<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 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
------------------------
CMS ENERGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MICHIGAN 38-2726431
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
FAIRLANE PLAZA SOUTH
330 TOWN CENTER DRIVE, SUITE 1100
DEARBORN, MICHIGAN 48126
(313) 436-9200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ALAN M. WRIGHT
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
FAIRLANE PLAZA SOUTH
330 TOWN CENTER DRIVE, SUITE 1100
DEARBORN, MICHIGAN 48126
313-436-9560
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
IT IS RESPECTFULLY REQUESTED THAT THE COMMISSION SEND COPIES
OF ALL NOTICES, ORDERS AND COMMUNICATIONS TO:
<TABLE>
<S> <C>
MICHAEL D. VANHEMERT, ESQ. S. KINNIE SMITH, ESQ.
CMS ENERGY CORPORATION SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
330 TOWN CENTER DRIVE 919 THIRD AVENUE
DEARBORN, MI 48126 NEW YORK, NY 10022
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement as determined by
market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
General Term Notes(R), Series
E........................... $400,000,000 100% $400,000,000 $118,000
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
Preliminary Prospectus Dated August 6, 1998
(Subject to Completion)
$400,000,000
CMS ENERGY CORPORATION
GENERAL TERM NOTES(R), SERIES E
------------------------
DUE FROM 9 MONTHS TO 25 YEARS FROM DATE OF ISSUE
------------------------
CMS Energy Corporation (the "Company" or "CMS Energy") may offer from time
to time up to $400,000,000 aggregate principal amount of its General Term Notes
(R), Series E (the "Notes"). Each Note will bear interest at a fixed rate
payable monthly, quarterly or semi-annually and will mature on a date from 9
months to 25 years from the date of issue. The interest rate, issue price,
stated maturity, interest payment dates and certain other terms (including a
Survivor's Option, if applicable) with respect to each Note will be established
at the time of issuance and set forth in a pricing supplement to this Prospectus
(a "Pricing Supplement"). If provided in the applicable Pricing Supplement with
respect to any Note, such Note will be subject to redemption prior to its stated
maturity by the Company, in whole or in part, at redemption prices declining
from a specified premium, if any, to par, together with accrued interest to the
date of redemption. Notes will be issued only in denominations of $1,000 or any
amount in excess thereof which is an integral multiple of $1,000. The Notes will
be unsecured debt securities of the Company. See "Description of General Term
Notes(R)."
In the case of a Note that provides for monthly interest payments, interest
will be payable, in arrears, on the fifteenth day of each calendar month;
provided, however, that in the event such Note is issued between the first and
fifteenth day of a calendar month, interest otherwise payable on the fifteenth
day of such calendar month will be payable on the fifteenth day of the next
succeeding calendar month. In the case of a Note that provides for quarterly or
semi-annual interest payments, interest will be payable, in arrears, commencing
on the day that is either three months or six months, as appropriate, from (i)
the day on which such Note is issued, if such Note is issued on the fifteenth
day of a calendar month, or (ii) the fifteenth day of the calendar month prior
to the calendar month in which such Note is issued, if such Note is issued prior
to the fifteenth day of a calendar month, or (iii) the fifteenth day of the
calendar month in which such Note is issued, if such Note is issued after the
fifteenth day of a calendar month.
Each Note initially will be issued in book-entry form and will be
represented only by a global certificate (a "Global Note") registered in the
name of the nominee of The Depository Trust Company (as Depository). A
beneficial interest in a Global Note will be shown on, and transfers thereof
will be effected only through, records maintained by the Depository and its
participants. A beneficial interest in a Global Note will not be represented by
Notes in definitive form except under the limited circumstances described
herein. See "Description of General Term Notes(R) -- Book-Entry System" and "--
Certificated Notes."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
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PRICE TO AGENT'S DISCOUNT PROCEEDS TO
PUBLIC(1) OR COMMISSION(2) COMPANY(2)(3)
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Per Note......................... 100% Not to exceed 4% Not less than 96%
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Total............................ $400,000,000 Not to exceed $16,000,000 Not less than $384,000,000
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</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to the public for each Note will be equal to 100% of the principal amount
thereof. See "Plan of Distribution."
(2) The Company will pay J. W. Korth & Company (the "Agent") and such other
agent(s) as the Company may select from time to time (collectively, the
"Agents") an underwriting discount or commission, not to exceed 4% of the
principal amount of any Note, which discount or commission will be disclosed
in the applicable Pricing Supplement for the Note, depending upon the
maturity of the Note. The names of any additional Agents will be disclosed
in a supplement to this Prospectus. The Company has agreed to indemnify the
Agents against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments that the
Agents may be required to make in respect thereof. See "Plan of
Distribution."
(3) Before deducting expenses payable by the Company estimated at $239,000.
------------------------
Offers to purchase the Notes are being solicited from time to time by the
Agent on behalf of the Company. The Agent has agreed to use its reasonable best
efforts to solicit purchases of the Notes. Following such solicitation, Notes
will be sold through the Agent, acting as principal. The Notes are offered,
subject to prior sale, when, as, and if issued to and accepted by the Agent, and
subject to the right of the Company and the Agent to reject any order in whole
or in part and to withdraw, cancel or modify the offer made hereby without
notice. The Notes will not be listed on any securities exchange, and there can
be no assurance that the Notes offered by this Prospectus will be sold or that
there will be a secondary market for the Notes. See "Plan of Distribution."
------------------------
J. W. Korth & Company
------------------------
The date of this Prospectus is August 6, 1998
- ----------------------
(R) Registered Servicemark of J. W. Korth & Company.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.
<PAGE> 3
Certain person participating in this offering may engage in transactions
that stabilize, maintain, or otherwise affect the price of the Notes.
Specifically, any agent may overallot in connection with the offering and may
bid for, and purchase, the Notes in the open market. For a description of these
activities, see "Plan of Distribution."
------------------------
No person is authorized in connection with the offering made hereby to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus or any Pricing Supplement, and any information or
representation not contained or incorporated herein must not be relied upon as
having been authorized by CMS Energy or any underwriter, dealer or agent. This
Prospectus and any Pricing Supplement do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which they relate or an offer to sell or the solicitation of an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus or any Pricing Supplement nor
any sale made hereunder or thereunder shall, under any circumstances, create any
implication that the information contained or incorporated herein or therein is
correct as of any time subsequent to the date of such information.
------------------------
AVAILABLE INFORMATION
CMS Energy is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and at 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such materials can
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a web site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding the Company. The outstanding Common
Stock of CMS Energy is listed on the New York Stock Exchange and reports, proxy
statements and other information concerning CMS Energy may also be inspected and
copied at the offices of such exchange at 20 Broad Street, New York, New York
10005.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by CMS Energy with the Commission (File No.
1-9513) pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus and shall be deemed to be a part hereof:
(1) CMS Energy's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) CMS Energy's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998; and
(3) CMS Energy's Current Reports on Form 8-K dated June 23, 1998 and
July 30, 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 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.
2
<PAGE> 4
CMS Energy undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents referred to above which
have been or may be incorporated in this Prospectus by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to CMS Energy Corporation at its principal executive offices located at Fairlane
Plaza South, 330 Town Center Drive, Suite 1100, Dearborn, Michigan 48126,
Attention: Office of the Secretary, telephone: (313) 436-9200.
Certain information contained in this Prospectus summarizes, is based upon,
or refers to information and financial statements contained in one or more
Incorporated Documents; accordingly, such information contained herein is
qualified in its entirety by reference to such documents and should be read in
conjunction therewith.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the information appearing elsewhere in this
Prospectus and the Incorporated Documents.
THE COMPANY
CMS Energy, incorporated in 1987, is the parent holding company of
Consumers Energy Company ("Consumers") and CMS Enterprises Company
("Enterprises"). Consumers, a combination electric and gas utility company
serving in all 68 counties of Michigan's Lower Peninsula, is the largest
subsidiary of CMS Energy. Consumers' customer base includes a mix of
residential, commercial and diversified industrial customers, the largest of
which is the automotive industry. Enterprises is engaged in several domestic and
international energy-related businesses including: (i) oil and gas exploration
and production; (ii) acquisition, development and operation of independent power
production facilities; (iii) energy marketing, 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) transmission,
storage 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.
THE OFFERING
Securities Offered............ $400,000,000 aggregate principal amount of
General Term Notes(R), Series E (the "Notes").
Maturity Date................. The Notes will be offered at varying maturities
but in no event will any Note mature earlier
than 9 months from its date of issue or later
than 25 years from its date of issue. The
stated maturity of each Note will be set forth
in the applicable Pricing Supplement.
Interest Rate................. The interest rate on each Note will be a fixed
rate established at the time of issuance and
set forth in the applicable Pricing Supplement.
Issue Price................... The Issue Price with respect to each Note will
be 100% of the principal amount, unless
otherwise set forth in the applicable Pricing
Supplement.
Interest Payment Dates........ The interest payment dates with respect to each
Note will be set forth in the applicable
Pricing Supplement. The Pricing Supplement also
will state whether interest on the related Note
will be payable monthly, quarterly or
semi-annually. See "Description of General Term
Notes(R) -- Interest."
Repayment Upon Death.......... If the Pricing Supplement relating to any Note
provides that the holder of such Note will have
the option (the "Survivor's Option") to elect
repayment of such Note prior to its stated
maturity in the event of the death of the
beneficial owner of such Note, the Company will
repay such Note (or portion thereof) properly
tendered for repayment by or on behalf of the
person that has authority to act on behalf of
the deceased owner of the beneficial
4
<PAGE> 6
interest in such Note at a price equal to 100%
of the principal amount of the beneficial
interest of the deceased owner in such Note
plus accrued interest to the date of such
repayment, subject to an annual aggregate
limitation and an individual holder limitation
on the dollar amount of Notes that will be
repaid in any year under the Survivor's Option
as well as a limitation on the ability of
surviving joint tenants and tenants by the
entirety to exercise the Survivor's Option. See
"Description of General Term Notes(R) --
Repayment Upon Death."
Redemption at Company's
Option........................ If it is so provided in the Pricing Supplement,
the Notes will be redeemable, in whole or in
part in increments of $1,000, at the option of
the Company, at any time after a specified
initial redemption date, on notice given by the
Company not more than 60 nor less than 30 days
prior to the date of redemption, at redemption
prices declining over a specified period from a
specified premium, if any, to par, together
with accrued interest to the date of
redemption. See "Description of General Term
Notes(R) -- Redemption."
Purchase at the Option of
Holder after a Change in
Control....................... On a date no earlier than 60 days nor later
than 90 days (the "Change in Control Purchase
Date") after the date on which the Company
mails written notice to the Holders of the
Notes of the occurrence of a Change in Control
at any time while the Notes are outstanding,
the Company will purchase any Note, at the
option of its Holder, for a Change in Control
Purchase Price equal to 101% of the aggregate
outstanding principal amount of the Notes to be
repurchased plus accrued interest thereon to
the Change in Control Purchase Date. See
"Description of General Term Notes(R) --
Purchase of Notes Upon Change in Control" for a
summary of these provisions and the definition
of "Change in Control."
Mandatory Sinking Fund........ None.
Ranking....................... The Notes will be unsecured debt securities of
the Company. The Notes will rank on a parity in
right of payment with all other unsecured and
unsubordinated indebtedness of the Company. As
of June 30, 1998 the Company had no secured
indebtedness outstanding. However, the Company
has retained the right to pledge assets to
secure indebtedness in the future, subject to
certain limitations. See "Description of
General Term Notes(R) -- Certain Restrictive
Covenants -- Limitations on Certain Liens."
Certain Covenants............. So long as any of the Notes are outstanding the
Company has agreed to: (a) limitations on the
creation of liens or security interests upon
the stock of Consumers and certain other
Subsidiaries; (b) limitations on transactions
between the Company and its affiliates; and (c)
limitations on certain mergers, consolidations
and sales of assets. Also, so long as the Notes
are outstanding and until the Notes are rated
BBB- or above (or an equivalent rating) by
Standard & Poor's and one Other Rating Agency,
at which time the Company will be permanently
released from such limitations the Company has
agreed to: (a) limitations on the issuance or
incurrence of indebtedness by the Company and
certain of its
5
<PAGE> 7
Subsidiaries (other than Consumers); (b)
limitations on the declaration or payment of
dividends on, or the redemption, retirement or
other acquisition of, the capital stock of the
Company; and (c) additional limitations on
certain mergers, consolidations and sales of
assets. See "Description of General Term
Notes(R) -- Certain Restrictive Covenants."
Use of Proceeds............... Unless otherwise provided in a Pricing
Supplement, the net proceeds of the sale of the
Notes will be used by the Company for its
general corporate purposes. See "Use of
Proceeds."
Liquidity..................... There is no active public trading market for
the Notes. Any Agent may make a market in the
Notes, but no Agent is obligated to do so and
any such market making so undertaken may be
discontinued without notice at any time. There
can be no assurance as to the liquidity of any
market that may develop for the Notes, the
ability of the Holders to sell their Notes, or
the price at which Holders would be able to
sell their Notes. If a trading market is not
developed or is not maintained, Holders of the
Notes may experience difficulty in reselling
them or may be unable to sell them at all. If a
market for the Notes develops, they may trade
at a discount from their Issue Price. Future
trading prices of the Notes will depend on many
factors, including prevailing interest rates,
the Company's operating results, and the market
for similar securities. The Company does not
intend to apply for listing of the Notes on any
securities exchange. Historically, and
particularly in recent periods, the market for
non-investment grade debt has been subject to
disruptions that have caused substantial
volatility in the prices of securities. There
can be no assurance that the market for the
Notes, if any, will not be subject to similar
disruptions.
6
<PAGE> 8
THE COMPANY
CMS Energy, incorporated in 1987, is the parent holding company of
Consumers Energy Company ("Consumers") and CMS Enterprises Company
("Enterprises"). Consumers, a combination electric and gas utility company
serving in all 68 counties of Michigan's Lower Peninsula, is the largest
subsidiary of CMS Energy. Consumers' customer base includes a mix of
residential, commercial and diversified industrial customers, the largest of
which is the automotive industry. Enterprises is engaged in several domestic and
international energy-related businesses including: (i) oil and gas exploration
and production; (ii) acquisition, development and operation of independent power
production facilities; (iii) energy marketing, 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 activities (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 major share 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 all of the 68
counties in Michigan's Lower Peninsula. Industries in Consumers' service area
include automotive, metal, chemical, food and wood products and a diversified
group of other industries. Consumers' 1997 consolidated operating revenue of
$3.8 billion was derived 67% from its electric utility business, 32% from its
gas utility business and 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 and the Federal Energy Regulatory Commission.
