removed Property Trustee.
(c) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as Delaware Trustee under Section 8.7 (a "Successor Delaware Trustee")
has been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his, her or
its successor shall have been appointed or until his, her or its death, removal,
resignation, dissolution or liquidation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
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(1) until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(2) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(e) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with Section 8.9(d).
(f) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
8.9 within 60 days after delivery pursuant to this Section 8.9 of an instrument
of resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
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(h) The Property Trustee shall give notice of each resignation and
each removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.8 and shall give notice to
the Sponsor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(i) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee
who is a natural person dies or becomes, in the opinion of the Sponsor,
incompetent or incapacitated, the vacancy created by such death, incompetence or
incapacity may be filled by (a) the unanimous act of the remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Sponsor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees or the Delaware Trustee, as
the case may be, set forth in Section 8.7).
(j) The indemnity provided to a Trustee under Section 8.6 shall
survive any Trustee's resignation or removal.
SECTION 8.10. Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Trustee, such successor Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee; but, on the request of the
Sponsor or the successor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Sponsor or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and if the Property Trustee is the resigning Trustee shall duly assign, transfer
and deliver to the successor Trustee all property and money held by such
retiring Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee shall execute
and deliver an
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amendment hereto wherein each successor Relevant Trustee shall accept such
appointment and which (a) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Relevant
Trustee all the rights, powers, trusts and duties of the retiring Relevant
Trustee and (b) shall add to or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Relevant Trustee, it being understood
that nothing herein or in such amendment shall constitute such Relevant Trustees
co-trustees and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee; but, on request of
the Trust or any successor Relevant Trustee, such retiring Relevant Trustee
shall duly assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Property Trustee, the Delaware Trustee
or any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Relevant Trustee
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any
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paper or any further act on the part of any of the parties hereto.
SECTION 8.12. Preferential Collection of Claims Against Sponsor or
Trust. If and when the Property Trustee shall be or become a creditor of the
Sponsor or the Trust (or any other obligor upon the Debentures or the Trust
Securities), the Property Trustee shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Sponsor or Trust (or any such
other obligor).
SECTION 8.13. Reports by Property Trustee. () To the extent required
by the Trust Indenture Act, within 60 days after December 31 of each year
commencing with December 31, 1999 the Property Trustee shall transmit to all
Securityholders in accordance with Section 10.8 and to the Sponsor, a brief
report dated as of such December 31 with respect to:
(1) its eligibility under Section 8.7 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such December 31 or, if the Property Trustee has not complied
in any material respects with such obligations, a description of such
noncompliance; and
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder which it
has not previously reported and which in its opinion materially affects the
Trust Securities.
(b) In addition, the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement
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as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(c) A copy of such report shall, at the time of such transmissions to
Holders, be filed by the Property Trustee with each national securities exchange
or self-regulatory organization upon which the Trust Securities are listed, with
the Commission and with the Sponsor.
SECTION 8.14. Reports to the Property Trustee. The Sponsor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 8.15. Evidence of Compliance with Conditions Precedent. Each
of the Sponsor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.
SECTION 8.16. Number of Trustees. (a) The number of Trustees shall be
four, provided that the Holder of all of the Common Securities by written
instrument may increase or decrease the number of Administrative Trustees. The
Property Trustee and the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number
of Administrative Trustees is not reduced pursuant to Section 8.16(a), or if the
number of Trustees is increased pursuant to Section 8.16(a), a vacancy shall
occur.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall
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occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with Section 8.9, the Administrative Trustees in office,
regardless of their number (and notwithstanding any other provision of this
Agreement), shall have all the powers granted to the Administrative Trustees and
shall discharge all the duties imposed upon the Administrative Trustees by this
Trust Agreement.
SECTION 8.17. Delegation of Power. (a) Any Administrative Trustee
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 2.7(a), including any registration
statement or amendment thereof filed with the Commission, or making any other
governmental filing.
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Sponsor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
ARTICLE 9
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination upon Expiration Date. Unless earlier
terminated, the Trust shall automatically terminate on ___________ (the
"Expiration Date"), following the distribution of the Trust Property in
accordance with Section 9.4.
SECTION 9.2. Early Termination. The first to occur of any of the
following events is an "Early Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Sponsor;
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(b) the occurrence of a Special Event except in the case of a Tax
Event following which the Sponsor has elected (i) to pay any Additional Sums (in
accordance with Section 4.4) such that the net amount received by Holders of
Preferred Securities in respect of Distributions are not reduced as a result of
such Tax Event and the Sponsor has not revoked any such election or failed to
make such payments or (ii) to redeem all or some of the Debentures pursuant to
Section 4.4(a);
(c) the redemption, conversion or exchange of all of the Trust
Securities;
(d) an order for dissolution of the Trust shall have been entered by
a court of competent jurisdiction and
(e) receipt by the Property Trustee of written notice from the
Sponsor at any time (which direction is optional and wholly within the
discretion of the Sponsor) of its intention to terminate the Trust and
distribute the Debentures in exchange for the Preferred Securities.
SECTION 9.3. Termination. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Securityholders upon the liquidation of the Trust
pursuant to Section 9.4, or upon the redemption of all of the Trust Securities
pursuant to Section 4.2, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of all expenses
owed by the Trust; and (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders.
SECTION 9.4. Liquidation. (a) If an Early Termination Event
specified in clause (a), (b), (d) or (e) of Section 9.2 occurs or upon the
Expiration Date, the Trust shall be liquidated by the Trustees as expeditiously
as the Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to each
Securityholder an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Trust Securities held by such Holder, subject to
Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage
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prepaid, mailed not later than 30 nor more than 60 days prior to the Liquidation
Date to each Holder of Trust Securities at such Holder's address as it appears
in the Securities Register. All notices of liquidation shall:
(1) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Preferred Securities held by such Holder;
and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Debentures, or, if
Section 9.4(d) applies, receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency or its nominee, as the record holder of
such Trust Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any Trust Securities Certificates not held by the Clearing Agency will
be deemed to represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Preferred Securities held by such Holders, and
bearing accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Trust Securities until such certifi-
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cates are presented to the Property Trustee for transfer or reissuance.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practicable, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution,
winding up or other termination of the Trust, Securityholders will be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding-up or termination, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements
of the Trust. The Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. At the request of the Sponsor, with the consent of the
Administrative Trustees and without the consent of the Property Trustee, the
Delaware Trustee or the Holders of the Preferred Securities, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a
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trust organized as such under the laws of any State; provided, that (i) such
successor entity either () expressly assumes all of the obligations of the Trust
with respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption and otherwise, (ii) the
Sponsor expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Debentures,
(iii) the Successor Securities are listed, or any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Preferred Securities are then listed, if any,
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease the
Sponsor has received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the Holders of the
Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the Holder's interest in the
new entity), (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act,
and (c) following such merger, consolidation, amalgamation or replacement, the
Trust or such successor entity will be treated as a grantor trust for United
States Federal income tax purposes and (viii) the Sponsor or any permitted
successor or assignee owns all of the Common Securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the
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Trust shall not, except with the consent of Holders of 100% in aggregate
Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge
with or into, be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as other than a
grantor trust for United States Federal income tax purposes.
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Securityholders. The death or
incapacity of any person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Trust Agreement, nor entitle the
legal representatives or heirs of such person or any Securityholder for such
person to claim an accounting, take any action or bring any proceeding in any
court for a partition or winding-up of the arrangements contemplated hereby, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
SECTION 10.2. Amendment. (a) This Trust Agreement may be amended
from time to time by the Trustees and the Sponsor, without the consent of any
Securityholders, (i) to cure any ambiguity, correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States Federal income tax purposes as a grantor
trust at all times that any Trust Securities are Outstanding or to ensure that
the Trust will not be required to register as an "investment company" under the
1940 Act, or be classified as other than a grantor trust for United States
Federal income tax purposes, or (iii) to comply with the requirements of the
Commission in order to maintain the
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qualification of this Trust Agreement under the Trust Indenture Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any Securityholder, and any amendments
of this Trust Agreement shall become effective when notice thereof is given to
the Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any provision of
this Trust Agreement may be amended by the Trustees and the Sponsor with (i) the
consent of Holders representing not less than a majority (based upon Liquidation
Amounts) of the Trust Securities then Outstanding, acting as a single class, and
(ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trustee's status as a grantor trust for
United States Federal income tax purposes or the Trust's exemption from the
status of an "investment company" under the 1940 Act, provided, however, if any
amendment or proposal that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment or
otherwise, would adversely affect only the Preferred Securities or only the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to
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<PAGE> 88
any amendment to this Trust Agreement which would cause the Trust to fail or
cease to qualify for the exemption from the status of an "investment company"
under the 1940 Act or be classified as other than a grantor trust for United
States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Sponsor, this Trust Agreement may not be amended in a
manner which imposes any additional obligation on the Sponsor.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Sponsor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 10.3. Separability. In case any provi sion in this Trust
Agreement or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.4. GOVERNING LAW. THIS TRUST AGREE MENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND TRUSTEES WITH RESPECT
TO THIS TRUST AGREEMENT IN THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES AND EXCLUDING SECTIONS 3540 AND 3561 OF TITLE 12
THEREOF.