Consumers' nuclear operations are subject to the jurisdiction of the Nuclear
Regulatory Commission.
The foregoing information concerning CMS Energy and its subsidiaries does
not purport to be comprehensive. For additional information concerning CMS
Energy and its subsidiaries' business and affairs, including their capital
requirements and external financing plans, pending legal and regulatory
proceedings and descriptions of certain laws and regulations to which those
companies are subject, prospective purchasers should refer to the Incorporated
Documents. See "Incorporation of Certain Documents by Reference" and "Available
Information" above.
The address of the principal executive officers of CMS Energy is Fairlane
Plaza South, 330 Town Center Drive, Suite 1100, Dearborn, Michigan 48126. Its
telephone number is (313) 436-9200.
RECENT DEVELOPMENTS
On June 23, 1998, the Company announced its oil and gas exploration and
production and it processing affiliates changed from full cost accounting to the
successful efforts method which required the Company to record a one-time,
non-cash reduction of shareholders equity and restate prior years' financial
statements. Common shareholders' equity at December 31, 1997 was $1.787 billion
as restated compared to $1.977 billion
7
<PAGE> 9
prior to that reduction. Refer to Forms 8-K dated June 23 and July 30, 1998 for
further discussion of the accounting change and copies of these restated
financial statements.
On July 23, 1998, the Company announced second quarter consolidated net
income of $64.6 million, up 38 percent from $47.2 million in the second quarter
of 1997. Second quarter operating revenue grew 11 percent, to $1.13 billion,
from $1.02 billion in the second quarter of 1997.
On August 3, 1998, the Company announced the execution of a merger
agreement with Continental Natural Gas, Inc. ("CNGL"), a $185 million (assets)
energy company engaged in gathering, processing, purchasing and marketing
natural gas and natural gas liquids in Oklahoma and Texas. Approximately $65
million of CMS Energy Common Stock will be issued to acquire 100% of CNGL's
common stock and approximately $90 million of CNGL debt will be assumed in the
transaction, which is intended to be accounted for as a pooling of interests.
The merger agreement is subject to ratification by the holders of a majority of
CNGL's common stock. The transaction is expected to close early in the fourth
quarter of 1998. Other than compliance with the Hart-Scott-Rodino Act, the
transaction does not require any governmental approvals.
USE OF PROCEEDS
Unless otherwise provided in a Pricing Supplement, the net proceeds from
the sale of the Notes will be used by the Company for its general corporate
purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for each of the years ended
December 31, 1993 through 1997, and for the three months ended March 31, 1998,
are as follows:
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------
MARCH 31, 1998 1997 1996 1995 1994 1993
-------------- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges............... 1.44 1.78 1.96 1.90 2.07 1.75
</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.
DESCRIPTION OF GENERAL TERM NOTES(R)
The Notes will be issued as a series of debt securities under an Indenture,
dated as of January 15, 1994 (such Indenture as amended or supplemented from
time to time by one or more supplemental indentures thereto, including a
supplemental indenture relating to the Notes, being referred to herein as the
"Indenture" and all debt securities hereafter issued under such Indenture being
collectively referred to herein as "Securities"), between the Company and The
Chase Manhattan Bank, a New York banking corporation, as trustee (the
"Trustee"). The Company is not limited by the Indenture as to the aggregate
principal amount of Securities it may issue. The descriptions of the Notes and
the Indenture in this Prospectus are brief summaries of the provisions contained
in such documents and do not purport to be complete. The form of the Indenture
is filed as an exhibit to the Registration Statement of which this Prospectus is
a part, and reference is made thereto for the definitive provisions of such
Indenture. The descriptions herein are qualified in their entirety by such
reference. Certain capitalized terms used herein without definition shall have
the meanings respectively set forth in the Indenture.
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<PAGE> 10
GENERAL
The Notes will be offered pursuant to this Prospectus on a continuing
basis. Each Note will mature from 9 months to 25 years from its date of issue.
The Notes will be issued without coupons in registered form only and in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000.
CMS Energy is a holding company and its assets consist primarily of
investment in its subsidiaries. The Securities (including the Notes) will be
obligations exclusively of the Company. The Company's ability to service its
indebtedness, including the Securities, is dependent primarily upon the earnings
of its subsidiaries and the distribution or other payment of such earnings to
the Company in the form of dividends, loans or advances, and repayment of loans
and advances from the Company. The subsidiaries are separate and distinct legal
entities and have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the Securities or to make any funds available therefor, whether by
dividends, loans or other payments.
A substantial portion of the consolidated liabilities of the Company have
been incurred by its subsidiaries. Therefore, the Company's rights and the
rights of its creditors, including holders of Securities, to participate in the
distribution of assets of any subsidiary upon the latter's liquidation or
reorganization will be subject to prior claims of the subsidiary's creditors,
including trade creditors, except to the extent that the Company may itself be a
creditor with recognized claims against the subsidiary (in which case the claims
of the Company would still be subject to the prior claims of any secured
creditor of such subsidiary and of any holder of indebtedness of such subsidiary
that is senior to that held by CMS Energy). As of June 30, 1998, the Company's
subsidiaries had total indebtedness for borrowed money (excluding intercompany
indebtedness) of approximately $2,878 million.
The Notes rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. As of June 30, 1998, the Company had no secured
indebtedness outstanding. However, the Company has retained the right to secure
indebtedness, subject to certain limitations. See "Certain Restrictive
Covenants -- Limitations on Certain Liens."
Notes will be represented by a Global Note registered in the name of the
nominee of the Depository, except under the limited circumstances described
below under "Certificated Notes." A single Global Note will represent all Notes
issued on the same day and having the same terms, including, but not limited to,
the same Interest Payment Dates, rate of interest, stated maturity and
repurchase and redemption provisions (if any). A beneficial interest in a Global
Note will be shown on, and transfers thereof will be effected only through,
records maintained by the Depository (with respect to interests of its
participants) and its participants (with respect to interests of persons other
than its participants).
Unless the applicable Pricing Supplement provides otherwise, the price at
which each Note will be issued (the "Issue Price") will be 100% of the principal
amount of the Note. Notes will not be issued as discounted securities, at prices
below stated principal amounts, or having an original issue discount for U.S.
federal income tax purposes, unless the applicable Pricing Supplement so
provides and, if applicable, describes potential U.S. federal income tax
consequences.
The Pricing Supplement relating to a Note will set forth, among other
things, the following terms: (i) the date on which such Note will be issued;
(ii) the Issue Price; (iii) the stated maturity date of such Note; (iv) the rate
per annum at which such Note will bear interest; (v) the Interest Payment Dates
for such Note; (vi) whether the holder of such Note will have the Survivor's
Option; (vii) whether and the terms on which such Note will be subject to
redemption by the Company prior to its stated maturity; and (viii) any other
terms not inconsistent with the provisions of the Indenture.
INTEREST
Each Note will bear interest from the date of issue at the fixed rate per
annum specified therein and in the applicable Pricing Supplement until the
principal thereof is paid or made available for payment. Interest will be
payable either monthly, quarterly or semi-annually on each Interest Payment Date
and at Maturity. Interest will be payable to the person in whose name a Note is
registered at the close of business on the Regular Record Date next preceding
each Interest Payment Date; provided, however, interest payable at
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Maturity will be payable to the person to whom principal shall be payable.
Unless otherwise indicated in the applicable Pricing Supplement, interest will
be paid in arrears and shall be the amount of interest accrued to, but
excluding, the Interest Payment Date. Interest on the Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
The Interest Payment Dates for a Note that provides for monthly interest
payments shall be the fifteenth day of each calendar month; provided, however,
that in the case of a Note issued between the first and fifteenth day of a
calendar month, interest otherwise payable on the fifteenth day of such calendar
month will be payable on the fifteenth day of the next succeeding calendar
month. In the case of a Note that provides for quarterly interest payments, the
Interest Payment Dates shall be the fifteenth day of each of the months
specified in the Pricing Supplement, commencing on the day that is three months
from (i) the day on which such Note is issued, if such Note is issued on the
fifteenth day of a calendar month, or (ii) the fifteenth day of the calendar
month immediately preceding the calendar month in which such Note is issued, if
such Note is issued prior to the fifteenth day of a calendar month, or (iii) the
fifteenth day of the calendar month in which such Note is issued, if such Note
is issued after the fifteenth day of a calendar month. In the case of a Note
that provides for semi-annual interest payments, the Interest Payment Dates
shall be the fifteenth day of each of the months specified in the Pricing
Supplement, commencing on the day that is six months from (i) the day on which
such Note is issued, if such Note is issued on the fifteenth day of a calendar
month, (ii) the fifteenth day of the calendar month immediately preceding the
calendar month in which such Note is issued, if such Note is issued prior to the
fifteenth day of a calendar month, or (iii) the fifteenth day of the calendar
month in which such Note is issued, if such Note is issued after the fifteenth
day of a calendar month. The Regular Record Date with respect to any Interest
Payment Date (other than at Maturity) shall be the first day (whether or not a
Business Day) of the calendar month in which such Interest Payment Date occurs,
and, in the case of interest payable at Maturity, the Regular Record Date shall
be the date of Maturity.
Interest on the Notes that is not punctually paid or duly provided for on
any Interest Payment Date ("defaulted interest") shall cease to be payable to
the Holder thereof on the relevant Regular Record Date and may be paid by the
Company to Holders of Notes (i) at the close of business on a Special Record
Date for the payment of such defaulted interest fixed by the Trustee and not
more than 15 nor less than 10 days prior to the date of the proposed payment,
provided that the Company shall have notified the Trustee in writing of the
amount of such defaulted interest, deposited with the Trustee funds equal to the
amount of the proposed payment or made arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, or (ii) in such
other lawful manner which is not inconsistent with the requirements of any
securities exchange on which the Notes are listed for trading.
REDEMPTION
A Note is not subject to redemption at the option of the Company prior to
the date, if any, fixed at the time of sale and designated as the "Initial
Redemption Date" on the face of such Note and in the applicable Pricing
Supplement hereto. If no Initial Redemption Date is indicated with respect to a
Note, such Note is not subject to redemption at the option of the Company prior
to Stated Maturity. If so specified in the applicable Pricing Supplement, on and
after the Initial Redemption Date, the related Note will be redeemable in whole
or in part in increments of $1,000, at the option of the Company, at redemption
prices declining from a specified premium, if any, to par, together with accrued
interest to the date of redemption, on notice given by the Company not more than
60 nor less than 30 days prior to the date of redemption. If less than all of
the Notes of like tenor and terms are to be redeemed, the Notes to be redeemed
will be selected by the Trustee by such method as the Trustee shall deem fair
and appropriate. Notwithstanding the foregoing however, the Company may at any
time purchase Notes at any price in the open market or otherwise. Notes so
purchased by the Company may, at the discretion of the Company, be held or
resold or surrendered to the Trustee for cancellation. The Notes will not have a
sinking fund. See "Purchase of Notes Upon Change in Control" and "Repayment Upon
Death."
With respect to Notes redeemable at the option of the Company, the
applicable Pricing Supplement will specify if the Company would be prohibited
from redeeming such Note as a part of, or in anticipation of, any
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refunding operation by the application, directly or indirectly, of moneys
borrowed having an effective interest cost to the Company of less than the
effective interest cost to the Company of such Note.
PURCHASE OF NOTES UPON CHANGE IN CONTROL
In the event of any Change in Control (as defined below) each Holder of a
Note will have the right, at such Holder's option, subject to the terms and
conditions of the Indenture, to require the Company to repurchase all or any
part of such Holder's Note on a date selected by the Company that is no earlier
than 60 days nor later than 90 days (the "Change in Control Purchase Date")
after the mailing of written notice by the Company of the occurrence of such
Change in Control at a repurchase price payable in cash equal to 101% of the
principal amount of such Notes plus accrued interest to the Change in Control
Purchase Date (the "Change in Control Purchase Price").
Within 30 days after the Change in Control, the Company is obligated to
mail to each Holder of a Note a notice regarding the Change in Control, which
notice shall state, among other things: (i) that a Change in Control has
occurred and that each such Holder has the right to require the Company to
repurchase all or any part of such Holder's Notes at the Change in Control
Purchase Price; (ii) the Change in Control Purchase Price; (iii) the Change in
Control Purchase Date, (iv) the name and address of the Paying Agent and (v) the
procedures that Holders must follow to cause the Notes to be repurchased.
To exercise this right, a Holder must deliver a Change in Control Purchase
Notice to the Paying Agent at its office in The City of New York, or any other
office of the Paying Agent maintained for such purposes, not later than 30 days
prior to the Change in Control Purchase Date. The Change in Control Purchase
Notice shall state (i) the portion of the principal amount of any Notes to be
repurchased, which must be $1,000 or an integral multiple thereof, (ii) that
such Notes are to be repurchased by the Company pursuant to the applicable
change-in-control provisions of the Indenture, and (iii) unless the Notes are
represented by one or more Global Notes, the certificate numbers of the Notes to
be repurchased.
Any Change in Control Purchase Notice may be withdrawn by the Holder by a
written notice of withdrawal delivered to the Paying Agent not later than three
Business Days prior to the Change in Control Purchase Date. The notice of
withdrawal shall state the principal amount and, if applicable, the certificate
numbers of the Notes as to which the withdrawal notice relates and the principal
amount, if any, which remains subject to a Change in Control Purchase Notice.
If a Note is represented by a Global Note, the Depository or its nominee
will be the holder of such Note and therefore will be the only entity that can
require the Company to repurchase Notes upon a Change in Control. To obtain
repayment with respect to such Note upon a Change in Control, the beneficial
owner of such Note must provide to the broker or other entity through which it
holds the beneficial interest in such Note (i) a Change in Control Purchase
Notice signed by such beneficial owner, and such signature must be guaranteed by
a member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. ("NASD") or a commercial bank or trust
company having an office or correspondent in the United States and (ii)
instructions to such broker or other entity to notify the Depository of such
beneficial owner's desire to cause the Company to repurchase such Notes. Such
broker or other entity will provide to the Paying Agent (i) a Change in Control
Purchase Notice received from such beneficial owner and (ii) a certificate
satisfactory to the Paying Agent from such broker or other entity that it
represents such beneficial owner. Such broker or other entity will be
responsible for disbursing any payments it receives upon the repurchase of such
Notes by the Company.
Payment of the Change in Control Purchase Price for a Note in certificated
form (a "Certificated Note") for which a Change in Control Purchase Notice has
been delivered and not withdrawn is conditioned upon delivery of such Note
(together with necessary endorsements) to the Paying Agent at its office in The
City of New York, or any other office of the Paying Agent maintained for such
purpose, at any time (whether prior to, on or after the Change in Control
Purchase Date) after the delivery of such Change in Control Purchase Notice.
Payment of the Change in Control Purchase Price for such Note will be made
promptly following the later of the Change in Control Purchase Date or the time
of delivery of such Note.
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If the Paying Agent holds, in accordance with the terms of the Indenture,
money sufficient to pay the Change in Control Purchase Price of a Note on the
Business Day following the Change in Control Purchase Date for such Note, then,
on and after such date, interest on such Note will cease to accrue, whether or
not such Note is delivered to the Paying Agent, and all other rights of the
Holder shall terminate (other than the right to receive the Change in Control
Purchase Price upon delivery of the Note).
Under the Indenture, a "Change in Control" means an event or series of
events by which (i) CMS Energy ceases to beneficially own, directly or
indirectly, at least 80% of the total voting power of all classes of Capital
Stock then outstanding of Consumers (whether arising from issuance of securities
of the Company or Consumers, any direct or indirect transfer of securities by
CMS Energy or Consumers, any merger, consolidation, liquidation or dissolution
of CMS Energy or Consumers or otherwise); or (ii) any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
"beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person or group shall be deemed to have "beneficial
ownership" of all shares that such person or group has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 30% of the Voting Stock of CMS
Energy; or (iii) CMS Energy consolidates with or merges into another corporation
or directly or indirectly conveys, transfers or leases all or substantially all
of its assets to any person, or any corporation consolidates with or merges into
CMS Energy, in either event pursuant to a transaction in which the outstanding
Voting Stock of CMS Energy is changed into or exchanged for cash, securities, or
other property, other than any such transaction where (A) the outstanding Voting
Stock of CMS Energy is changed into or exchanged for Voting Stock of the
surviving corporation and (B) the holders of the Voting Stock of CMS Energy
immediately prior to such transaction retain, directly or indirectly,
substantially proportionate ownership of the Voting Stock of the surviving
corporation immediately after such transaction.
The Indenture requires CMS Energy to comply with the provisions of Rule
13e-4 and any other tender offer rules under the Exchange Act which may then be
applicable and file Schedule 13E-4 or any other schedule required thereunder in
connection with any offer by CMS Energy to purchase Notes at the option of
Holders upon a Change in Control. The Change in Control purchase feature of the
Notes may in certain circumstances make more difficult or discourage a takeover
of CMS Energy and, thus, the removal of incumbent management. The Change in
Control purchase feature, however, is not the result of management's knowledge
of any specific effort to accumulate shares of its common stock or to obtain
control of the Company by means of a merger, tender offer, solicitation or
otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions. Instead, the Change in Control purchase feature is a customary term
contained in similar debt offerings and the terms of such feature result from
negotiations between CMS Energy and the Agents. Management has no present
intention to propose any anti-takeover measures although it is possible that CMS
Energy could decide to do so in the future.
No Note may be repurchased by the Company as a result of a Change of
Control if there has occurred and is continuing an Event of Default described
under "Events of Default" below (other than a default in the payment of the
Change in Control Purchase Price with respect to the Notes). In addition, the
Company's ability to purchase Notes may be limited by its financial resources
and its inability to raise the required funds because of restrictions on
issuance of securities contained in other contractual arrangements.
REPAYMENT UPON DEATH
The Pricing Supplement relating to any Note will indicate whether the
holder of such Note will have the Survivor's Option. SEE THE PRICING SUPPLEMENT
TO DETERMINE WHETHER THE SURVIVOR'S OPTION APPLIES TO ANY PARTICULAR NOTE.
Pursuant to exercise of the Survivor's Option, if applicable, the Company
will repay any Note (or portion thereof) properly tendered for repayment by or
on behalf of the person (the "Representative") that has authority to act on
behalf of the deceased owner of the beneficial interest in such Note under the
laws of the appropriate jurisdiction (including, without limitation, the
personal representative or executor of such deceased beneficial owner) at a
price equal to 100% of the principal amount of the beneficial interest of the
deceased owner in such Note plus accrued interest to the date of such repayment,
subject to the following
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limitations. Notwithstanding the foregoing, the Survivor's Option will not be
available to persons who are surviving joint tenants or surviving tenants by the
entirety. The Company may, in its sole discretion, limit the aggregate principal
amount of Notes as to which exercises of the Survivor's Option will be accepted
in any calendar year (the "Annual Put Limitation") to one percent (1%) of the
outstanding principal amount of the Notes as of the end of the most recent
fiscal year, but not less than $500,000 in any such calendar year, or such
greater amount as the Company in its sole discretion may determine for any
calendar year, and may limit to $100,000, or such greater amount as the Company
in its sole discretion may determine for any calendar year, the aggregate
principal amount of Notes (or portions thereof) as to which exercise of the
Survivor's Option will be accepted in such calendar year with respect to any
individual deceased owner of beneficial interests in such Notes (the "Individual
Put Limitation"). Moreover, the Company will not make principal repayments
pursuant to exercise of the Survivor's Option in amounts that are less than
$1,000, and, in the event that the limitations described in the preceding
sentence would result in the partial repayment of any Note, the principal amount
of such Note remaining outstanding after repayment must be at least $1,000 (the
minimum authorized denomination of the Notes). Any Note (or portion thereof)
tendered pursuant to exercise of the Survivor's Option may be withdrawn by a
written request by the Representative of the deceased owner received by the
Trustee prior to its repayment.
Each Note (or portion thereof) that is tendered pursuant to valid exercise
of the Survivor's Option will be accepted promptly in the order all such Notes
are tendered, except for any Note (or portion thereof) the acceptance of which
would contravene (i) the Annual Put Limitation, if applied, or (ii) the
Individual Put Limitation, if applied, with respect to the relevant individual
deceased owner of beneficial interests therein. If, as of the end of any
calendar year, the aggregate principal amount of Notes (or portions thereof)
that have been accepted pursuant to exercise of the Survivor's Option for such
year, has not exceeded the Annual Put Limitation, if applied, for such year, any
exercise(s) of the Survivor's Option with respect to Notes (or portions thereof)
not accepted during such calendar year because such acceptance would have
contravened the Individual Put Limitation, if applied, with respect to an
individual deceased owner of beneficial interests therein will be accepted in
the order all such Notes (or portions thereof) were tendered, to the extent that
any such exercise would not exceed the Annual Put Limitation for such calendar
year. Any Note (or portion thereof) accepted for repayment pursuant to exercise
of the Survivor's Option will be repaid no later than the first Interest Payment
Date that occurs 20 or more calendar days after the date of such acceptance.
Each Note (or any portion thereof) tendered for repayment that is not accepted
in any calendar year due to the application of the Annual Put Limitation will be
deemed to be tendered in the following calendar year in the order in which all
such Notes (or portions thereof) were originally tendered, unless any such Note
(or portion thereof) is withdrawn by the Representative for the deceased owner
prior to its repayment. In the event that a Note (or any portion thereof)
tendered for repayment pursuant to valid exercise of the Survivor's Option is
not accepted, the Trustee will deliver a notice by first-class mail to the
registered Holder thereof at its last known address as indicated in the Security
Register that states the reasons such Note (or portion thereof) has not been
accepted for repayment.
Subject to the foregoing, in order for a Survivor's Option to be validly
exercised with respect to any Note (or portion thereof), the Trustee must
receive from the Representative of the deceased owner (i) a written request for
repayment signed by the Representative, and such signature must be guaranteed by
a member firm of a registered national securities exchange or of the NASD or a
commercial bank or trust company having an office or correspondent in the United
States, (ii) if such Note is not represented by a Global Note as described
below, tender of the Note (or portion thereof) to be repaid, (iii) appropriate
evidence satisfactory to the Company and the Trustee that (A) the Representative
has authority to act on behalf of the deceased beneficial owner, (B) the death
of such beneficial owner has occurred and (C) the deceased was the owner of a
beneficial interest in such Note at the time of death, (iv) if applicable, a
properly executed assignment or endorsement, and (v) if the beneficial interest
in such Note is held by a nominee of the deceased beneficial owner, a
certificate satisfactory to the Trustee from such nominee attesting to the
deceased's ownership of a beneficial interest in such Note. All questions as to
the eligibility or validity of any exercise of the Survivor's Option will be
determined by the Company, in its sole discretion, which determinations will be
final and binding on all parties.
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If a Note is represented by a Global Note, the Depository or its nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise the Survivor's Option for such Note. To obtain repayment pursuant to
exercise of the Survivor's Option with respect to such Note, the Representative
must provide to the broker or other entity through which the beneficial interest
in such Note is held by the deceased owner (i) the documents described in
clauses (i) and (iii) of the preceding paragraph and (ii) instructions to such
broker or other entity to notify the Depository of such Representative's desire
to obtain repayment pursuant to exercise of the Survivor's Option. Such broker
or other entity will provide to the Trustee (i) the documents received from the
Representative referred to in clause (i) of the preceding sentence and (ii) a
certificate satisfactory to the Trustee from such broker or other entity stating
that it represents the deceased beneficial owner. Such broker or other entity
will be responsible for disbursing any payments it receives pursuant to exercise
of the Survivor's Option to the appropriate Representative. See "Book-Entry
System."
A REPRESENTATIVE MAY OBTAIN THE FORMS USED TO EXERCISE THE SURVIVOR'S
OPTION FROM THE CHASE MANHATTAN BANK, THE TRUSTEE, AT 450 WEST 33RD STREET, 15TH
FLOOR, NEW YORK, NEW YORK 10001-2697, ATTENTION: GLOBAL TRUST SERVICES, DURING
NORMAL BUSINESS HOURS.
PAYMENT AND PAYING AGENTS
Payments of principal, premium, if any, and interest on Notes represented
by a Global Note will be made to the Depository through such Paying Agent or
Paying Agents in The City of New York as the Company may designate from time to
time or by wire transfer to the Depository. See "Book-Entry System." Payments of
principal, premium, if any, and interest on Certificated Notes will be made upon
surrender of such Notes at the office of such Paying Agent or Paying Agents in
The City of New York as the Company may designate from time to time, except that
at the option of the Company, payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The principal corporate trust office of The Chase Manhattan Bank, located
at 450 West 33rd Street, 15th Floor, New York, New York 10001-2697, has been
designated as the Company's sole Paying Agent for payments with respect to the
Notes. The Company may at any time designate additional Paying Agents or rescind
the designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for the Notes.
BOOK-ENTRY SYSTEM
The Notes will be issued initially in the form of one or more Global Notes
that will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York ("DTC"), which will act as securities depository for the Notes.
The Notes will be issued as fully-registered securities registered in the name
of Cede & Co. (DTC's partnership nominee). DTC and any other depository which
may replace DTC as depository for the Notes are sometimes referred to herein as
the "Depository."
Upon issuance, all Notes having the same issue date, interest rate,
redemption provisions, provisions for repurchase at the option of the Holder,
stated maturity and other provisions will be represented by one or more Global
Notes. Except under the limited circumstances described below, Notes represented
by Global Notes will not be exchangeable for Certificated Notes.
So long as the Depository, or its nominee, is the registered owner of a
Global Note, such Depository or such nominee, as the case may be, will be
considered the sole registered holder of the individual Notes represented by
such Global Note for all purposes under the Indenture. Payments of principal of
and premium, if any, and any interest on individual Notes represented by a
Global Note will be made to the Depository or its nominee, as the case may be,
as the registered holder of such Global Note. Except as set forth below, owners
of beneficial interests in a Global Note will not be entitled to have any of the
individual Notes represented by such Global Note registered in their names, will
not receive or be entitled to receive physical delivery of any such Note and
will not be considered the registered holder thereof under the Indenture,
including, without limitation, for purposes of consenting to any amendment
thereof or supplement thereto as described in this Prospectus.
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The following is based upon information furnished by DTC:
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants ("Direct
Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the NASD. Access to
the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Notes under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Notes on DTC's
records. The ownership interest of each actual purchaser of each Note
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Notes are to be
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Notes, except in the event that
use of the book-entry system for one or more Notes is discontinued.
To facilitate subsequent transfers, all Global Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Global Notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Notes; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Notes are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes are being redeemed, DTC's practice is to determine by lot the amount
of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to Notes.
Under its usual procedures, DTC mails an Omnibus Proxy to the Company as
soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payable
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the
payable date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such
Participant and not of DTC, any Agents, or the
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Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Company, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository
with respect to the Notes at any time by giving 90 days' notice to the
Company or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Certificated Notes are
required to be printed and delivered in exchange for the Notes represented
by the Global Notes held by the DTC. See "Certificated Notes."
In addition, the Company may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities depository).
In that event, Certificated Notes will be printed and delivered in exchange
for the Notes represented by the Global Notes held by DTC. See
"Certificated Notes."
The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC. The Company believes such information to be
reliable, but the Company takes no responsibility for the accuracy thereof.
None of the Company, any Agents, the Trustee, any paying agent or the
registrar for the Notes will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
CERTIFICATED NOTES
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company by the
earlier of (i) 90 days from the date the Company receives notice to the effect
that the Depository is unwilling or unable to act, or the Company determines
that the Depository is unable to act or (ii) the effectiveness of the
Depository's resignation or failure to fulfill its duties as Depository, the
Company will issue Certificated Notes in exchange for the Notes represented by
the Global Notes held by the Depository. In addition, the Company may at any
time and in its sole discretion determine not to have Notes represented by a
Global Note and, in such event, will issue individual Certificated Notes in
exchange for the Notes represented by the Global Note. In either instance, the
owner of a beneficial interest in a Note represented by a Global Note will be
entitled to have such Note registered in its name and will be entitled to
physical delivery of such Note in certificated form. Individual Certificated
Notes so issued will be issued in fully registered form, without coupons, in one
or more authorized denominations as described above under "General."
Certificated Notes will be exchangeable for other Certificated Notes of any
authorized denominations and of a like aggregate principal amount and tenor.