SECTION 10.5. Payments Due on Non-Business Day. If the date fixed for
any payment on any Trust Security shall be a day which is not a Business Day,
then such payment need not be made on such date but may be made on the next
succeeding day which is a Business Day except as otherwise provided in Section
4.1(a) and Section 4.2(d)), with the same force and effect as though made on the
date fixed
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<PAGE> 89
for such payment, and no interest shall accrue thereon for the period after such
date.
SECTION 10.6. Successors. This Trust Agreement shall be binding upon
and shall inure to the benefit of any successor to the Sponsor, the Trust or the
Relevant Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Sponsor that is
permitted under Article 9 of the Indenture and pursuant to which the assignee
agrees in writing to perform the Sponsor's obligations hereunder, the Sponsor
shall not assign its obligations hereunder.
SECTION 10.7. Headings. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands. Any report, notice,
demand or other communications which by any provision of this Trust Agreement is
required or permitted to be given or served to or upon any Securityholder or the
Sponsor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Holder of Preferred
Securities, to such Holder as such Holder's name and address may appear on the
Securities Register; and (b) in the case of the Holder of the Common Securities.
Any notice to Preferred Securityholders shall also be given to such
Owners as have, within two years preceding the giving of such notice, filed
their names and addresses with the Property Trustee for that purpose. Such
notice, demand or other communication to or upon a Securityholder shall be
deemed to have been sufficiently given, or made, for all purposes, upon hand
delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is published
by the Trust) as follows: (a) with respect to the Property Trustee, to The Bank
of New York, 101 Barclay Street, Floor 21W, New York, New York 10286, Attention:
80
<PAGE> 90
Corporate Trust Administration, (b) with respect to the Delaware Trustee, to The
Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711, with a copy of any such notice to the Property Trustee at its address
above, and (c) with respect to the Administrative Trustees, to them at the
address for notices to the Sponsor, marked "Attention: Secretary". Such notice,
demand or other communication to or upon the Trust or the Property Trustee shall
be deemed to have been sufficiently given or made only upon actual receipt of
the writing by the Trust or the Property Trustee.
SECTION 10.9. Agreement Not to Petition. Each of the Trustees and the
Sponsor agrees for the benefit of the Securityholders that, until at least one
year and one day after the Trust has been terminated in accordance with Article
9, it shall not file, or join in the filing of, a petition against the Trust
under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the Sponsor
takes action in violation of this Section 10.9, the Property Trustee agrees, for
the benefit of Securityholders, that, at the expense of the Sponsor, it shall
file an answer with the bankruptcy court or otherwise properly contest the
filing of such petition by the Sponsor against the Trust or the commencement of
such action and raise the defense that the Sponsor has agreed in writing not to
take such action and should be stopped and precluded therefrom and such other
defenses, if any, as counsel for the Trustee or the Trust may assert. The
provisions of this Section 10.9 shall survive the termination of this Trust
Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture Act
that are required to be part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is the
trustee for the purposes of the Trust Indenture Act.
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<PAGE> 91
(c) If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required
provision shall control. If any provision of this Trust Agreement modifies or
excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Trust Agreement
as so modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE
INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS THE TRUST AND SUCH SECURITYHOLDER AND SUCH
OTHERS.
SECTION 10.12. Counterparts. This Trust Agreement may contain more
than one counterpart of the signature page and this Trust Agreement may be
executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
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<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
CMS ENERGY CORPORATION,
as Sponsor
By:________________________________________
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:________________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:________________________________________
Name:
Title:
________________________________________
Alan M. Wright,
as Administrative Trustee
________________________________________
Thomas A. McNish,
as Administrative Trustee
83
<PAGE> 93
EXHIBIT A
CERTIFICATE OF TRUST
OF
CMS ENERGY TRUST III
A-1
<PAGE> 94
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
CMS Energy Trust III
Common Securities
(liquidation amount $ per Common Security)
CMS Energy Trust III, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that CMS Energy
Corporation (the "Holder") is the registered owner of _________ common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (the "Common Securities"). In accordance with Section 5.10
of the Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of December 10, 1998, as the same may be amended from time to
time (the "Trust Agreement") including the designation of the terms of the
Common Securities as set forth therein. The Holder is entitled to the benefits
of the Common Securities Guarantee Agreement entered into by CMS Energy
Corporation, a Delaware corporation, and The Bank of New York, as Guarantee
Trustee, dated as of December 10, 1998 (the "Guarantee"), to the extent provided
therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
B-1
<PAGE> 95
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this __ day of _____ 1999.
CMS ENERGY TRUST III
By: _________________________
Name:
As Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Trust Agreement.
Dated:
THE BANK OF NEW YORK,
as Property Trustee
By:_______________________
Authorized Signatory
B-2
<PAGE> 96
EXHIBIT C
This Preferred Security is a Book-Entry Preferred Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of The Depository Trust Company ("DTC") or a
nominee of DTC. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than DTC or its nominee only in the
limited circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of DTC (55 Water Street, New York), to CMS Energy Trust III or
its agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC and any payment hereon is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.
Certificate Number Number of Preferred Securities
--- CUSIP NO.
Certificate Evidencing Preferred Securities
of
CMS Energy Trust III
___% Convertible Preferred Securities
(liquidation amount $___ per Preferred Security)
CMS Energy Trust III, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that CEDE & Co. (the
"Holder") is
C-1
<PAGE> 97
the registered owner of ________ preferred securities of the Trust representing
an undivided beneficial interest in the assets of the Trust and designated the
CMS Energy Trust III ___% Convertible Preferred Securities (liquidation amount $
per Preferred Security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.4 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of ___, as the same may be
amended from time to time (the "Trust Agreement") including the designation of
the terms of Preferred Securities as set forth therein. The Holder is entitled
to the benefits of the Guarantee Agreement entered into by CMS Energy
Corporation, a Delaware corporation, and The Bank of New York, as Guarantee
Trustee, dated as of December 10, 1998 (the "Guarantee"), to the extent provided
therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
C-2
<PAGE> 98
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this __ day of ____ 1999.
CMS ENERGY TRUST III
By: ___________________________
Name:
An Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Trust Agreement.
Dated:
THE BANK OF NEW YORK,
as Property Trustee
By:________________________
Authorized Signatory
C-3
<PAGE> 99
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ___________________
Signature: ____________________
(Sign exactly as our name appears on the other side of this Preferred Security
Certificate)
Signature Guarantee:* _____________________
______________________
* (Signature must be guaranteed by an institution which is a member of the
following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock
C-4
<PAGE> 100
Exchange Medallion Program (SEMP); or (iv) in such other guarantee programs
acceptable to the Trustee.)