Certificated Notes may be presented for exchange as provided above, and may
be presented for registration of transfer (duly endorsed, or accompanied by a
duly executed written instrument of transfer), at the office of The Chase
Manhattan Bank, the Trustee, in The City of New York, (the "Security Registrar")
or at the office of any other transfer agent designated by the Company for such
purpose with respect to the Notes and referred to in the applicable Pricing
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such transfer or exchange
will be effected upon the Security Registrar or such other transfer agent, as
the case may be, being satisfied with the documents of title and identity of the
person making the request. If a Pricing Supplement refers to any transfer agents
(in addition to the Security Registrar) designated by the Company with respect
to the Notes, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Company will be required to maintain a
transfer agent in each Place of Payment for the Notes. The Company may at any
time designate additional transfer agents with respect to the Notes.
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The Company will not be required to (i) issue, register the transfer of or
exchange Certificated Notes during a period beginning at the opening of business
15 days before the selection of Notes to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; or (ii)
register the transfer of or exchange any Certificated Note, or portion thereof,
called for redemption, except the unredeemed portion of any Certificated Note
being redeemed in part.
If a Certificated Note is mutilated, destroyed, lost or stolen, it may be
replaced at the corporate trust office or agency of the Trustee in The City of
New York upon payment by the Holder of such expenses as may be incurred by the
Company and the Trustee in connection therewith and the furnishing of such
evidence and indemnity as the Company and the Trustee may require. Mutilated
Notes must be surrendered before new Notes will be issued.
CERTAIN RESTRICTIVE COVENANTS
The Indenture contains, among others, the covenants described below.
Certain capitalized terms used below are defined herein under the heading
"Certain Definitions."
Limitation on Consolidated Indebtedness. The Indenture provides that so
long as any of the Notes are Outstanding and until the Notes are rated BBB- or
above (or an equivalent rating) by Standard & Poor's and one Other Rating
Agency, at which time the Company will be permanently released from the
provisions of this "Limitation on Consolidated Indebtedness", the Company shall
not, and shall not permit any Restricted Subsidiary to, issue, create, assume,
guarantee, incur or otherwise become liable for (collectively, "issue"),
directly or indirectly, any Indebtedness unless (a) the Consolidated Coverage
Ratio of the Company and its Consolidated Subsidiaries for the four consecutive
fiscal quarters immediately preceding the issuance of such Indebtedness (as
shown by a pro forma consolidated income statement of the Company and its
Consolidated Subsidiaries for the four most recent fiscal quarters ending at
least 30 days prior to the issuance of such Indebtedness after giving effect to
(i) the issuance of such Indebtedness and (if applicable) the application of the
net proceeds thereof to refinance other Indebtedness as if such Indebtedness was
issued at the beginning of the period, (ii) the issuance and retirement of any
other Indebtedness since the first day of the period as if such Indebtedness was
issued or retired at the beginning of the period and (iii) the acquisition of
any company or business acquired by the Company or any Subsidiary of the Company
since the first day of the period (including giving effect to the pro forma
historical earnings of such company or business), including any acquisition
which will be consummated contemporaneously with the issuance of such
Indebtedness, as if in each case such acquisition occurred at the beginning of
the period) exceeds a ratio of 1.6 to 1.0 and (b) immediately after giving
effect to the issuance of such Indebtedness and (if applicable) the application
of the net proceeds thereof to refinance other Indebtedness, the Consolidated
Leverage Ratio shall not exceed a ratio of 0.75 to 1.0.
The foregoing limitation is subject to exceptions for certain revolving
Indebtedness to banks provided that the aggregate outstanding principal amount
of such revolving Indebtedness shall not exceed $1,000,000,000, Indebtedness
outstanding on the date of the original Indenture, certain refinancings and
Indebtedness of the Company to a Subsidiary or by a Subsidiary to the Company.
Limitation upon Restricted Payments. The Indenture provides that, so long
as any of the Notes are Outstanding and until the Notes are rated BBB- or above
(or an equivalent rating) by Standard & Poor's and one Other Rating Agency, at
which time the Company will be permanently released from the provisions of this
"Limitation upon Restricted Payments", the Company will not, and will not permit
any of its Restricted Subsidiaries, directly or indirectly, to, (i) declare or
pay any dividend or make any distribution on the Capital Stock of the Company to
the direct or indirect holders of the Company's Capital Stock (except dividends
or distributions payable solely in Non-Convertible Capital Stock of the Company
or in options, warrants or other rights to purchase such Non-Convertible Capital
Stock and except dividends or distributions payable to the Company or a
Subsidiary) or (ii) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company (any such dividend, distribution, purchase,
redemption, repurchase, other acquisition or retirement, being hereinafter
referred to as a "Restricted Payment") if at any time the Company or such
Subsidiary makes such Restricted Payment: (1) an Event of Default, or an event
that with the lapse of time or
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the giving of notice or both would constitute an Event of Default, shall have
occurred and be continuing (or would result therefrom); or (2) the aggregate
amount of such Restricted Payment and all other Restricted Payments made since
September 30, 1993, would exceed the sum of: (a) $120,000,000 plus 100% of
Consolidated Net Income from September 30, 1993 to the end of the most recent
fiscal quarter ending at least 45 days prior to the date of such Restricted
Payment (or, in case such sum shall be a deficit, minus 100% of the deficit) and
(b) the aggregate Net Proceeds received by the Company from the issue or sale of
or contribution with respect to its Capital Stock after September 30, 1993.
The foregoing provisions will not prohibit: (i) dividends or other
distributions paid in respect of any class of Capital Stock issued by the
Company in connection with the acquisition of any business or assets by the
Company or a Restricted Subsidiary where the dividends or other distributions
with respect to such Capital Stock are payable solely from the net earnings of
such business or assets; (ii) any purchase or redemption of Capital Stock of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Redeemable Stock or
Exchangeable Stock); (iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividends would have
complied with this covenant; or (iv) payments pursuant to the Tax Sharing
Agreement.
Limitations on Certain Liens. The Indenture provides that so long as any of
the Notes are outstanding, the Company shall not create, incur, assume or suffer
to exist any Lien intended to or having the effect of conferring upon a creditor
of the Company or any Subsidiary of the Company a preferential interest upon or
with respect to the Capital Stock of Consumers, Enterprises or CMS NOMECO Oil &
Gas Co. ("NOMECO") without making effective provision whereby the Notes shall be
(so long as such creditor shall be so secured) equally and ratably secured. The
foregoing does not apply to (a) Liens securing Indebtedness of the Company,
provided that on the date such Liens are created, and after giving effect to
such Indebtedness, the aggregate principal amount at maturity of all of the
secured Indebtedness of the Company shall not exceed 10% of Consolidated Assets
on such date or (b) certain liens for taxes, pledges to secure workman's
compensation, other statutory obligations and certain support obligations not to
exceed $30 million at any one time outstanding, certain materialmen's,
mechanic's and similar liens and certain purchase money liens.
The foregoing limitations regarding Consolidated Indebtedness, Restricted
Payments and Liens do not apply to Consumers, the Company's largest Subsidiary.
In addition, they do not currently limit transactions by any of the Company's
other Subsidiaries because none of such Subsidiaries would currently fall under
the definition of Restricted Subsidiaries.
Limitation on Transactions with Affiliates. The Indenture provides that so
long as any of the Notes are Outstanding, the Company may not, directly or
indirectly, conduct any business or enter into any transaction or series of
related transactions (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with an Affiliate unless the terms of
such business, transaction or series of transactions are as favorable to the
Company as terms that could be obtainable at the time for a comparable
transaction or series of related transactions in arm's-length dealings with an
unrelated third person. This covenant shall not apply to (i) any compensation
paid to officers and directors of the Company which has been approved by the
Board of Directors of the Company or (ii) loans to the Company or an Affiliate
pursuant to a global cash management program, which loans mature within one year
from the date thereof.
Limitation on Consolidation, Merger, Sale or Conveyance. The Indenture
provides that so long as any of the Notes are Outstanding the Company shall not
consolidate with or merge into any other person or sell, lease or convey its
property as an entirety or substantially as an entirety unless, upon any such
consolidation, merger, sale, lease or conveyance, and after giving effect
thereto, (i) the person formed by such consolidation or into which the Company
shall have been merged or which shall have acquired such property (the
"Continuing Entity") shall be a corporation and shall have expressly assumed all
of the Company's obligations under the Notes and the Indenture, and (ii) no
Event of Default, or an event that, with the lapse of time or the giving of
notice or both, would become an Event of Default under the Indenture shall have
happened and be continuing, The Indenture also provides that so long as any of
the Notes are Outstanding and until the Notes are rated BBB- or above (or an
equivalent rating) by Standard & Poor's and one Other Rating Agency, at
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which time the Company will be permanently released from such provisions, the
Company shall not consolidate with or merge into any other person or sell, lease
or convey its property as an entirety or substantially as an entirety unless,
upon any such consolidation, merger, sale, lease or conveyance, and after giving
effect thereto, (i) the Consolidated Net Worth of the Continuing Entity shall be
at least equal to the Consolidated Net Worth of the Company immediately prior to
the transaction and (ii) the Continuing Entity would be entitled to incur at
least $1 of additional Indebtedness (other than revolving Indebtedness to banks)
without violating the restriction set forth in "-- Limitations on Consolidated
Indebtedness" above.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made thereto for the full definition of all such terms,
as well as any other terms used herein for which no definition is provided.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Amortization Expense" means, for any period, amounts recognized during
such period as amortization of capital leases, depletion, nuclear fuel, goodwill
and assets classified as intangible assets in accordance with generally accepted
accounting principles.
"Capital Lease Obligations" of a person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; the stated maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty; and
such obligation shall be deemed secured by a Lien on any property or assets to
which such lease relates.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interest in
(however designated) corporate stock, including any Preferred Stock or Letter
Stock.
"Consolidated Assets" means, at any date of determination, the aggregate
assets of the Company and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Consolidated Capital" means, at any date of determination, the sum of (a)
Consolidated Indebtedness, (b) consolidated equity of the common stockholders of
the Company and the Consolidated Subsidiaries, (c) consolidated equity of the
preference stockholders of the Company and the Consolidated Subsidiaries and (d)
consolidated equity of the preferred stockholders of the Company and the
Consolidated Subsidiaries, in each case, determined at such date in accordance
with generally accepted accounting principles.
"Consolidated Coverage Ratio" with respect to any period means the ratio of
(i) the aggregate amount of Operating Cash Flow for such period to (ii) the
aggregate amount of Consolidated Interest Expense for such period.
"Consolidated Indebtedness" means, without duplication, at any date of
determination, the sum of the aggregate Indebtedness of the Company plus the
aggregate debt (as such term is construed in accordance with generally accepted
accounting principles) of the Consolidated Subsidiaries.
"Consolidated Interest Expense" means, for any period, the total interest
expense in respect of Indebtedness of the Company and its Consolidated
Subsidiaries, including, without duplication, (i) interest expense attributable
to capital leases, (ii) amortization of debt discount, (iii) capitalized
interest, (iv) cash
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and noncash interest payments, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs under Interest Rate Protection Agreements (including
amortization of discount) and (vii) interest expense in respect of obligations
of other persons deemed to be Indebtedness of the Company or any Consolidated
Subsidiaries under clause (v) or (vi) of the definition of Indebtedness,
provided, however, that Consolidated Interest Expense shall exclude any costs
otherwise included in interest expense recognized on early retirement of debt.
"Consolidated Leverage Ratio" means, at any date of determination, the
ratio of Consolidated Indebtedness to Consolidated Capital.
"Consolidated Net Income" means, for any period, the net income of the
Company and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income of any person if such person is not a Subsidiary, except that (A) the
Company's equity in the net income of any such person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such person during such period to the Company or a
Consolidated Subsidiary as a dividend or other distribution and (B) the
Company's equity in a net loss of any such person for such period shall be
included in determining such Consolidated Net Income; (ii) any net income of any
person acquired by the Company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; and (iii) any
gain or loss realized upon the sale or other disposition of any property, plant
or equipment of the Company or its Consolidated Subsidiaries which is not sold
or otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any person.
"Consolidated Net Worth" of any person means the total of the amounts shown
on the consolidated balance sheet of such person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of any date selected by such person not more
than 90 days prior to the taking of any action for the purpose of which the
determination is being made (and adjusted for any material events since such
date), as (i) the par or state value of all outstanding Capital Stock plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit, (B) any
amounts attributable to Redeemable Stock and (C) any amounts attributable to
Exchangeable Stock.
"Consolidated Subsidiary" means, any Subsidiary whose accounts are or are
required to be consolidated with the accounts of the Company in accordance with
generally accepted accounting principles.
"Exchangeable Stock" means any Capital Stock of a corporation that is
exchangeable or convertible into another security (other than Capital Stock of
such corporation that is neither Exchangeable Stock nor Redeemable Stock).
"Indebtedness" of any person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible or
liable; (ii) all Capital Lease Obligations of such person; (iii) all obligations
of such person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business); (iv) all obligations of such person for the reimbursement of any
obligor or any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such person of a demand for reimbursement following payment on the
letter of credit); (v) all obligations of the type referred to in clauses (i)
through (iv) of other persons and all dividends of other persons for the payment
of which, in either case, such person is responsible or liable as obligor,
guarantor or otherwise; and (vi) all obligations of the type referred to in
clauses (i) through (v) of the other persons secured by any Lien on any property
or asset of such
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person (whether or not such obligation is assumed by such person), the amount of
such obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Letter Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is intended to
reflect the separate performance of certain of the businesses or operations
conducted by such corporation or any of its subsidiaries.
"Lien" means any lien, mortgage, pledge, security interest, conditional
sale, title retention agreement or other charge or encumbrance of any kind.
"Net Proceeds" means, with respect to any issuance or sale or contribution
in respect of Capital Stock, the aggregate proceeds of such issuance, sale or
contribution, including the fair market value (as determined by the Board of
Directors and net of any associated debt and of any consideration other than
Capital Stock received in return) of property other than cash received by the
Company, net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result thereof, provided, however, that if such fair market
value as determined by the Board of Directors of property other than cash is
greater than $25 million, the value thereof shall be based upon an opinion from
an independent nationally recognized firm experienced in the appraisal or
similar review of similar types of transactions.
"Non-Convertible Capital Stock" means, with respect to any corporation, any
non-convertible Capital Stock of such corporation and any Capital Stock of such
corporation convertible solely into non-convertible Capital Stock other than
Preferred Stock of such corporation; provided, however, that Non-Convertible
Capital Stock shall not include any Redeemable Stock or Exchangeable Stock.
"Operating Cash Flow" means for any period, with respect to the Company and
its Consolidated Subsidiaries, the aggregate amount of Consolidated Net Income
after adding thereto Consolidated Interest Expense (adjusted to include costs
recognized on early retirement of debt), income taxes, depreciation expense,
Amortization Expense, any noncash amortization of debt issuance costs, any
nonrecurring, noncash charges to earnings and any negative accretion
recognition.
"Other Rating Agency" means any one of Duff & Phelps Credit Rating Co.,
Fitch Investors Service, L.P. or Moody's Investors Service, Inc., and any
successor to any of these organizations which is a nationally recognized
statistical rating organization.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Redeemable Stock" means any Capital Stock that by its terms or otherwise
is required to be redeemed prior to the first anniversary of the Maturity of any
Outstanding Notes or is redeemable at the option of the holder thereof at any
time prior to the first anniversary of the Maturity of any Outstanding Notes.
"Restricted Subsidiary" means any Subsidiary (other than Consumers and its
subsidiaries) of the Company which at the time of determination had assets
which, as of the date of the Company's most recent quarterly consolidated
balance sheet, constituted at least 10% of the total Consolidated Assets of the
Company and its Consolidated Subsidiaries and any other Subsidiary which from
time to time is designated a Restricted Subsidiary by the Board of Directors of
the Company, provided that no Subsidiary may be designated a Restricted
Subsidiary if, immediately after giving effect thereto, an Event of Default, or
an event that, with the
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lapse of time or the giving of notice or both, would constitute an Event of
Default, would exist or the Company and its Restricted Subsidiaries could not
incur at least $1 of additional Indebtedness under the restriction set forth
under "-- Limitations on Consolidated Indebtedness" above and (i) any such
Subsidiary so designated as a Restricted Subsidiary must be organized under the
laws of the United States or any state thereof; (ii) more than 80% of the Voting
Stock of such Subsidiary must be owned of record and beneficially by the Company
or a Restricted Subsidiary; (iii) such Restricted Subsidiary must be a
Consolidated Subsidiary; and (iv) such Subsidiary must not therefore have been
designated as a Restricted Subsidiary.
"Standard & Poor's" shall mean Standard & Poor's Rating Group, a division
of McGraw Hill Inc., and any successor thereto which is a nationally recognized
statistical rating organization, or if such entity shall cease to rate the Notes
or shall cease to exist and there shall be no such successor thereto, any other
nationally recognized statistical rating organization selected by the Company
which is acceptable to the Trustee.
"Subsidiary" means any corporation of which more than 50% of the
outstanding Voting Stock is at the time directly or indirectly owned by the
parent company and/or one or more companies which are themselves subsidiaries of
such parent company. "Subsidiary" means a subsidiary of the Company.
"Tax Sharing Agreement" means the Amended and Restated Agreement for the
Allocation of Income Tax Liabilities and Benefits, dated as of January 1, 1994,
as amended or supplemented from time to time, by and among the Company, each of
the members of the Consolidated Group (as defined therein), and each of the
corporations that become members of the Consolidated Group.
"Voting Stock" means securities of any class or classes the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for
corporate directors (or persons performing similar functions).
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture with respect to
the Notes: (a) default in the payment of interest upon any Note when such
interest becomes due and payable and continuance of such default for 30 days;
(b) default in the payment of all or any part of the principal of (or premium,
if any, on) any Note when it becomes due and payable at its Maturity; (c)
default in the performance of any covenants of the Company in the Indenture,
continued for 60 days after written notice as provided in the Indenture; (d) a
default or event of default in respect of any Indebtedness of the Company shall
occur which results in the acceleration of $25,000,000 or more of the principal
amount of such Indebtedness or Indebtedness of the Company in excess of
$25,000,000 shall not be paid at maturity thereof, which default shall not have
been waived by the holder or holders of such Indebtedness within 30 days of such
default; (e) entry of final judgments against the Company aggregating in excess
of $25,000,000 which remain undischarged or unbonded for a period (during which
execution shall not be effectively stayed) of 60 days; (f) certain events in
bankruptcy, insolvency or reorganization involving the Company. Subject to the
provisions of the Indenture relating to the duties of the Trustee in case an
Event of Default shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders of Notes, unless such Holders shall
have offered to the Trustee reasonable indemnity.
If an Event of Default with respect to the Notes shall occur and be
continuing, (i) either the Trustee or the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes may accelerate the maturity
of the Outstanding Notes and (ii) the Holders of not less than a majority of the
aggregate outstanding principal amount of the Outstanding Notes, may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee; provided,
however, that after any such acceleration, but before a judgment or decree for
payment of the money due has been obtained, the Holders of not less than a
majority in aggregate principal amount of Outstanding Notes may, under certain
circumstances, rescind and annul such acceleration and its consequences if all
Events of Default, other than the non-payment of accelerated principal, have
been cured or waived as provided in the Indenture. For information as to waiver
of defaults, see "Modification of the Indenture."
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No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
satisfactory indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted by a Holder of
a Note for the enforcement of payment of the principal of or interest on such
Note on or after the respective due dates expressed in such Note.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance.
MODIFICATION OF THE INDENTURE
Modification and amendment of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities affected thereby,
provided that no such modification or amendment may, without the consent of the
Holder of each Outstanding Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal or interest on,
any Outstanding Security, or reduce the principal amount thereof or rate of
interest thereon, or change the Redemption Price applicable to any Security; (b)
change the place or currency of payment of principal of or premium, if any, or
interest on any Security; (c) impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity (or in the case
of redemption or repayment at the option of the Holder, on or after the
Redemption Date or Repayment Date) thereof; (d) reduce the above-stated
percentage of Outstanding Securities necessary to modify or amend the Indenture
or the consent of whose Holders is required for any waiver or reduce the
percentage required for quorum or voting; or (e) modify the foregoing
requirements. The Holders of at least a majority in aggregate principal amount
of the Outstanding Securities of a series may waive past defaults with respect
to such series except payment defaults and the Holders of at least a majority in
aggregate principal amount of all Outstanding Securities may waive compliance by
the Company with certain covenants.
Modification and amendment of the Indenture may be made by the Company and
the Trustee without the consent of any Holder, for any of the following
purposes: (a) to evidence the succession of another corporation to the Company;
(b) to add to the covenants of the Company for the benefit of the Holders of all
or any series of Securities; (c) to add additional Events of Default for the
benefit of the Holders of all or any series of Securities; (d) to change any
provision of the Indenture to facilitate the issuance of Securities in bearer
form; (e) to change or eliminate any provision of the Indenture, provided no
Security Outstanding of any series is entitled to the benefit of such provision;
(f) to secure the Securities; (g) to establish the form or terms of Securities;
(h) to provide for the acceptance of appointment by a successor Trustee; (i) to
cure any ambiguity, defect or inconsistency in the Indenture provided such
action does not materially adversely affect the interests of Holders of
Securities or (j) to supplement provisions of the Indenture to permit or
facilitate the defeasance or discharge of a series of Securities provided that
such action shall not materially adversely affect the interests of Holders of
Securities of such Series.
DEFEASANCE, COVENANT DEFEASANCE AND DISCHARGE
The Indenture provides that the Company may elect (A) to defease and be
discharged from all of its obligations with respect to the Securities or any
series thereof (except for the obligations to register the transfer or exchange
of such Securities, to replace temporary or mutilated, destroyed, lost or stolen
Securities, to maintain an office or agency in respect of such Securities, to
hold monies for repayment in trust and certain other obligations), and that the
provisions of the Indenture will no longer be in effect with respect to such
Securities (except as aforesaid) ("defeasance") or (B) to be released from its
covenants set forth in the Indenture with respect to, among other things,
limitation on Consolidated Indebtedness, limitation on Restricted Payments,
limitation on transactions with Affiliates, limitation on Liens, limitation on
consolidation, merger, sale or conveyance, repurchase obligations on Change in
Control, ("covenant defeasance") with
23
<PAGE> 25
respect to such Securities, upon in the case of (A) or (B) the deposit with the
Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or U.S. Government Obligations which, without any reinvestment, but through
the scheduled payment of principal and interest in accordance with their terms,
will provide money in an amount sufficient to pay the principal of (and premium,
if any) and interest on the Notes on the scheduled due dates therefor. Such a
trust may only be established, if, among other things, (x) such defeasance or
covenant defeasance will not result (whether immediately or with notice or lapse
of time or both) in a breach or violation of, or constitute a default under, any
material agreement to which the Company is party or by which it is bound and (y)
the Company has delivered to the Trustee an Opinion of Counsel (as specified in
the Indenture) to the effect that the Holders of such Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred. Such
Opinion of Counsel, in the case of defeasance under clause (A) above, must refer
to and be based upon a ruling of the Internal Revenue Service or a change in
applicable federal income tax law occurring after the date of the Indenture.
In the event the Company exercises its option to effect a covenant
defeasance with respect to the Securities of any series as described in the
preceding paragraph and such Securities of such series are declared due and
payable because of the occurrence of any Event of Default (other than an Event
of Default caused by failure to comply with the covenants that are defeased),
and the amount of money and U.S. Government Obligations on deposit with the
Trustee would be insufficient to pay amounts due on the Securities of such
series at the time of the acceleration resulting from such Event of Default, the
Company will remain liable for such payments.
The Company may obtain a discharge of the Indenture with respect to all
Securities then Outstanding (except for certain obligations to register the
transfer or exchange of such Securities, to replace temporary or mutilated,
destroyed, lost or stolen Securities, to maintain an office or agency in respect
of such Securities, to hold monies for repayment in trust and certain other
obligations) when all Securities theretofore authenticated and delivered have,
with certain exceptions, been delivered to the Trustee for cancellation or by
irrevocably depositing in trust with the Trustee money, and/or U.S. Government
Obligations which, without any reinvestment but through the scheduled payment of
principal and interest in accordance with their terms, will provide money in an
amount sufficient to pay all the principal of (and premium, if any) and interest
on the Securities on the Stated Maturities or redemption dates thereof, provided
that such Securities are by their terms due and payable, or are to be called for
redemption, within one year and the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such discharge and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
discharge had not occurred.
THE TRUSTEE UNDER THE INDENTURE
The Chase Manhattan Bank is the Trustee under the Indenture. The Company
maintains banking and borrowing relations with The Chase Manhattan Bank.
24
<PAGE> 26
PLAN OF DISTRIBUTION
The Agents will be J. W. Korth & Company and such other agents as the
Company may designate from time to time. The names of any additional Agents will
be disclosed in a supplement to this Prospectus. Subject to the terms and
conditions set forth in a distribution agreement (the "Distribution Agreement")
among the Company and the Agents, offers to purchase the Notes will be solicited
from time to time by the Agents on behalf of the Company, and the Notes may be
offered on a continuous basis by the Company through the Agents. Each Agent will
agree to use its reasonable best efforts to solicit purchases of the Notes.
Following such solicitation, the Agents, severally and not jointly, may purchase
Notes from the Company, for their own account, from time to time. Notes acquired
by any Agent will be offered either directly to the public or to certain dealers
that will then reoffer the Notes to the public. Sales by an Agent to any dealer
will be made pursuant to an agreement between such Agent and dealer (each a
"Dealer Agreement").
A Pricing Supplement with respect to each offering of Notes by the Company
will set forth, among other things, the name of each Agent participating in the
distribution of such Notes, the price to public of such Notes and the proceeds
to the Company from such sale, any underwriting discounts or commissions and
other items constituting Agent's compensation, and any discounts or concessions
allowed, reallowed or paid to dealers. After any initial public offering of
Notes pursuant to a Pricing Supplement, the price to the public of such Notes,
and the related underwriting discount and selling concession, may be changed.
The Agent has advised the Company that all initial offers by any Agents and
by any dealers, unless otherwise set forth in the applicable Pricing Supplement,
are proposed to be made at prices equal to 100% of the principal amount of the
Notes being sold, less, in the case of an offer by an Agent to a dealer, a price
concession not in excess of the amount set forth in the applicable Pricing
Supplement. Offers and sales by Agents or dealers subsequent to the initial
offering may be at varying prices determined at the time of sale.
The Notes will not be listed on any securities exchange and will not be
traded, when issued, on any other established trading market. Any Agent may make
a market in the Notes, but no Agent is obligated to do so. Any market-making so
undertaken may be discontinued at any time without notice. There can thus be no
assurance that a secondary market for the Notes will exist or as to the
liquidity or continuation of any such market. Moreover, the Company reserves the
right to withdraw, cancel or modify the offer made hereby at any time without
notice, and any such withdrawal, cancellation or modification also may adversely
affect the liquidity of the Notes.
In order to facilitate the offering of the Notes, any Agent may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, any Agent may overallot in connection with the offering,
creating a short position in the Notes for its own account. In addition, to
cover overallotments or to stabilize the price of the Notes, any Agent may bid
for, and purchase, the Notes in the open market. Any of these activities may
stabilize or maintain the market price of the Notes above independent market
levels. The Agents are not required to engage in these activities, and may end
any of these activities at any time.
The Distribution Agreement provides, and the terms of each Dealer Agreement
will provide, that the obligations of any Agent or dealer to purchase Notes will
be subject to certain conditions precedent. The nature of the Agent's
obligations under the Distribution Agreement is such that an Agent will be
obligated to purchase all of the Notes offered by any Pricing Supplement naming
such Agent if any of such Notes are purchased. The Company, or any Agent with
respect to itself, may terminate the Distribution Agreement at any time upon
written notice.
The Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act"), or to contribute to payments that the Agents may be required
to make in respect thereof.
25
<PAGE> 27
LEGAL OPINIONS
Opinions as to the legality of the Notes will be rendered for CMS Energy by
Michael D. VanHemert, Assistant General Counsel for CMS Energy. Certain legal
matters with respect to the Notes will be passed upon by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, N.Y., counsel for the Agents. Skadden, Arps,
Slate, Meagher & Flom LLP provides legal services to an affiliate of CMS Energy
and has, from time to time, provided legal services to CMS Energy. As of March
31, 1998, an attorney currently employed by Skadden, Arps, Slate, Meagher & Flom
LLP, and formerly employed by CMS Energy, owned approximately 50,326 shares of
CMS Energy Common Stock, $.01 par value ("CMS Energy Common Stock"), 2,000
shares of CMS Energy Class G Common Stock, no par value, options to acquire
approximately 142,000 shares of CMS Energy Common Stock, 10 shares of Consumers
$4.50 Series Preferred Stock, $100 par value, and $50,000 aggregate principal
amount of certain debt securities issued by CMS Energy. As of March 31, 1998,
Mr. VanHemert beneficially owned approximately 2,750 shares of CMS Energy Common
Stock.