EXHIBIT D
NOTICE OF CONVERSION
To: The Bank of New York
as Property Trustee of
CMS Energy Trust III
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Common Stock, $.01 par value, of CMS ENERGY CORPORATION (the
"CMS Energy Common Stock") in accordance with the terms of the Amended and
Restated Trust Agreement (the "Trust Agreement"), dated as of __, 1999 by Alan
M. Wright and Thomas A. McNish, as Administrative Trustees, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New York, as Property Trustee, CMS
Energy Corporation, as Depositor, and by the Holders, from time to time, of
individual beneficial interests in the Trust to be issued pursuant to the Trust
Agreement. Pursuant to the aforementioned exercise of the option to convert
these Preferred Securities, the undersigned hereby directs the Conversion Agent
(as that term is defined in the Trust Agreement) to (i) exchange such Preferred
Securities for a portion of the Debentures (as that term is defined in the Trust
Agreement) held by the Trust (at the rate of exchange specified in the terms of
the Preferred Securities set forth in the Trust Agreement) and (ii) immediately
convert such Debentures on behalf of the undersigned, into CMS Energy Common
Stock (at the conversion rate specified in the terms of the Preferred Securities
set forth in the Trust Agreement).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name
C-5
<PAGE> 101
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Date: ____________, ____
in whole __ in part __
Number of Preferred Securities to be
converted: ___________________
If a name or names other than the
undersigned, please indicate in the spaces
below the name or names in which the shares
of CMS Energy Common Stock are to be
issued, along with the address or addresses
of such person or persons
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
_________________________________________________
_________________________________________________
_________________________________________________
Signature Guarantee:* __________________________
_____________________
* (Signature must be guaranteed by an institution which is a member of the
following recognized Signature Guaranty Programs: (i) The
(continued...)
C-6
<PAGE> 102
______________________
*(continued...)
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee programs acceptable to the
Trustee.)
C-7
<PAGE> 1
EXHIBIT 4(p)
_________________________________________________________
GUARANTEE AGREEMENT
CMS Energy Corporation
and
The Bank of New York
Relating to the Trust Preferred Securities of
CMS Energy Trust III
Dated as of ________, 1998
_________________________________________________________
<PAGE> 2
CROSS REFERENCE TABLE*
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c), 2.8
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5, 3.2
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.6, 5.4
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
- ----------------------------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
2
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE 1 ----
DEFINITIONS
<S> <C> <C>
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2. List of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3. Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4. Periodic Reports to Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5. Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6. Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.7. Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.2. Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee . . . . . . . . . . . . . . . . 14
ARTICLE 5
GUARANTEE
SECTION 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.3. Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.5. Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.7. Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 6
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.2. Certain Covenants of the Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 7
TERMINATION
SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8.5. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
ii
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of ________, 1998, is
executed and delivered by CMS Energy Corporation, a Michigan corporation (the
"Guarantor") and The Bank of New York, a New York banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Trust Preferred Securities (as defined herein)
of CMS Energy Trust III, a Delaware statutory business trust (the "Issuer").
WHEREAS, the Trust Preferred Securities will be issued by the
Issuer and the proceeds thereof, together with the proceeds from the issuance of
the Issuer's Common Securities (as defined below), will be used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor which will be
deposited with The Bank of New York, as Property Trustee under the Trust
Agreement, as trust assets;
WHEREAS, as incentive for the Holders to purchase Trust
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth herein, to pay to the Holders of the Trust
Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Guarantee for the benefit of the holders of the Common
Securities (as defined herein), except that if an
<PAGE> 6
event of default (as defined in the Indenture (as defined herein)), has
occurred and is continuing, the rights of holders of the Common Securities to
receive Guarantee Payments (as defined in the Common Securities Guarantee)
under the Common Securities Guarantee shall be subordinated to the rights of
Holders of Trust Preferred Securities to receive Guarantee Payments (as defined
herein) under this Guarantee;
NOW, THEREFORE, in consideration of the purchase by each
Holder of Trust Preferred Securities, which purchase the Guarantor hereby
agrees shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to time of
the Trust Preferred Securities.
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. As used in this
Guarantee Agreement, the terms set forth below shall, unless the context
otherwise requires, have the following meanings. Capitalized or otherwise
defined terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct common
control with such specified Person, provided, however, that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled' have meanings
correlative to the foregoing.
"Common Securities" means the securities representing
common beneficial interests in the assets of the Issuer.
"Common Stock" shall mean the common stock, par value $.01,
per share, of the Guarantor.
2
<PAGE> 7
"Event of Default" means a default by the Guarantor on any
of its payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any Guarantee
Payments, the Guarantor shall have received written notice of default and shall
not have cured such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Trust Preferred
Securities, to the extent not paid or made by or on behalf of the Issuer: (i)
any accumulated and unpaid Distributions (as defined in the Trust Agreement)
required to be paid on the Trust Preferred Securities, to the extent the Issuer
shall have funds on hand available therefor at such time, (ii) the redemption
price, including all accrued and unpaid Distributions to the date of redemption
(the "Redemption Price"), with respect to the Trust Preferred Securities called
for redemption by the Issuer to the extent the Issuer shall have funds on hand
available therefor, and (iii) upon a voluntary or involuntary dissolution,
winding-up or liquidation of the Issuer, unless Debentures are distributed to
the Holders, the lesser of (a) the aggregate of the liquidation preference of
$50 per Preferred Security plus accrued and unpaid Distributions on the Trust
Preferred Securities to the date of payment to the extent the Issuer shall have
funds on hand available to make such payment and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Trust Preferred Securities; provided, however,
that in determining whether the holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor, the Guarantee Trustee or
any Affiliate of the Guarantor or the Guarantee Trustee.
3
<PAGE> 8
"Indenture" means the Indenture dated as of ________, 1998,
as supplemented and amended between the Guarantor and The Bank of New York, as
trustee.
"List of Holders" has the meaning specified in Section 2.2
(a).
"Majority in Liquidation Preference of the Securities"
means, except as provided by the Trust Indenture Act, a vote by the Holder(s),
voting separately as a class, of more than 50% of the liquidation preference
of all the outstanding Trust Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by (i) the Chairman, Chief Executive Officer, President or
a Vice President, and by (ii) the Treasurer, an Assistant Treasurer, the
Controller, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
4
<PAGE> 9
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any Executive Vice President, Senior Vice President, any First Vice
President, any Vice President, any Assistant Vice President, the Secretary, any
Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer
or Assistant Trust Officer or any other officer of the Corporate Trust Services
Division of the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under
Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application. (a) This
Guarantee Agreement is subject to the provisions of the Trust Indenture Act
that are required to be part of this Guarantee Agreement and shall, to the
extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.2. List of Holders. (a) The Guarantor shall
furnish or cause to be furnished to the Guarantee Trustee (unless the
Guarantee Trustee is acting as Securities Registrar with respect to the
Debentures under the Indenture) (i) semi-annually, on or before January 15 and
July 15 of each year, a list, in such form as the Guarantee Trustee may
reasonably re-
5
<PAGE> 10
quire, of the names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (ii) at such
other times as the Guarantee Trustee may request in writing, within 30 days
after the receipt by the Guarantor of any such request, a List of Holders as of
a date not more than 15 days prior to the time such list is furnished, in each
case to the extent such information is in the possession or control of the
Guarantor and is not identical to a previously supplied list of Holders or has
not otherwise been received by the Guarantee Trustee. Notwithstanding the
foregoing, the Guarantor shall not be obligated to provide such List of Holders
at any time the Trust Preferred Securities are represented by one or more Global
Certificates (as defined in the Indenture). The Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its
obligations under Section 311(a), Section 311(b) and Section 312(b) of the
Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
On or before July 15, of each calendar year, the Guarantee Trustee shall
provide to the Holders such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to Guarantee
Trustee. The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and
information, if any, as required by Section 314 of the Trust Indenture Act and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with
Conditions Precedent. The Guarantor shall provide to the Guarantee Trustee
such evidence of compliance with such conditions precedent, if any, provided
for in this Guarantee Agreement that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any
6
<PAGE> 11
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver. The
Holders of a Majority in Liquidation Preference of the Securities may, by vote,
on behalf of the Holders, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
therefrom.
SECTION 2.7. Event of Default; Notice. (a) The
Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders, notices
of all Events of Default known to the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, except in the
case of a default in the payment of a Guarantee Payment, the Guarantee Trustee
shall be protected in withholding such notice if and so long as the Board of
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of the Trust Agreement shall have obtained written notice, of
such Event of Default.
SECTION 2.8. Conflicting Interests. The Trust
Agreement and the Indenture shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
7
<PAGE> 12
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee
Trustee. (a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, upon
acceptance by such Successor Guarantee Trustee of its appointment hereunder,
and such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to the
Responsible Officer of the Guarantee Trustee has occurred and is continuing,
the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders.