EXPERTS
The consolidated financial statements and schedules 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 period ended March 31, 1998, Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report thereon states 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.
26
<PAGE> 28
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR ANY PRICING SUPPLEMENT IN CONNECTION WITH THE OFFERINGS COVERED BY
THIS PROSPECTUS AND ANY PRICING SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY AGENT. NEITHER THIS PROSPECTUS NOR ANY PRICING SUPPLEMENT
CONSTITUTES AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES TO WHICH THIS PROSPECTUS AND ANY PRICING SUPPLEMENT RELATE IN ANY
JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PRICING SUPPLEMENT
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Prospectus Summary................... 4
The Company.......................... 7
Use of Proceeds...................... 8
Ratio of Earnings to Fixed Charges... 8
Description of General Term
Notes(R)........................... 8
Plan of Distribution................. 25
Legal Opinions....................... 26
Experts.............................. 26
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
$400,000,000
CMS ENERGY
CORPORATION
GENERAL TERM NOTES(R),
SERIES E
------------------------
PROSPECTUS
AUGUST 6, 1998
------------------------
J.W. KORTH & COMPANY
------------------------------------------------------
------------------------------------------------------
<PAGE> 29
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
ESTIMATED
AMOUNT
---------
<S> <C>
Filing fee -- Securities and Exchange Commission............ $118,000
Services of Trustee (including counsel)..................... 15,000
Printing.................................................... 15,000
Rating Agency fee........................................... 40,000
Services of counsel......................................... 20,000
Services of independent public accountants, Arthur Andersen
LLP....................................................... 11,000
Blue Sky fees and expenses.................................. 4,500
Miscellaneous............................................... 15,000
--------
Total:................................................. $239,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following resolution was adopted by the Board of Directors of CMS Energy on
May 6, 1987:
RESOLVED: That effective March 1, 1987 the Corporation shall indemnify to
the full extent permitted by law every person (including the estate, heirs and
legal representatives of such person in the event of the decease, incompetency,
insolvency or bankruptcy of such person) who is or was a director, officer,
partner, trustee, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against all liability, costs, expenses, including attorneys'
fees, judgments, penalties, fines and amounts paid in settlement, incurred by or
imposed upon the person in connection with or resulting from any claim or any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative, investigative or of whatever nature, arising from the
person's service or capacity as, or by reason of the fact that the person is or
was, a director, officer, partner, trustee, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
partner, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. Such right of indemnification shall not be
deemed exclusive of any other rights to which the person may be entitled under
statute, bylaw, agreement, vote of shareholders or otherwise.
CMS Energy's Bylaws provide:
The Corporation may purchase and maintain liability insurance, to the full
extent permitted by law, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity.
Article VIII of the Articles of Incorporation reads:
A director shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach of duty as a director except (i)
for a breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for a violation of
Section 551(l) of the Michigan Business Corporation Act, and (iv) any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article VIII, and no modification to its
provisions by law, shall apply to, or have any effect upon, the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment, repeal or
modification.
II-1
<PAGE> 30
Article IX of the Articles of Incorporation reads:
Each director and each officer of the Corporation shall be indemnified by
the Corporation to the fullest extent permitted by law against expenses
(including attorneys' fees), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with the
defense of any proceeding in which he or she was or is a party or is threatened
to be made a party by reason of being or having been a director or an officer of
the Corporation. Such right of indemnification is not exclusive of any other
rights to which such director or officer may be entitled under any now or
hereafter existing statute, any other provision of these Articles, bylaw,
agreement, vote of shareholders or otherwise. If the Business Corporation Act of
the State of Michigan is amended after approval by the shareholders of this
Article IX to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the Business Corporation Act of the State of Michigan, as so amended. Any repeal
or modification of this Article IX by the shareholders of the Corporation shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
Sections 561 through 571 of the Michigan Business Corporation Act provide
CMS Energy with the power to indemnify directors, officers, employees and agents
against certain expenses and payments, and to purchase and maintain insurance on
behalf of directors, officers, employees and agents.
Officers and directors are covered within specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of CMS Energy or of CMS Energy's subsidiaries and
CMS Energy's officers and directors are indemnified against such losses by
reason of their being or having been directors or officers of another
corporation, partnership, joint venture, trust or other enterprise at CMS
Energy's request. In addition, CMS Energy has indemnified each of its present
directors by contracts that contain affirmative provisions essentially similar
to those in sections 561 through 571 of the Michigan Business Corporation Act
summarized above.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
(1) -- Form of Distribution Agreement.
(4)(a)(i) -- Indenture dated as of January 15, 1994 between CMS Energy
and The Chase Manhattan Bank, as Trustee, relating to the
Notes. (Designated in CMS Energy's Form 8-K dated March
29, 1994, File No. 1-9513, as Exhibit (4)(a).)
(4)(a)(ii) -- First Supplemental Indenture dated as of January 20, 1994
between CMS Energy and The Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated March 29,
1994, File No. 1-9513, as Exhibit (4)(b).)
(4)(a)(iii) -- Second Supplemental Indenture dated as of March 19, 1996
between CMS Energy and The Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form 10-Q for the quarter
ended March 31, 1996, File No. 9-9513, as Exhibit (4).)
(4)(a)(iv) -- Third Supplemental Indenture dated as of March 17, 1997
between CMS Energy and The Chase Manhattan Bank, as Trustee
(Designated in CMS Energy's Form 8-K dated May 1, 1997,
File No. 9-9513, as Exhibit (4)(a)(iv).)
(4)(a)(v) -- Fourth Supplemental Indenture dated as of September 17,
1997 between CMS Energy and The Chase Manhattan Bank, as
Trustee (Designated in CMS Energy's Form S-3 dated
September 22, 1997, File No. 333-36115, as Exhibit
((4)(d).)
(4)(a)(vi) -- Form of Fifth Supplemental Indenture.
(5) -- Opinion of Counsel.
(12) -- Statement regarding computation of ratio of earnings to
fixed charges.
(15) -- Letter regarding unaudited interim financial information.
(23)(a) -- Consent of Counsel is contained in Exhibit 5 hereto.
</TABLE>
II-2
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C>
(23)(b) -- Consent of Arthur Andersen LLP.
(24) -- Powers of Attorney.
(25) -- Form T-1, Statement of Eligibility of Trustee.
</TABLE>
Exhibits listed above which have been filed with the Securities and
Exchange Commission are incorporated herein by reference with the same effect as
if filed with this registration statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; (iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that (i) and (ii) do not apply if the registration
statement is on Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dearborn, and State of Michigan, on the 5th day of
August, 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 on the 5th day of August, 1998.
<TABLE>
<CAPTION>
NAME
----
<C> <S>
(i) Principal executive officer:
/s/ WILLIAM T. MCCORMICK, JR. Chairman of the Board Chief Executive Officer and
- --------------------------------------------- Director
(William T. McCormick, Jr.)
(ii) Principal financial officer:
/s/ ALAN M. WRIGHT Senior Vice President and Chief Financial Officer
- ---------------------------------------------
(Alan M. Wright)
(iii) Controller or principal accounting officer:
/s/ PRESTON D. HOPPER Senior Vice President, Corporate Performance and
- --------------------------------------------- Chief Accounting Officer
(Preston D. Hopper)
Director
- ---------------------------------------------
(Kenneth L. Way)
* Director
- ---------------------------------------------
(John M. Deutch)
* Director
- ---------------------------------------------
(James J. Duderstadt)
* Director
- ---------------------------------------------
(Kathleen R. Flaherty)
* Director
- ---------------------------------------------
(Victor J. Fryling)
* Director
- ---------------------------------------------
(Earl D. Holton)
* Director
- ---------------------------------------------
(William U. Parfet)
* Director
- ---------------------------------------------
(Percy A. Pierre)
* Director
- ---------------------------------------------
(Kenneth Whipple)
* Director
- ---------------------------------------------
(John B. Yasinsky)
*By /s/ ALAN M. WRIGHT
----------------------------------------
Alan M. Wright
Attorney-in-fact
</TABLE>
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(1) -- Form of Distribution Agreement.
(4)(a)(i) -- Indenture dated as of January 15, 1994 between CMS Energy
and The Chase Manhattan Bank, as Trustee, relating to the
Notes. (Designated in CMS Energy's Form 8-K dated March 29,
1994, File No. 1-9513, as Exhibit (4)(a).)
(4)(a)(ii) -- First Supplemental Indenture dated as of January 20, 1994
between CMS Energy and The Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form 8-K dated March 29, 1994,
File No. 1-9513, as Exhibit (4)(b).)
(4)(a)(iii) -- Second Supplemental Indenture dated as of March 19, 1996
between CMS Energy and The Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form 10-Q for the quarter ended
March 31, 1996, File No. 9-9513, as Exhibit (4).)
(4)(a)(iv) -- Third Supplemental Indenture dated as of March 17, 1997
between CMS Energy and The Chase Manhattan Bank, as Trustee
(Designated in CMS Energy's Form 8-K dated May 1, 1997, File
No. 9-9513, as Exhibit (4)(a)(iv).)
(4)(a)(v) -- Fourth Supplemental Indenture dated as of September 17, 1997
between CMS Energy and The Chase Manhattan Bank, as Trustee
(Designated in CMS Energy's Form S-3 dated September 22,
1997, File No. 333-36115, as Exhibit ((4)(d).)
(4)(a)(vi) -- Form of Fifth Supplemental Indenture.
(5) -- Opinion of Counsel.
(12) -- Statement regarding computation of ratio of earnings to
fixed charges.
(15) -- Letter regarding unaudited interim financial information.
(23)(a) -- Consent of Counsel is contained in Exhibit 5 hereto.
(23)(b) -- Consent of Arthur Andersen LLP.
(24) -- Powers of Attorney.
(25) -- Form T-1, Statement of Eligibility of Trustee.
</TABLE>
<PAGE> 1
EXHIBIT 1
CMS ENERGY CORPORATION
Skadden, Arps, Slate, Meagher & Flom LLP
$400,000,000
GENERAL TERM NOTES(R), SERIES E
DUE FROM NINE MONTHS TO TWENTY-FIVE YEARS FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
August ___, 1998
J. W. KORTH & COMPANY
32841 Middlebelt Road, Suite 400
Farmington Hills, Michigan 48334
Dear Sirs:
CMS Energy Corporation, a Michigan corporation (the "Company"),
confirms its agreement with you (the "Agent," and together with such additional
agents as may be named from time to time, the "Agents") with respect to the
issue and sale by the Company of up to $400,000,000 aggregate principal amount
of its General Term Notes(R), Series E (the "Notes"). The Notes are to be issued
under an Indenture, dated as of January 15, 1994 as supplemented by a First
Supplemental Indenture dated as of January 20, 1994, a Second Supplemental
Indenture dated as of March 19, 1996, a Third Supplemental Indenture dated as of
March 17, 1997 a Fourth Supplemental Indenture dated as of September 17, 1997
and a Fifth Supplemental Indenture dated as of August __, 1998 (such Indenture,
as so supplemented, the "Indenture"), between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"). The Notes will have the maturities,
annual interest rates, redemption provisions, if any, and other terms specified
in a pricing supplement to the Prospectus referred to below.
- ----------------------------
(R) Registered servicemark of J. W. Korth & Company
<PAGE> 2
Subject to the terms and conditions stated herein, the Company hereby
(i) appoints J. W. Korth & Company as the agent of the Company for the purpose
of soliciting and receiving offers to purchase the Notes, (ii) reserves the
right, from time to time, to appoint additional agents for the purpose of
soliciting and receiving offers to purchase the Notes, provided that (a) the
Company shall furnish the Agents with reasonable advance notification of the
addition of any such agent, (b) such additional agent shall be acceptable to J.
W. Korth & Company and (c) each such additional agent shall be required to
become a party to this agreement and undertake the obligations of an Agent
hereunder pursuant to an Additional Agent Appointment Agreement substantially in
the form of Exhibit E hereto, and (iii) agrees that, whenever the Company
determines to sell Notes pursuant to this Agreement, such Notes shall be sold
pursuant to a supplemental agreement between the Company and J. W. Korth &
Company (the "Purchasing Agent") with the Purchasing Agent purchasing such Notes
as principal; the supplemental agreement will also specify the amount of Notes
being sold which have been solicited by each Agent. Each such supplemental
agreement (which shall be either oral, to be confirmed in writing, or written,
and in either case the written confirmation of an oral agreement or the written
supplemental agreement shall be substantially in the form of Exhibit B hereto
and may take the form of an exchange of any standard form of written
telecommunication between the Purchasing Agent and the Company) is herein
referred to as a "Terms Agreement." Any such Terms Agreement may be signed on
behalf of the Company by such persons as are authorized from time to time by the
Board of Directors of the Company to bind the Company in this regard. Under no
circumstances will any Agent be obligated to purchase, or the Company be
obligated to sell, any Notes, unless a Terms Agreement has been entered into
between the Company and the Purchasing Agent with respect to such Notes.
1. Solicitations by the Agents of Offers To Purchase; Purchases
by the Purchasing Agent of Notes as Principal.
Following the Commencement Date (defined below), the Company shall
notify the Agents from time to time as to the commencement of a period during
which the Notes may be offered and sold by the Agents. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Agents will use their respective reasonable
best efforts to solicit offers to purchase the Notes upon the terms and
conditions set forth in the Prospectus as then amended and supplemented and as
contemplated by the Note Administrative Procedures attached hereto as Exhibit A
("the Procedures").
The Agents are authorized to solicit orders for the Notes only in
denominations of $1,000 or any amount in excess thereof which is a multiple of
$1,000 and, unless otherwise agreed to by the Company, at a purchase price equal
to 100% of their principal amount. In soliciting offers to purchase the Notes
hereunder, the Agents are acting solely as agents for the Company, and not as
principals. Each Agent shall communicate to the Company, orally or in writing,
each reasonable offer or indication of interest received by it to purchase
Notes. Each Agent shall have the right to reject, in its discretion reasonably
exercised, any offer received by it to purchase the
2
<PAGE> 3
Notes, in whole or in part, and any such rejection shall not be deemed a breach
of its agreements contained herein. The Company shall have the right to accept
offers to purchase the Notes and may reject any such offer in whole or in part.
The obligations of the Agents under this Agreement shall be several and not
joint.
Each acceptance by the Company of an offer to purchase Notes shall be
in accordance with the terms of this Agreement and a Terms Agreement which will
provide for the sale of such Notes to, and the purchase and reoffering thereof
by, the Purchasing Agent as principal. The commitment of the Purchasing Agent to
purchase Notes pursuant to any Terms Agreement (and any contemporaneous purchase
of Notes by an Agent from the Purchasing Agent) shall be deemed to have been
made on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
Each Terms Agreement shall describe the Notes to be purchased pursuant thereto
by the Purchasing Agent as principal, specify the principal amount of such
Notes, the price to be paid to the Company for such Notes, the rate at which
interest will be paid on the Notes, the date and time of delivery of payment for
such Notes (the "Settlement Date"), whether the Notes provide for a survivor's
option or for optional redemption by the Company and on what terms and
conditions, the place of delivery of the Notes and payment therefor, the method
of payment and any requirements for the delivery of the opinions of counsel, the
certificates from the Company, and the letter from Arthur Andersen LLP, pursuant
to Section 6(B)(b). The Agents may reallow any portion of the commission payable
pursuant hereto to dealers or purchasers in connection with the offer and sale
of any Notes.
The Company agrees to pay to the Purchasing Agent, as consideration for
soliciting the sale of the Notes pursuant to a Terms Agreement, a commission in
the form of a discount equal to a percentage not greater than 4%, which
percentage shall be set forth in the applicable Terms Agreement, of the
principal amount of each Note sold by the Company; the Purchasing Agent and the
other Agents will share such commission in such proportion as they may agree.
Delivery of the certificates for Notes pursuant to any Terms Agreement
shall be made as agreed to between the Company and the Purchasing Agent as
specified in the Terms Agreement, not later than the Settlement Date set forth
in such Terms Agreement, against payment of funds to the Company in the net
amount due to the Company for such Notes by the method and in the form specified
in the Terms Agreement.
The Agents and the Company agree to perform the respective duties and
obligations specifically provided to be performed by them in the Procedures. The
Procedures may be amended only by written agreement of the Company and the
Agents.
The documents required to be delivered by Section 6 of this Agreement
shall be delivered at the office of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the Agents, 919 Third
3
<PAGE> 4
Avenue, New York, NY 10022, on such date as may be agreed to by the Company and
the Agents (the "Commencement Date").
2. Other Activities of Agents. The Company acknowledges that nothing in
this Agreement shall prohibit any Agent from (i) acting as broker for the sale
of Notes by customers other than the Company, (ii) soliciting the sale of Notes
through such Agent as broker for a seller, soliciting the sale of Notes to such
Agent as principal and soliciting offers to buy Notes, (iii) purchasing Notes in
the secondary market, and (iv) offering and selling as principal for its own
account Notes which such Agent has purchased.
3. Representations and Warranties. The Company represents and warrants
to, and agrees with, the Agents as of the date hereof, as of the Commencement
Date and as of the times referred to in Section 4(g) hereof (the Commencement
Date and each such time hereinafter sometimes referred to as a "Representation
Date"), that:
(a) A registration statement (File No. _________) in respect
of $400,000,000 aggregate principal amount of debt securities of the
Company, including the Notes, has been filed with the Securities and
Exchange Commission (the "Commission"); such registration statement and
any post-effective amendment thereto, each in the form heretofore
delivered or to be delivered to the Agents, including all documents
incorporated by reference in the prospectus contained therein, have
been declared effective by the Commission in such form, and no other
document with respect to such registration statement or other document
incorporated by reference therein has heretofore been filed or
transmitted for filing with the Commission; and no stop order
suspending the effectiveness of such registration statement has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Securities Act of 1933, as amended (the "Act"),
being hereinafter called a "Preliminary Prospectus"); such registration
statement, as amended at the time it became effective, including all
exhibits thereto and the documents incorporated by reference therein at
the time such registration statement became effective, being
hereinafter called the "Registration Statement"; the prospectus,
including any prospectus supplement relating to the Notes, in the form
in which it has most recently been filed, or transmitted for filing,
with the Commission on or prior to the date of this Agreement, being
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
the applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the
Prospectus, including any supplement to the Prospectus that sets forth
only the terms of a particular issue of the Notes and the manner of
distribution thereof (a "Pricing Supplement"), shall be deemed to refer
to and
4
<PAGE> 5
include any documents filed after the date of such Preliminary
Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated
by reference in such Preliminary Prospectus or Prospectus, as the case
may be; any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of the
Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement; and any
reference to the Prospectus as amended or supplemented shall be deemed
to refer to and include the Prospectus as amended or supplemented
(including the applicable Pricing Supplement) in relation to the Notes
sold pursuant to this Agreement, in the form in which it is filed, or
transmitted for filing, with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 4(a)(ii) hereof, including any
documents incorporated by reference therein as of the date of such
filing or transmission);
(b) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission (or, if an amendment with
respect to any such document was filed, when such amendment was filed),
conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents, when they were
filed, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Agent expressly
for use in the Prospectus as amended or supplemented;
(c) The Registration Statement and the Prospectus conform, and
any amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements
of the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission
thereunder, and the Registration Statement, as of its effective date,
and the Prospectus, as of its filing date, do not, and any amendments
or supplements to the Registration Statement or the Prospectus will
not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading; provided, however,
5
<PAGE> 6
that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Agent expressly for use in
the Registration Statement or the Prospectus as amended or supplemented
or any such statements in or omissions from that part of the
Registration Statement that constitutes the Statement of Eligibility on
Form T-1 of the Trustee under the Trust Indenture Act;
(d) Since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus there has not
been any material adverse change in the business, properties, financial
condition or results of operations of the Company and its consolidated
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, as amended or supplemented;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan, with corporate power and corporate authority to own or
lease its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, in which the failure to so qualify and be in
good standing would materially and adversely affect the business,
financial condition or results of operations of the Company and its
consolidated subsidiaries, taken as a whole;
(f) The filing of the Registration Statement with respect to
the Notes has, and the issuance and sale of the Notes pursuant to this
Agreement and any Terms Agreement have, been duly authorized by the
Company, and, when Notes are authenticated and issued pursuant to the
Indenture and delivered against payment of the consideration as
specified in this Agreement and any applicable Terms Agreement, such
Notes will have been duly executed, issued and delivered by the Company
and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles and will be entitled to the benefits
provided by the Indenture; the Indenture has been duly authorized,
executed and delivered by the Company and is duly qualified under the
Trust Indenture Act and the Indenture constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture conforms,
and the Notes will conform, in all material respects, to the
descriptions thereof contained in the Prospectus as amended or
supplemented to relate to each issuance of Notes;
(g) The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture, this
Agreement and any Terms
6
<PAGE> 7
Agreement, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its significant subsidiaries
(as defined in Rule 405 as promulgated by the Commission under the Act)
is a party or by which the Company or any of its significant
subsidiaries is bound, or to which any of the property or assets of the
Company or any of its significant subsidiaries is subject, that is
material to the business, properties, financial condition or results of
operations of the Company and its consolidated subsidiaries, taken as a
whole, nor will such action result in any violation of the provisions
of the Articles of Incorporation, as amended, or the By-laws of the
Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its significant subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Notes or the consummation by the Company
of the other transactions contemplated by this Agreement or any Terms
Agreement or the Indenture, except such as have been, or will have been
prior to the Commencement Date, obtained under the Act and the Trust
Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or blue sky laws in connection with the solicitation by any
Agent of offers to purchase Notes and with purchases of Notes by such
Agent as principal;
(h) Other than as set forth or contemplated in the Prospectus,
as amended or supplemented, there are no legal or governmental
proceedings pending to which the Company or any of its significant
subsidiaries is a party or of which any property of the Company or any
of its significant subsidiaries is the subject with respect to which
there is a reasonable likelihood of one or more determinations which
would individually or in the aggregate have a material adverse effect
on the business, properties, financial condition or results of
operations of the Company and its consolidated subsidiaries, taken as a
whole; and, to the best of the Company's knowledge, no such proceedings
are threatened by governmental authorities or others;
(i) The Company is not subject to regulation under the
Investment Company Act of 1940, as amended;
(j) The Company will apply the net proceeds from the sale of
Notes for the purpose set forth in the Prospectus under the caption
"Use of Proceeds";
(k) To the best of the Company's knowledge, Arthur Andersen
LLP, who have audited certain financial statements of the Company
incorporated by reference in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder;
7
<PAGE> 8
(l) Immediately after the sale of Notes by the Company
hereunder and under any Terms Agreement, the aggregate amount of Notes
which shall have been issued and sold by the Company hereunder and
under any Terms Agreement and of any debt securities of the Company
(other than such Notes) that shall have been issued and sold pursuant
to the Registration Statement will not exceed the amount of debt
securities registered under the Registration Statement;
(m) Other than as set forth or contemplated in the Prospectus,
as amended or supplemented, the Company owns or possesses all permits,
licenses and other authorizations necessary to own, lease or use its
properties and assets and to conduct its business in the manner
described in the Prospectus, except to the extent that the failure to
own or possess any such permit, license or other authorization would
not have a material adverse effect on the business, properties,
financial condition or results of operations of the Company and its
consolidated subsidiaries, taken as a whole, and the Company has not
received any notice of proceedings relating to the revocation or
modification of any such permit, license or other authorization which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, might reasonably be expected to have a material
adverse effect upon the business, properties, financial condition or
results of operations of the Company and its consolidated subsidiaries,
taken as a whole; and
(n) Other than as set forth in the Prospectus as amended or
supplemented, no event or condition exists that constitutes, or with
the giving of notice or lapse of time or both would constitute, a
default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any of its
significant subsidiaries or under any indenture, mortgage, loan
agreement or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed
by the Company or any of its significant subsidiaries, if such default
would result in such indebtedness in an aggregate principal amount
exceeding $25,000,000 becoming or being declared due and payable prior
to the date on which it would otherwise become due and payable.
4. Covenants of the Company. The Company agrees with each of the
Agents:
(a) (i) To make no amendment or supplement to the Registration
Statement or the Prospectus after the date of any Terms Agreement by
the Purchasing Agent to purchase Notes as principal and prior to the
related Settlement Date prior to having afforded each Agent a
reasonable opportunity to review and comment on it and having
reasonably considered any such comments; provided however, that, if any
amendment or supplement to the Registration Statement or the Prospectus
shall be transmitted for filing or filed after the date of any Terms
Agreement between the Company and the Purchasing Agent for the purchase
of Notes and prior to the related Settlement Date, the Purchasing Agent
may unilaterally terminate such Terms Agreement and upon any such
termination no Agent shall have any further obligation under such Terms
Agreement; (ii) to prepare, with
8
<PAGE> 9
respect to any Notes to be sold through or to such Agent pursuant to
this Agreement, a Pricing Supplement with respect to such Notes in a
form previously approved by such Agent and to file such Pricing
Supplement pursuant to Rule 424(b) under the Act within the applicable
time period prescribed for such filing by such Rule; (iii) to make no
amendment or supplement to the Registration Statement or Prospectus,
other than any Pricing Supplement, at any time prior to having afforded
each Agent a reasonable opportunity to review and promptly comment on
it and having reasonably considered any such comments; (iv) to file
timely all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (all such reports
and proxy or information statements which are so filed and which have
not been subsequently superseded shall be referred to as the
"Incorporated Documents") for so long as the delivery of a prospectus
is required in connection with the offering or sale of the Notes, and
during such period to advise such Agent, promptly after the Company
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or has become effective or any
amendment or supplement to the Prospectus (other than any Pricing
Supplement that relates to Notes not purchased through or by such
Agent) has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any prospectus relating to the Notes, of the suspension of
the qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amendment
or supplement of the Registration Statement or Prospectus or for
additional information; and (v) in the event of the issuance of any
such stop order or of any such order preventing or suspending the use
of any such prospectus or suspending any such qualification, promptly
to use reasonable efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as the
Agents may reasonably request to qualify such Notes for offering and
sale under the securities laws of such jurisdictions in the United
States as the Agents may reasonably request and to comply with such
laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of such Notes, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation, to
file a general consent to service of process in any jurisdiction, take
any action which would subject it to general service of process in any
jurisdiction where it is not now subject or file annual reports with
such jurisdictions or comply with any other requirements deemed by the
Company in its reasonable judgment expressed in writing to the
Purchasing Agent to be unduly burdensome; and to inform the Agents
promptly of any notices it may receive from any state securities agency
which limits or will limit any such qualification or exemption;
(c) To furnish the Agents with copies of the Prospectus as
amended or supplemented, in the form in which it is filed with the
Commission pursuant to Rule
9
<PAGE> 10
424(b) of the Act, in such quantities as the Agents may from time to
time reasonably request, and, if the delivery of a prospectus is
required at any time in connection with the offering or sale of any
Notes and if at such time any event shall have occurred as a result of
which it is necessary to further amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, or, if for any other reason
during such period it is necessary to further amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated
by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to notify each Agent and
request the Agents, in their capacity as agents of the Company, to
suspend solicitation of offers to purchase Notes from the Company (and,
if so notified, each Agent shall cease such solicitations as soon as
possible, but in any event not later than one business day later); and
if the Company shall decide to amend or supplement the Registration
Statement or the Prospectus as then amended or supplemented, to so
advise the Agents by telephone (with confirmation in writing) and to
prepare and cause to be filed as soon as practicable with the
Commission an amendment or supplement to the Registration Statement or
the Prospectus as then amended or supplemented that will correct such
statement or omission or effect such compliance; provided, however,
that if during such period an Agent continues to own Notes purchased
from the Company by such Agent as principal or an Agent is otherwise
required to deliver a prospectus in respect of transactions in the
Notes, the Company shall promptly prepare and file with the Commission
such an amendment or supplement;
(d) To make generally available to its security holders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) of the Act), an earnings statement of the Company and its