(c) The Guarantee Trustee, before the occurrence
of any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Guarantee Agreement, and no implied covenants shall be read
into this Guarantee Agreement against the Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) and is actually known to the Responsible Officer of the Guarantee Trustee,
the Guarantee Trustee shall exercise such of the rights and powers vested in it
by this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement
shall be construed to relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
8
<PAGE> 13
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of
Default that may have occurred;
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express
provisions of this Guarantee Agreement, and the
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement;
and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the
Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine whether
or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee, unless
it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of
the Holders of not less than a Majority in
Liquidation Preference of the Securities relating to
the time, method and place of con-
9
<PAGE> 14
ducting any proceeding for any remedy available to
the Guarantee Trustee, or exercising any trust or
power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial
liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if
the Guarantee Trustee shall have reasonable grounds
for believing that the repayment of such funds or
liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee
Trustee. (a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting
upon any resolution, certificate, statement, proxy,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be
sufficiently evidenced by an Officers' Certificate
unless otherwise prescribed herein.
(iii) Whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem
it desirable that a matter be proved or established
before
10
<PAGE> 15
taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee,
shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with
legal counsel, and the advice or opinion of such
legal counsel with respect to legal matters shall be
full and complete authorization and protection in
respect of any action taken, suffered or omitted to
be taken by it hereunder in good faith and in
accordance with such advice or opinion. Such legal
counsel may be legal counsel to the Guarantor or any
of its Affiliates and may be one of its employees.
The Guarantee Trustee shall have the right at any
time to seek instructions concerning the
administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee
such adequate security and indemnity as would satisfy
a reasonable person in the position of the Guarantee
Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such
request or direction, including such reasonable
advances as may be requested by the Guarantee
Trustee; provided that, nothing contained in this
Section 3.2(a)(v) shall be taken to relieve the
Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and
11
<PAGE> 16
powers vested in it by this Guarantee Agreement and
use the same degree of care and skill in the exercise
thereof as a prudent person would exercise or use
under the circumstances in the conduct of his or her
own affairs.
(vi) The Guarantee Trustee shall not be bound to
make any investigation into the facts or matters
stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or
investigation into such facts or matters as it may
see fit.
(vii) The Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through its agents
or attorneys or any Affiliate, and the Guarantee
Trustee shall not be responsible for any misconduct
or negligence on the part of any such agent or
attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem
it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (A) may
request instructions from the Holders of a Majority
in Liquidation Preference of the Securities, (B)
may refrain from enforcing such remedy or right or
taking such other action until such instructions are
received, and (C) shall be protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement
shall be deemed to impose any duty or obligation on the Guarantee Trustee to
perform any act or acts
12
<PAGE> 17
or exercise any right, power, duty or obligation conferred or imposed on it in
any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty to act in accordance with such power
and authority.
SECTION 3.3. Indemnity. The Guarantor agrees to
indemnify the Guarantee Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of
the Guarantee Trustee, arising out of or in connection with the acceptance or
administration of this Guarantee Agreement, including the reasonable costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. The
Guarantee Trustee will not claim or exact any lien or charge on any Guarantee
Payment as a result of any amount due to it under this Guarantee Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility. (a)
There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to
the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000,
and shall be a corporation meeting the requirements
of Section 310(a) of the Trust Indenture Act. If
such corporation publishes reports of condition at
least annually, pursuant to law or to the
requirements of the supervising or examining
authority, then, for the purposes of this Section and
to the extent permitted by the Trust Indenture
13
<PAGE> 18
Act, the combined capital and surplus of such
corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and
Resignation of the Guarantee Trustee. (a) Subject to Section 4.2(b) the
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor.
(b) The Guarantee Trustee shall not be removed
until a Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder
shall hold office until a Successor Guarantee Trustee shall have been appointed
or until its removal or resignation. The Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by an instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor and
the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery to the Guarantor of an instrument of resignation, the
14
<PAGE> 19
resigning Guarantee Trustee may petition, at the expense of the Guarantor, any
court of competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as
it may deem proper, appoint a Successor Guarantee Trustee.
ARTICLE 5
GUARANTEE
SECTION 5.1. Guarantee. The Guarantor
irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert other than the
defense of payment. The Guarantor's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer to pay such amounts to the Holders.
SECTION 5.2. Waiver of Notice and Demand. The
Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of
any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee Trustee,
Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3. Obligations Not Affected. The
obligations, covenants, agreements and duties of the Guarantor under this
Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Trust Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the
Issuer of all or any portion of the Dis-
15
<PAGE> 20
tributions (other than an extension of time for payment of Distributions that
results from the extension of any interest payment period on the Debentures as
so provided in the Indenture), Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the terms of
the Trust Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency
in, the Trust Preferred Securities;
(f) the settlement or compromise of any
obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or
the Guarantee Trustee to give notice to, or obtain the consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4. Rights of Holders. The Guarantor
expressly acknowledges that: (i) this Guarantee Agreement will be deposited
with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the
Guarantee Trustee has the right to enforce this Guarantee
16
<PAGE> 21
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Preference of the 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 this Guarantee Agreement or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Guarantee Trustee, the
Issuer or any other Person; and (v) if an Event of Default with respect to the
Debentures constituting the failure to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable has
occurred and is continuing, then any Holder shall have the right, which is
absolute and unconditional, to proceed directly against the Guarantor to obtain
Guarantee Payments without first waiting to determine if the Guarantee Trustee
has enforced this Guarantee Agreement or instituting a legal proceeding against
the Issuer, the Guarantee Trustee or any other Person.
SECTION 5.5. Guarantee of Payment. This
Guarantee Agreement creates a guarantee of payment and not of collection. This
Guarantee Agreement will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by the
Issuer) or upon distribution of Debentures to Holders as provided in the Trust
Agreement.
SECTION 5.6. Subrogation. The Guarantor shall
be subrogated to all (if any) rights of the Holders against the Issuer in
respect of any amounts paid to the Holders by the Guarantor under this
Guarantee Agreement and shall have the right to waive payment by the Issuer
pursuant to Section 5.1; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment,
any amounts are due and unpaid under this Guarantee Agreement. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
17
<PAGE> 22
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.7. Independent Obligations. The
Guarantor acknowledges that its obligations hereunder are independent of the
obligations of the Issuer with respect to the Trust Preferred Securities and
that the Guarantor shall be liable as principal and as debt or hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE 6
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination. The Guarantee
Agreement will constitute an unsecured obligation of the Guarantor and will
rank subordinate and junior in right of payment to all liabilities of the
Guarantor and pari passu with any guarantee now or hereafter entered into by
the Guarantor in respect of the Common Securities or of any preferred or
preference stock of any affiliate of the Guarantor.
SECTION 6.2. Certain Covenants of the Guarantor.
(a) Guarantor covenants and agrees that if and so long as (i) the Issuer is the
holder of all the Debentures, (ii) a Tax Event (as defined in the Trust
Agreement) in respect of the Issuer has occurred and is continuing and (iii) the
Guarantor has elected, and has not revoked such election, to pay Additional Sums
(as defined in the Trust Agreement) in respect of the Trust Preferred Securities
and Common Securities, the Guarantor will pay to the Issuer such Additional
Sums.
(b) The Guarantor covenants and agrees that it
will not, and will not permit any subsidiary of the Guarantor to, (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Guarantor'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 the Guarantor that rank pari passu with or junior to the
18
<PAGE> 23
Debentures (other than (a) any dividend, redemption, liquidation, interest,
principal or guarantee payment by Guarantor 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 this Agreement, (c) purchases of
Common Stock related to the issuance of Common Stock under any of the
Guarantor's benefit plans for its directors, officers or employees, (d) as a
result of a reclassification of the Guarantor's capital stock or the exchange
or conversion of one series or class of the Guarantor's capital stock for
another series or class of the Guarantor's capital stock and (e) the purchase
of fractional interests in shares of the Guarantor'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 the Guarantor has actual knowledge that (a) with the giving of
notice or the lapse of time, or both, would constitute an "Event of Default"
under the Indenture with respect to the Debentures and (b) in respect of which
the Guarantor shall not have taken reasonable steps to cure, (ii) the Guarantor
shall be in default with respect to its payment of any obligations under the
Guarantee or (iii) the Guarantor shall have given notice of its selection of an
Extension Period (as defined in the Indenture) with respect to the Debentures
and shall not have rescinded such notice, or such Extension Period, or any
extension thereof, shall be continuing.
(c) The Guarantor covenants and agrees (i) to
maintain directly or indirectly 100% ownership of the Common Securities,
provided that certain successors which are permitted by the Indenture may
succeed to the Guarantor's ownership of the Common Securities, (ii) not to
voluntarily terminate, wind-up or liquidate the Issuer, except (a) in connection
with a distribution of the Debentures to the holders of the Trust Preferred
Securities in liquidation of the Issuer or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the Trust Agreement, (iii)
to use its reasonable efforts, consistent with the terms and provisions of the
Trust Agreement, to cause the Issuer to remain classified as a grantor trust and
not as an association taxable as a corporation for United States Federal income
tax purpos-
19
<PAGE> 24
es, (iv) for so long as Trust Preferred Securities are outstanding, not to
convert Debentures except pursuant to a notice of conversion delivered to the
Conversion Agent (as defined in the Trust Agreement) by a Holder, (v) to
maintain the reservation for issuance of the number of shares of Common Stock
that would be required from time to time upon the conversion of all the
Debentures then outstanding, (vi) to deliver shares of Common Stock upon an
election by the Holders to convert such Trust Preferred Securities into Common
Stock and (vii) to honor all obligations relating to the conversion or exchange
of the Trust Preferred Securities into or for Common Stock or Debentures.
ARTICLE 7
TERMINATION
SECTION 7.1. Termination. This Guarantee
Agreement shall terminate and be of no further force and effect upon (i) full
payment of the Redemption Price of all Trust Preferred Securities, (ii) the
distribution of Debentures to the Holders in exchange for all of the Trust
Preferred Securities, (iii) full payment of the amounts payable in accordance
with the Trust Agreement upon liquidation of the Issuer or (iv) upon the
distribution, if any, of Common Stock the holders of the Trust Preferred
Securities in respect of the conversion of all such holders' Trust Preferred
Securities into Common Stock. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Trust Preferred Securities or this Guarantee Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Successors and Assigns. All
guarantees and agreements contained in this Guarantee Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Trust Preferred Securities
then outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article Nine of the Indenture
and
20
<PAGE> 25
pursuant to which the assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations
hereunder.
SECTION 8.2. Amendments. Except with respect to
any changes which do not adversely affect the rights of the Holders in any
material respect (in which case no consent of the Holders will be required),
this Guarantee Agreement may only be amended with the prior approval of the
Holders of not less than a Majority in Liquidation Preference of the
Securities. The provisions of Article 6 of the Trust Agreement concerning
meetings of the Holders shall apply to the giving of such approval. The
Guarantor shall furnish the Guarantee Trustee with an Officers' Certificate and
an Opinion of Counsel to the effect that any amendment of this Agreement is
authorized and permitted.
SECTION 8.3. Notices. Any notice, request or
other communication required or permitted to be given hereunder shall be in
writing, duly signed by the party giving such notice, and delivered, telecopied
or mailed by first class mail as follows: (a) if given to the Guarantor, to
the address set forth below or such other address as the Guarantor may give
notice of to the Holders:
CMS Energy Corporation
Fairlane Plaza South
330 Town Center Drive, Suite 1100
Dearborn, MI 48126
Phone No.: (313) 436-9200
Facsimile No.: (313) 436-9225
Attention: General Counsel
(b) if given to the Issuer, in care of the
Guarantee Trustee, at the Issuer's (and the Guarantee Trustee's) address set
forth below or such other address as the Guarantee Trustee on behalf of the
Issuer may give notice of to the Holders:
CMS Energy Financial Trust I
c/o CMS Energy Corporation
Fairlane Plaza South
330 Town Center Drive, Suite 1100
Dearborn, MI 48126
Phone No.: (313) 436-9200
21
<PAGE> 26
Facsimile No.: (313) 436-9225
Attention: General Counsel
with a copy to:
The Bank of New York
101 Barclay Street
Floor 21W
New York, New York 10286
Phone No.: [To Come]
Facsimile No.: [To Come]
Attention: [To Come]
(c) if given to any Holder, at the address set
forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have
been given when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid, except that if a notice or other
document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.
SECTION 8.4. Benefit. This Guarantee Agreement
is solely for the benefit of the Holders and is not separately transferable
from the Trust Preferred Securities.
SECTION 8.5. Interpretation. In this Guarantee
Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee
Agreement but not defined in the preamble hereto have the respective meanings
assigned to them in Section 1.1;
(b) a term defined anywhere in this Guarantee
Agreement has the same meaning throughout;
(c) all references to "the Guarantee Agreement" or
"this Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
22
<PAGE> 27
(d) all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has
the same meaning when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural
and vice versa; and
(g) the masculine, feminine or neuter genders used
herein shall include the masculine, feminine and neuter genders.
23
<PAGE> 28
SECTION 8.6. Governing Law. THIS GUARANTEE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF MICHIGAN WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.
THIS GUARANTEE AGREEMENT is executed as of the
day and year first above written.
CMS ENERGY CORPORATION
By: ____________________________
Name:
Title:
THE BANK OF NEW YORK, as Guaran-
tee Trustee
By: ____________________________
Name:
Title:
24
<PAGE> 1
EXHIBIT 5(a)
December 14, 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 $1,500,000,000 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; (v) Trust Preferred Securities of CMS Energy Trust III; (vi)
the guarantee of the Trust Preferred Securities by the Company ("Trust Preferred
Securities Guarantee"); (vii) Stock Purchase Contracts of the Company; and
(viii) Stock Purchase Units of the Company. (The offered securities,
collectively, 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
as to such matters
<PAGE> 2
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 LLP.
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.
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]
December 15, 1998
CMS Energy Corporation
CMS Energy Trust II
CMS Energy Trust III
c/o CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
Re: CMS Energy Corporation
CMS Energy Trust II
CMS Energy Trust III
Registration Statement on Form S-3
Dear Ladies and Gentlemen:
We have acted as special counsel to CMS Energy Trust II and
CMS Energy Trust III (each a "CMS Trust" and, together, the "CMS Trusts"),
statutory business trusts formed under the Business Trust Act of the State of
Delaware, in connection with the preparation of a Registration Statement on Form
S-3, to be filed by CMS Energy Corporation, a Michigan corporation (the
"Company") and the CMS Trusts with the Securities and Exchange Commission (the
"Commission") on December 15, 1998 under the Securities Act of 1933, as amended
(the "Act") (such Registration Statement being hereinafter referred to as the
"Registration Statement"). The Registration Statement relates to, among other
things, the issuance and sale from time to time pursuant to Rule 415 of the
General Rules and Regulations promulgated under the Act, of the trust preferred
securities (the "Preferred Securities") of each of the CMS Trusts.
The Preferred Securities of each CMS Trust are to be issued
pursuant to the Amended and Restated Declaration of Trust of such CMS Trust
(each a
<PAGE> 2
CMS Energy Corporation
CMS Energy Trust II
CMS Energy Trust III
December 15, 1998
Page 2
"Declaration" and, collectively, the "Declarations"), each such
Declaration being among the Company, as sponsor, The Bank of New York as the
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.
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 each of the CMS Trusts (the "Certificates of Trust")
filed with the Secretary of State of the State of Delaware on May 22, 1997 with
respect to CMS Energy Trust II and December 10, 1998 with respect to CMS Energy
Trust III; (ii) the form of the Declaration of each of the CMS Trusts (including
the designation of the terms of the Preferred Securities annexed thereto); and
(iii) the form of the Preferred Securities of each of the CMS Trusts. 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
executed documents or documents to be executed, we have assumed that the parties
thereto, other than the CMS Trusts, had 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 Declaration of each CMS Trust, and the Preferred Securities of each CMS
Trust, when executed, will be in substantially the form reviewed by us and that
the terms of the Trust Preferred Securities will have been established so as not
to violate or conflict with any law, rule, or regulation to
<PAGE> 3
CMS Energy Corporation
CMS Energy Trust II
CMS Energy Trust III
December 15, 1998
Page 3
which the Company or either of the CMS Trusts is subject. 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
representatives of the Company, the CMS Trusts and others.
Members of our firm are admitted to the bar in the State of
New York, and we express no opinion as to the laws of any jurisdiction other
than the Business Trust Act of the State of Delaware.
Based on and subject to the foregoing and to the other
qualifications and limitations set forth herein, we are of the opinion that the
Preferred Securities of each CMS Trust, when the Declaration of such CMS Trust
is duly executed and delivered and the terms of the Preferred Securities are
established in accordance with the terms of the Declaration of such CMS Trust,
will be duly authorized for issuance and, when issued and executed in accordance
with the Declaration of such CMS Trust 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 such
CMS Trust. We bring to your attention, however, that the Preferred Securities
holders may be obligated, pursuant to the Declaration of such CMS Trust, 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 request of or directions
to the Property Trustee of such CMS Trust to exercise its rights and powers
under the Declaration of such CMS Trust.
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 Opinions" in the base prospectus
included in the Registration Statement. In giving this consent, we do not
hereby 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
<PAGE> 4
CMS Energy Corporation
CMS Energy Trust II
CMS Energy Trust III
December 15, 1998
Page 4
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,
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
<PAGE> 1
EXHIBIT (12)
CMS ENERGY CORPORATION
Ratio of Earnings to Fixed Charges and
Preferred Securities Dividends and Distributions
(Millions of Dollars)
<TABLE>
<CAPTION>
Nine Months
Ended Years Ended December 31
September 30, 1998 1997 1996 1995 1994 1993
------------------------------------------------------------------------
(b)
<S> <C> <C> <C> <C> <C> <C>
Earnings as defined (a)
Consolidated net income $ 191 $ 244 $ 224 $ 195 $ 177 $ 130
Income taxes 86 108 137 113 91 62
Exclude equity basis subsidiaries (75) (80) (85) (57) (18) (6)
Fixed charges as defined, adjusted to
exclude capitalized interest of $17, $13,
$5, $4, $2, and $2 million for the nine
months ended September 30, 1998 and
for the years ended December 31, 1997,
1996, 1995, 1994 and 1993, respectively 293 360 313 299 253 247
------------------------------------------------------------
Earnings as defined $ 495 $ 632 $ 589 $ 550 $ 503 $ 433
============================================================
Fixed charges as defined (a)
Interest on long-term debt $ 234 $ 273 $ 230 $ 224 $ 193 $ 204
Estimated interest portion of lease rental 5 8 10 9 9 12
Other interest charges 33 49 43 42 30 25
Preferred securities dividends and
distributions 58 67 54 42 36 17
------------------------------------------------------------
Fixed charges as defined $ 330 $ 397 $ 337 $ 317 $ 268 $ 258
============================================================
Ratio of earnings to fixed charges and
preferred securities dividends and distributions 1.50 1.59 1.75 1.74 1.88 1.68
============================================================
</TABLE>
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of
Regulation S-K.
(b) Excludes a cumulative effect of change in accounting after-tax gain of $43
million.
<PAGE> 1
EXHIBIT (15A)
To CMS Energy Corporation:
We are aware that CMS Energy Corporation has incorporated by reference
in this registration statement its Form 10-Q for the quarter ended March 31,
1998, which includes our report dated May 11, 1998, covering the unaudited
interim financial information contained therein. In June 1998, CMS Energy
Corporation changed its method of accounting for its investments in oil and gas
properties from the full cost method of accounting to the successful efforts
method of accounting. The interim financial information contained therein has
not been restated to reflect the change in accounting. However, CMS Energy
Corporation's Form 8-K dated July 30, 1998 contains certain restated financial
information for the quarter ended March 31, 1998 such information has not been
subject to audit or review procedures. Pursuant to this change in accounting,
our report contained therein has not been modified to reflect this change in
accounting. Pursuant to Regulation C of the Securities Act of 1933, this report
is not considered a part of the registration statement prepared or certified by
our Firm or report prepared or certified by our Firm within the meaning of
Sections 7 and 11 of the Act.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan,
December 9, 1998.
<PAGE> 1
EXHIBIT (15B)
To CMS Energy Corporation:
We are aware that CMS Energy Corporation has incorporated by reference
in this registration statement its Form 10-Q for the quarter ended June 30, 1998
and its Form 10-Q for the quarter ended September 30, 1998, which includes our
reports dated August 11, 1998 and November 10, 1998, respectively, covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, this report is not considered a part
of the registration statement prepared or certified by our Firm or report
prepared or certified by our Firm within the meaning of Sections 7 and 11 of the
Act.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan,
December 9, 1998.
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
July 27, 1998 included or incorporated by reference in CMS Energy Corporation's
Form 8-K dated July 30, 1998 and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
Detroit, Michigan,
December 9, 1998.
<PAGE> 1
[CMS ENERGY LOGO] EXHIBIT 24
- --------------------------------------------------------------------------------
December 4, 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 $1.5 billion 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).
/s/ William T. McCormick, Jr. /s/ Victor J. Fryling
- ----------------------------- -----------------------------
William T. McCormick, Jr. Victor J. Fryling
/s/ John Deutch /s/ W.U. Parfet
- ----------------------------- -----------------------------
John M. Deutch William U. Parfet
/s/ James J. Duderstadt /s/ Percy A. Pierre
- ----------------------------- -----------------------------
James J. Duderstadt Percy A. Pierre
/s/ K.R. Flaherty /s/ K.L. Way
- ----------------------------- -----------------------------
Kathleen R. Flaherty Kenneth L. Way
/s/ Earl D. Holton /s/ Whipple
- ----------------------------- -----------------------------
Earl D. Holton Kenneth Whipple
/s/ John B. Yasinsky
--------------------
John B. Yasinsky
<PAGE> 2
Extract from the minutes of a meeting of the Board of Directors of CMS Energy
Corporation (the "Corporation") held on December 4, 1998.
- - - - - - - -
Proposed Issue and Sale of Equity, Trust
or Convertible Securities
At a meeting of the Board of Directors held on October 23, 1998,
a resolution was adopted amending previous resolutions of the Board of Directors
adopted at meetings held on October 24, 1997 and January 24, 1998, respectively.
Such resolution on October 23, 1998 authorized the issue and sale of up to an
aggregate principal amount of $900 million of equity, trust or convertible
securities (plus an additional 20% for the purpose of covering underwriters'
over-allotments, price adjustments, or sale of additional securities) plus an
additional $400 million net aggregate principal amount of common stock of the
Corporation to cover possible conversions from convertible securities.
Management of the Corporation recommended that the resolution adopted on October
23, 1998 be rescinded and new resolutions be adopted to authorize the issue and
sale of $1.5 billion aggregate principal amount of any equity, trust or
convertible securities of the Corporation (plus an additional 20% for the
purpose of covering underwriters' over-allotments, price adjustments, or sale of
additional securities) which includes allowance for conversions from convertible
securities. The matter was discussed fully.
Upon motion duly made and seconded, the following resolution was
thereupon unanimously adopted:
RESOLVED: That resolution adopted at a meeting of the Board
of Directors held on October 23, 1998 with respect to the proposed issue
and sale of an aggregate principal amount of $900 million of equity, trust
or convertible securities of the Corporation plus an additional $400
million aggregate principal amount of common stock of the Corporation to
cover possible conversions from convertible securities, is rescinded.
Upon motion duly made and seconded, the following resolutions
were thereupon unanimously adopted:
RESOLVED: That the Board of Directors authorizes the issue
and sale, from time to time, at private placement or public sale, of up to
$1.5 billion aggregate principal amount (plus an additional 20% for the
purpose of covering underwriters' over-allotments, price adjustments, or
sale of additional securities) of any equity, trust or convertible
securities of the Corporation, to be sold for the best price and on the
best terms obtainable in the judgment of a Special Committee of the Board
of Directors appointed for such purposes; and
RESOLVED FURTHER: That Victor J. Fryling with William T.
McCormick,
Equity-Sale
<PAGE> 3
Jr., as alternate, is appointed to a Special Committee of this Board of
Directors, which shall have the full authority to act on behalf of the
Board for the purposes stated in the foregoing resolution with respect to
(a) determining the offering price, any underwriting discounts and the
proceeds to the Corporation of the proposed issue and sale of the aggregate
principal amount of $1.5 billion (plus over-allotments, price adjustments,
or sale of additional securities) of any equity, trust or convertible
securities of the Corporation, and (b) authorizing the officers to take
such further actions as they may deem advisable to carry out the issue and
sale of such securities; and
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered to prepare, execute, and file,
or cause to be prepared and filed, one or more Registration Statements on
Form S-3 with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, together with all documents required as exhibits
to such Registration Statements, with respect to the issue and sale of $1.5
billion aggregate principal amount (plus an additional 20% for
underwriters' over-allotments, price adjustments, or sale of additional
securities) of any equity, trust or convertible securities of the
Corporation, such registrations to be in such form as may be approved by
the officers executing the same, and to do all other things necessary to
make such registrations effective, including the execution and filing of
any necessary or appropriate amendments, including post-effective
amendments; and
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and directed to determine the jurisdictions in
which appropriate action shall be taken to qualify or register for sale all
or such part of the securities of the Corporation as they may deem
advisable; to perform on behalf of the Corporation any and all such acts as
they may deem necessary or advisable in order to comply with the applicable
laws of any such jurisdictions, and in connection therewith, to execute and
file all requisite papers and documents, including but not limited to,
applications, reports, surety bonds, irrevocable consents and appointments
of attorneys for service of process; and the execution by such officers or
any of them of any such paper or document or the doing by them of any act
in connection with the foregoing matters shall conclusively establish their
authority therefor from the Corporation; and
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered to cause the Corporation to make
application to the New York Stock Exchange, or on such other exchange as
the officers may decide, for the listing on such Exchange, upon notice of
issuance, of $1.5 billion aggregate principal amount of any equity, trust
or convertible securities of the Corporation (plus over-allotments, price
adjustments, or sale of additional securities) and to represent the
Corporation in connection with any application or applications for listing
and to appear on behalf of the Corporation before such official or body of
said Exchange as may be appropriate, with authority to make such changes,
upon the advice of counsel, in said applications or in any agreements or
other papers relating thereto as may be necessary or appropriate to conform
with the requirements for listing; and
Equity-Sale
<PAGE> 4
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered to execute one or more
underwriting agreements, purchase agreements, or any other type of
agreements between the Corporation and the underwriter or representatives
of the underwriters (or any agents) or any other purchaser appointed or
named in such agreement or agreements as they may deem appropriate for the
proposed sale of the securities; and
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered to do and to perform, or cause
to be done and performed, all such acts, deeds, and things and to make,
execute, and deliver, or cause to be made, executed, and delivered, all
such agreements, undertakings, documents, instruments, or certificates in
the name and on the behalf of the Corporation or otherwise as each such
officer may deem necessary or appropriate to effectuate or carry out fully
the purpose and intent of the foregoing resolutions, including the
performance of the obligations of the Corporation under purchase
agreements, underwriting agreements and sales agreements, any Registration
Statement or any other agreements related to the issuance and sale of the
Corporation's securities.
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered, for and on behalf of the
Corporation, to establish one or more Michigan special purpose limited
partnerships of which the Corporation would be the general partner, for the
purpose of issuing and selling Partnership Preferred Securities, and to
establish one or more Delaware statutory business trusts of which the
Corporation would be the sponsor, for the purpose of issuing and selling
Trust Preferred Securities; and
RESOLVED FURTHER: That Messrs. Alan M. Wright and Thomas A.
McNish (or successors(s) appointed, in writing, by the Chairman of the
Board or the President of the Corporation, and filed in the Corporate
Secretary's Office) are appointed to serve, at the Corporation's request,
and are authorized and empowered, for and on behalf of the Corporation, to
act as Trustees in accordance with the declaration of trust, and any
amendments thereto, of the trust; and
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered to appoint an institutional
trustee, purchase contract agent, and any agent or trustees necessary or
appropriate in connection with the issuance and sale of the securities; and
RESOLVED FURTHER: That the officers of the Corporation, and
each of them, are authorized and empowered to execute and deliver on behalf
of the Corporation an indenture or indentures, including one or more
supplements to any indenture, in the form approved or authorized by the
Special Committee under the corporate seal to be thereto affixed and
attested by the Secretary, with the trustee or trustees appointed, such
indenture or indentures, supplement or supplements to be in such form and
content and bear such date as may be approved by the officer of the
Corporation executing the same,
Equity-Sale
<PAGE> 5
such approval to be conclusively evidenced by the execution of said
indenture or indentures, or supplement or supplements.
- - - - - - - -
Equity-Sale
<PAGE> 1
Ex. 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)
<TABLE>
<CAPTION>
<S> <C>
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)
</TABLE>
---------------
CMS ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
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)
</TABLE>
----------------------
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
(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.)
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.
-2-
<PAGE> 3
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 9th day of December, 1998.
THE BANK OF NEW YORK
By: /s/THOMAS C. KNIGHT
------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<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 9th day of December, 1998.
THE BANK OF NEW YORK
By: T. C. KNIGHT
------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<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 June 30, 1998,
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 depository institutions:
Noninterest-bearing balances and currency and coin.. $7,301,241
Interest-bearing balances........................... 1,385,944
Securities:
Held-to-maturity securities......................... 1,000,737
Available-for-sale securities....................... 4,240,655
Federal funds sold and Securities purchased under
agreements to resell................................ 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned
income..................................38,788.269
LESS: Allowance for loan and
lease losses...............................632,875
LESS: Allocated transfer risk
reserve..........................................0
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,155,394
Assets held in trading accounts........................ 1,307,562
Premises and fixed assets (including capitalized
leases)............................................. 670,445
Other real estate owned................................ 13,598
Investments in unconsolidated subsidiaries and
associated companies................................ 215,024
Customers' liability to this bank on acceptances
outstanding......................................... 974,237
Intangible assets...................................... 1,102,625
Other assets........................................... 1,944,777
-----------
Total assets........................................... $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices................................. $26,930,258
Noninterest-bearing.......................11,579.390
Interest-bearing..........................15,350,868
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 16,117,854
Noninterest-bearing..........................187,464
Interest-bearing..........................15,930,390
Federal funds purchased and Securities sold under
agreements to repurchase............................ 2,170,238
Demand notes issued to the U.S. Treasury................ 300,000
Trading liabilities.................................... 1,310,867
Other borrowed money:
With remaining maturity of one year or less......... 2,549,479
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 46,654
Bank's liability on acceptances executed and
outstanding......................................... 983,398
Subordinated notes and debentures...................... 1,314,000
Other liabilities...................................... 2,295,520
-----------
Total liabilities...................................... 54,018,268
-----------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 731,319
Undivided profits and capital reserves................. 3,385,227
Net unrealized holding gains (losses) on
available-for-sale securities....................... 51,233
Cumulative foreign currency translation adjustments.... ( 37,639)
-----------
Total equity capital................................... 5,265,424
-----------
Total liabilities and equity capital................... $59,283,692
===========
</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 Directors
Alan R. Griffith
- --------------------------------------------------------------------------------
<PAGE> 1
Exh. 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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
(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.)
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.
-2-
<PAGE> 3
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 9th day of December, 1998.
THE BANK OF NEW YORK
By: /s/THOMAS C. KNIGHT
----------------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<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 9th day of December, 1998.
THE BANK OF NEW YORK
By: T. C. Knight
----------------------------------------
Name: Thomas C. Knight
Title: Assistant Vice President
<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 June 30, 1998,
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 depository institutions:
Noninterest-bearing balances and currency and coin.. $7,301,241
Interest-bearing balances........................... 1,385,944
Securities:
Held-to-maturity securities......................... 1,000,737
Available-for-sale securities....................... 4,240,655
Federal funds sold and Securities purchased under
agreements to resell................................ 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned
income..................................38,788.269
LESS: Allowance for loan and
lease losses...............................632,875
LESS: Allocated transfer risk
reserve..........................................0
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,155,394
Assets held in trading accounts........................ 1,307,562
Premises and fixed assets (including capitalized
leases)............................................. 670,445
Other real estate owned................................ 13,598
Investments in unconsolidated subsidiaries and
associated companies................................ 215,024
Customers' liability to this bank on acceptances
outstanding......................................... 974,237
Intangible assets...................................... 1,102,625
Other assets........................................... 1,944,777
-----------
Total assets........................................... $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices................................. $26,930,258
Noninterest-bearing.......................11,579,390
Interest-bearing..........................15,350,868
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 16,117,854
Noninterest-bearing..........................187,464
Interest-bearing..........................15,930,390
Federal funds purchased and Securities sold under
agreements to repurchase............................ 2,170,238
Demand notes issued to the U.S. Treasury................ 300,000
Trading liabilities.................................... 1,310,867
Other borrowed money:
With remaining maturity of one year or less......... 2,549,479
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 46,654
Bank's liability on acceptances executed and
outstanding......................................... 983,398
Subordinated notes and debentures...................... 1,314,000
Other liabilities...................................... 2,295,520
-----------
Total liabilities...................................... 54,018,268
-----------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 731,319
Undivided profits and capital reserves................. 3,385,227
Net unrealized holding gains (losses) on
available-for-sale securities....................... 51,233
Cumulative foreign currency translation adjustments.... ( 37,639)
-----------
Total equity capital................................... 5,265,424
-----------
Total liabilities and equity capital................... $59,283,692
===========
</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 Directors
Alan R. Griffith
- --------------------------------------------------------------------------------
<PAGE> 1
Exh. 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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
(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.)
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.
-2-
<PAGE> 3
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 9th day of December, 1998.
THE BANK OF NEW YORK
By: /s/THOMAS C. KNIGHT
----------------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<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 9th day of December, 1998.
THE BANK OF NEW YORK
By: T. C. Knight
----------------------------------------
Name: Thomas C. Knight
Title: Assistant Vice President
<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 June 30, 1998,
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 depository institutions:
Noninterest-bearing balances and currency and coin.. $7,301,241
Interest-bearing balances........................... 1,385,944
Securities:
Held-to-maturity securities......................... 1,000,737
Available-for-sale securities....................... 4,240,655
Federal funds sold and Securities purchased under
agreements to resell................................ 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned
income..................................38,788.269
LESS: Allowance for loan and
lease losses...............................632,875
LESS: Allocated transfer risk
reserve..........................................0
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,155,394
Assets held in trading accounts........................ 1,307,562
Premises and fixed assets (including capitalized
leases)............................................. 670,445
Other real estate owned................................ 13,598
Investments in unconsolidated subsidiaries and
associated companies................................ 215,024
Customers' liability to this bank on acceptances
outstanding......................................... 974,237
Intangible assets...................................... 1,102,625
Other assets........................................... 1,944,777
-----------
Total assets........................................... $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices................................. $26,930,258
Noninterest-bearing.......................11,579,390
Interest-bearing..........................15,350,868
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 16,117,854
Noninterest-bearing..........................187,464
Interest-bearing..........................15,930,390
Federal funds purchased and Securities sold under
agreements to repurchase............................ 2,170,238
Demand notes issued to the U.S. Treasury................ 300,000
Trading liabilities.................................... 1,310,867
Other borrowed money:
With remaining maturity of one year or less......... 2,549,479
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 46,654
Bank's liability on acceptances executed and
outstanding......................................... 983,398
Subordinated notes and debentures...................... 1,314,000
Other liabilities...................................... 2,295,520
-----------
Total liabilities...................................... 54,018,268
-----------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 731,319
Undivided profits and capital reserves................. 3,385,227
Net unrealized holding gains (losses) on
available-for-sale securities....................... 51,233
Cumulative foreign currency translation adjustments.... ( 37,639)
-----------
Total equity capital................................... 5,265,424
-----------
Total liabilities and equity capital................... $59,283,692
===========
</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 Directors
Alan R. Griffith
- --------------------------------------------------------------------------------
<PAGE> 1
Exh. 25(d)
================================================================================
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 III
(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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
(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.)
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.
-2-
<PAGE> 3
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 9th day of December, 1998.
THE BANK OF NEW YORK
By: /s/THOMAS C. KNIGHT
----------------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<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 9th day of December, 1998.
THE BANK OF NEW YORK
By: T. C. Knight
----------------------------------------
Name: Thomas C. Knight
Title: Assistant Vice President
<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 June 30, 1998,
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 depository institutions:
Noninterest-bearing balances and currency and coin.. $7,301,241
Interest-bearing balances........................... 1,385,944
Securities:
Held-to-maturity securities......................... 1,000,737
Available-for-sale securities....................... 4,240,655
Federal funds sold and Securities purchased under
agreements to resell................................ 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned
income..................................38,788.269
LESS: Allowance for loan and
lease losses...............................632,875
LESS: Allocated transfer risk
reserve..........................................0
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,155,394
Assets held in trading accounts........................ 1,307,562
Premises and fixed assets (including capitalized
leases)............................................. 670,445
Other real estate owned................................ 13,598
Investments in unconsolidated subsidiaries and
associated companies................................ 215,024
Customers' liability to this bank on acceptances
outstanding......................................... 974,237
Intangible assets...................................... 1,102,625
Other assets........................................... 1,944,777
-----------
Total assets........................................... $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices................................. $26,930,258
Noninterest-bearing.......................11,579,390
Interest-bearing..........................15,350,868
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 16,117,854
Noninterest-bearing..........................187,464
Interest-bearing..........................15,930,390
Federal funds purchased and Securities sold under
agreements to repurchase............................ 2,170,238
Demand notes issued to the U.S.Treasury................ 300,000
Trading liabilities.................................... 1,310,867
Other borrowed money:
With remaining maturity of one year or less......... 2,549,479
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 46,654
Bank's liability on acceptances executed and
outstanding......................................... 983,398
Subordinated notes and debentures...................... 1,314,000
Other liabilities...................................... 2,295,520
-----------
Total liabilities...................................... 54,018,268
-----------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 731,319
Undivided profits and capital reserves................. 3,385,227
Net unrealized holding gains (losses) on
available-for-sale securities....................... 51,233
Cumulative foreign currency translation adjustments.... ( 37,639)
-----------
Total equity capital................................... 5,265,424
-----------
Total liabilities and equity capital................... $59,283,692
===========
</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 } Directors
Alan R. Griffith }
- --------------------------------------------------------------------------------
<PAGE> 1
Exh. 25(e)
================================================================================
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 III
(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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
(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.)
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.
-2-
<PAGE> 3
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 9th day of December, 1998.
THE BANK OF NEW YORK
By: /s/THOMAS C. KNIGHT
----------------------------------------
Name: THOMAS C. KNIGHT
Title: ASSISTANT VICE PRESIDENT
<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 9th day of December, 1998.
THE BANK OF NEW YORK
By: T. C. Knight
----------------------------------------
Name: Thomas C. Knight
Title: Assistant Vice President
<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 June 30, 1998,
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 depository institutions:
Noninterest-bearing balances and currency and coin.. $7,301,241
Interest-bearing balances........................... 1,385,944
Securities:
Held-to-maturity securities......................... 1,000,737
Available-for-sale securities....................... 4,240,655
Federal funds sold and Securities purchased under
agreements to resell................................ 971,453
Loans and lease financing receivables:
Loans and leases, net of unearned
income..................................38,788.269
LESS: Allowance for loan and
lease losses...............................632,875
LESS: Allocated transfer risk
reserve..........................................0
Loans and leases, net of unearned income,
allowance, and reserve............................ 38,155,394
Assets held in trading accounts........................ 1,307,562
Premises and fixed assets (including capitalized
leases)............................................. 670,445
Other real estate owned................................ 13,598
Investments in unconsolidated subsidiaries and
associated companies................................ 215,024
Customers' liability to this bank on acceptances
outstanding......................................... 974,237
Intangible assets...................................... 1,102,625
Other assets........................................... 1,944,777
-----------
Total assets........................................... $59,283,692
===========
LIABILITIES
Deposits:
In domestic offices................................. $26,930,258
Noninterest-bearing.......................11,579,390
Interest-bearing..........................15,350,868
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 16,117,854
Noninterest-bearing..........................187,464
Interest-bearing..........................15,930,390
Federal funds purchased and Securities sold under
agreements to repurchase............................ 2,170,238
Demand notes issued to the U.S. Treasury................ 300,000
Trading liabilities.................................... 1,310,867
Other borrowed money:
With remaining maturity of one year or less......... 2,549,479
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 46,654
Bank's liability on acceptances executed and
outstanding......................................... 983,398
Subordinated notes and debentures...................... 1,314,000
Other liabilities...................................... 2,295,520
-----------
Total liabilities...................................... 54,018,268
-----------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 731,319
Undivided profits and capital reserves................. 3,385,227
Net unrealized holding gains (losses) on
available-for-sale securities....................... 51,233
Cumulative foreign currency translation adjustments.... ( 37,639)
-----------
Total equity capital................................... 5,265,424
-----------
Total liabilities and equity capital................... $59,283,692
===========
</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 } Directors
Alan R. Griffith }
- --------------------------------------------------------------------------------