consolidated subsidiaries (which need not be audited) covering a period
of at least 12 months beginning after the later of (i) the effective
date of the Registration Statement, (ii) the effective date of each
post-effective amendment to the Registration Statement, and (iii) the
date of each filing by the Company with the Commission of an Annual
Report on Form 10-K that is incorporated by reference in the
Registration Statement, which earning statements shall comply with
Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule
158 of the Act);
(e) So long as any Notes are outstanding, to furnish to such
Agent, without charge, copies of its Annual Report on Form 10-K and
other financial reports of the Company furnished or made available to
the public generally, and deliver to such Agent, (i) as soon as they
are available, copies of any Incorporated Documents; and (ii) such
additional publicly available information concerning the business and
financial condition of the Company as such Agent may from time to time
reasonably request;
(f) That, from the date of any Terms Agreement with the
Purchasing Agent and continuing to and including the related Settlement
Date, the Company will not, without the
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<PAGE> 11
prior written consent of each Agent, which consent shall not be
unreasonably withheld, issue or announce the proposed issuance of,
offer, sell, contract to sell or otherwise dispose of any debt
securities of the Company which both mature more than 9 months after
such Settlement Date and are substantially similar to the Notes and
which are expected to be distributed on a retail basis in a manner
comparable to that set forth in Exhibit A;
(g) That each execution and delivery by the Company of a Terms
Agreement with the Purchasing Agent shall be deemed to be an
affirmation to each Agent that the representations and warranties of
the Company contained in this Agreement are true and correct as of the
date of such Terms Agreement, as though made at and as of such date,
and an undertaking that such representations and warranties will be
true and correct as of the Settlement Date for the Notes relating to
such sale, as though made at and as of such date (except that such
representations and warranties shall be deemed to relate to the
Registration Statement and the Prospectus, as amended and supplemented,
relating to such Notes);
(h) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), each time a document filed under the Act or the Exchange
Act is incorporated by reference into the Prospectus (other than (A) a
Current Report pursuant to Section 13 or 15(d) of the Exchange Act on
Form 8-K relating exclusively to the previous issuance of Notes under
the Registration Statement or (B) a Quarterly Report on Form 10-Q under
the Exchange Act, unless, in the case of clause (B), the Agents shall
otherwise request), and each time the Company sells Notes to the
Purchasing Agent as principal and the applicable Terms Agreement
specifies the delivery of an opinion or opinions by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Agent, as a condition to the
purchase of Notes pursuant to such Terms Agreement, at the request of
such Agent, Skadden, Arps, Slate, Meagher & Flom LLP shall furnish to
such Agent its written opinion, dated the date of such amendment,
supplement, incorporation or Settlement Date relating to such sale, as
the case may be, in form reasonably satisfactory to such Agent to the
effect that such Agent may rely on the opinion of such counsel as to
the matters referred to in Section 6(A)(c), which was last furnished to
such Agent to the same extent as though it was dated the date of such
letter authorizing reliance (except that the statements in such last
opinion shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date or, in lieu of such
opinion, an opinion of the same tenor as the opinion of such counsel as
to the matters referred to in Section 6(A)(c), but modified to relate
to the Registration Statement and the Prospectus as amended and
supplemented to such date), and reasonably in advance of the time that
any such opinion is to be delivered the Company shall furnish to such
counsel such papers and information as they may reasonably request to
enable them to pass on such matters;
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<PAGE> 12
(i) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), each time a document filed under the Act or the Exchange
Act is incorporated by reference into the Prospectus (other than (A) a
Current Report pursuant to Section 13 or 15(d) of the Exchange Act on
Form 8-K relating exclusively to the previous issuance of Notes under
the Registration Statement or (B) a Quarterly Report on Form 10-Q under
the Exchange Act, unless, in the case of clause (B), the Agents shall
otherwise request), and each time the Company sells Notes to the
Purchasing Agent as principal and the applicable Terms Agreement
specifies the delivery of an opinion under this Section 4(i) as a
condition to the purchase of Notes pursuant to such Terms Agreement,
the Company shall furnish or cause to be furnished forthwith to such
Agent the written opinion or opinions of counsel to the Company or such
other counsel for the Company reasonably satisfactory to such Agent,
dated the date of such amendment, supplement, incorporation or
Settlement Date relating to such sale, as the case may be, in form
reasonably satisfactory to such Agent to the effect that such Agent may
rely on the opinion of such counsel as to the matters referred to in
Exhibit C hereof, which was last furnished to such Agent to the same
extent as though it was dated the date of such letter authorizing
reliance (except that the statements in such last opinion shall be
deemed to relate to the Registration Statement and the Prospectus as
amended and supplemented to such date or, in lieu of such opinion, an
opinion of the same tenor as the opinion of such counsel as to the
matters referred to in Exhibit C hereof but modified to relate to the
Registration Statement and the Prospectus as amended and supplemented
to such date);
(j) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement) and each time that a document filed under the Act or the
Exchange Act is incorporated by reference into the Prospectus (other
than (A) a Current Report pursuant to Section 13 or 15(d) of the
Exchange Act on Form 8-K relating exclusively to the previous issuance
of Notes under the Registration Statement or (B) a Quarterly Report on
Form 10-Q under the Exchange Act, unless, in the case of clause (B),
the Agents shall otherwise request), in either case to set forth
financial information included in or derived from the Company's
consolidated financial statements or accounting records, and each time
the Company sells Notes to the Purchasing Agent as principal and the
applicable Terms Agreement specifies the delivery of a letter under
this Section 4(j) as a condition to the purchase of Notes pursuant to
such Terms Agreement, the Company shall cause Arthur Andersen LLP
forthwith to furnish such Agent a letter, dated the date of such
amendment, supplement, incorporation or Settlement Date relating to
such sale, as the case may be, in form reasonably satisfactory to such
Agent, of the same tenor as the letter referred to in Exhibit D hereof
but modified to relate to the Registration Statement and the Prospectus
as amended or supplemented to the date of such letter, with such
changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records of
the Company, to the extent such financial statements and other
information are available as
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<PAGE> 13
of a date not more than five business days prior to the date of such
letter; provided, however, that, with respect to any financial
information or other matter, such letter may reconfirm as true and
correct at such date as though made at and as of such date, rather than
repeat, statements with respect to such financial information or other
matter made in the letter referred to in Exhibit D hereof which was
last furnished to such Agent; and
(k) That each time the Registration Statement or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), each time a document filed under the Act or the Exchange
Act is incorporated by reference into the Prospectus (other than a
Current Report pursuant to Section 13 or 15(d) of the Exchange Act on
Form 8-K relating exclusively to the previous issuance of Notes under
the Registration Statement), and each time the Company sells Notes to
the Purchasing Agent as principal and the applicable Terms Agreement
specifies the delivery of a certificate under this Section 4(k) as a
condition to the purchase of Notes pursuant to such Terms Agreement,
the Company shall furnish or cause to be furnished forthwith to such
Agent a certificate, dated the date of such supplement, amendment,
incorporation or Settlement Date, as the case may be, in such form and
executed by such officers of the Company as shall be reasonably
satisfactory to such Agent (or, in the case of certificates delivered
pursuant to Section 6(B)(b) hereof, by such other employees authorized
by the Board of Directors of the Company to execute and deliver such
certificates), to the effect that the statements contained in the
certificate referred to in Section 6 hereof which was last furnished to
such Agent are true and correct at such date as though made at and as
of such date (except that such statements shall be deemed to relate to
the Registration Statement and the Prospectus as amended and
supplemented to such date) or, in lieu of such certificate,
certificates of the same tenor as the certificates referred to in said
Section 6 but modified to relate to the Registration Statement and the
Prospectus as amended and supplemented to such date.
5. Payment of Expenses. The Company covenants and agrees with
each Agent that the Company will pay or reimburse all expenses incident to this
Agreement, including the following: (i) the reasonable fees and expenses of one
counsel for the Agents in connection with the preparation of a blue sky survey
of qualifications and exemptions to offer and sell notes in the various states
in the United States, the District of Colombia, Puerto Rico and Guam, provided
that the Company shall not be obligated to reimburse the Agents for any legal
fees referred to in this clause (i) in excess of $6,500; (ii) to the extent the
Company has agreed to print any of the following, the cost of printing any Terms
Agreement, any Indenture, any blue sky survey and any other documents in
connection with the offering, purchase, sale and delivery of the Notes; (iii)
any filing fees in connection with the qualification of the Notes for offering
and sale under state securities laws as provided in Section 4(b) hereof; (iv)
any fees charged by securities rating services for rating the Notes; (v) any
filing fees incident to any required review by the National Association of
Securities Dealers, Inc. ("NASD") of the terms of the sale of the Notes; (vi)
the cost of preparing the Notes; (vii) the fees and expenses of any Trustee and
any agent of any Trustee and any transfer or paying agent of the Company and the
fees and disbursements of
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<PAGE> 14
counsel for any Trustee or such agent in connection with any Indenture and the
Notes; and (viii) taxes (other than transfer taxes on sales by the Agents or
Dealers) in connection with the issuance and delivery of the Notes; provided
that the Company shall not be obligated to reimburse any Agent for any expenses
referred to in this sentence incurred after the initial offering of Notes except
as may be negotiated from time to time by the Company and the Agents. Except as
provided in this Section, Section 7 and Section 8 hereof, each Agent shall pay
all other costs and expenses it incurs.
6. Conditions to the Obligations of the Agents. (A) The
obligations of each Agent to solicit offers to purchase the Notes pursuant to
Section 1 hereof will, unless waived by such Agent expressly in writing, be
subject to the accuracy of the representations and warranties on the part of
the Company made herein as of the date hereof and as of the Commencement Date,
to the accuracy of the statements of the Company's officers made in each
certificate furnished pursuant to the provisions hereof, to the performance and
observance by the Company of all covenants and agreements herein contained on
its part to be performed and observed and to the following additional
conditions precedent:
(a) (i) The Prospectus as amended or supplemented (including
the Pricing Supplement) with respect to such Notes shall have been
filed with the Commission pursuant to Rule 424(b) under the Act within
the applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 4(a) hereof;
(ii) no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and (iii)
all requests for additional information on the part of the Commission
shall have been complied with.
(b) The Company shall have furnished to such Agent an opinion
or opinions of the counsel to the Company, dated the Commencement Date,
substantially to the effect set forth in Exhibit C hereto. Any of the
opinions set forth therein may be delivered by another counsel for the
Company who is reasonably satisfactory to the Agents.
(c) Such Agent shall have received from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Agent, an opinion, dated the
Commencement Date, with respect to the Registration Statement, as
amended as of the Commencement Date, the Prospectus, as amended and
supplemented as of the Commencement Date, and other related matters as
such Agent may reasonably require; and the Company shall have furnished
to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass on such matters.
(d) The Company shall have furnished to such Agent a
certificate of the Company, signed by any of the Chairman of the Board,
the President or the Chief Financial Officer, dated the Commencement
Date, to the effect that to the best of such person's knowledge after
reasonable investigation:
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<PAGE> 15
(i) this Agreement is substantially in the form
presented to and approved by the Board of Directors of the
Company;
(ii) The representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the date of such certificate with the
same effect as if made on the date of such certificate, and
the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied as
a condition to the obligations of such Agent under this
Agreement;
(iii) since the date of the most recent financial
statements included or incorporated by reference in the
Prospectus, as amended and supplemented, there has been no
material adverse change in the business, properties, financial
condition or results of operations of the Company and its
consolidated subsidiaries, taken as a whole, other than those
changes reflected in or contemplated by the Prospectus, as
amended and supplemented as of the date of the certificate;
(iv) no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings
for such purposes are pending before or threatened by the
Commission; and
(v) since the date of the Prospectus, as amended and
supplemented, no downgrading shall have occurred in the rating
accorded the Company's debt securities by Standard & Poor's
Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Duff & Phelps Credit Rating Co. ("Duff & Phelps")
or Fitch Investors Service, L.P. ("Fitch") and none of S&P,
Moody's, Duff & Phelps or Fitch has placed on "credit watch"
or "credit review" with negative implications the Company's
debt securities.
(e) Arthur Andersen LLP shall have furnished to such Agent a
letter or letters, dated the Commencement Date, in form and substance
satisfactory to such Agent, confirming that they are independent public
accountants within the meaning of the Act and the Exchange Act and the
respective applicable published rules and regulations thereunder.
(f) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, as amended
and supplemented, there shall not have been (i) any downgrade or
placement on "credit watch" or "credit review" as described in the
certificate referred to in paragraph (A)(d)(v) of this Section 6 or
(ii) any material adverse change in the business, properties, financial
condition or results of operations of the Company and its consolidated
subsidiaries, taken as a whole, the effect of which, in the reasonable
judgment of such Agent after reasonable inquiry, is to impair the
marketability of the Notes.
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<PAGE> 16
(g) There shall not have occurred: (i)(A) a suspension or
material limitation in trading in securities generally on the New York
Stock Exchange, (B) a suspension in trading in any securities of the
Company on any exchange or over-the-counter market, or (C) a general
moratorium on commercial banking activities in New York declared by
either Federal or New York State authorities, if the effect of any such
occurrence is such as to impair, in the reasonable judgment of such
Agent, after reasonable inquiry, the marketability of the Notes; or
(ii) the outbreak or material escalation of hostilities involving the
United States or the declaration by the United States of a national
emergency or war, if the effect of any such occurrence on the financial
markets of the United States is such as to impair, in the reasonable
judgment of such Agent, after reasonable inquiry, the marketability of
the Notes.
(h) The Company shall have furnished to such Agent such
further information, certificates and documents as such Agent may
reasonably request from time to time. Any certificate signed by any
officer of the Company and delivered to such Agent or its counsel and
delivered explicitly pursuant to the terms of this Agreement shall be
deemed a representation and a warranty by the Company to such Agent as
to matters covered thereby, as if set forth herein.
(B) The obligations of the Purchasing Agent to purchase Notes pursuant
to any Terms Agreement entered into by it pursuant to Section 1 hereof will be
subject to the accuracy of the representations and warranties on the part of the
Company herein as of the date of such Terms Agreement and as of the Settlement
Date thereunder, to the accuracy of the statements of the Company's officers
made in each certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company of all covenants and agreements
contained herein and in such Terms Agreement on its part to be performed and
observed and to the following additional conditions precedent (which cannot be
waived by the Purchasing Agent in any respect without the consent of each other
Agent):
(a) (i) The Prospectus as amended or supplemented (including
the Pricing Supplement) with respect to such Notes shall have been
filed with the Commission pursuant to Rule 424(b) under the Act within
the applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 4(a) hereof;
(ii) no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and (iii)
all requests for additional information on the part of the Commission
shall have been complied with.
(b) Upon the request of any Agent, such Agent shall have
received, appropriately updated and modified, (i) a certificate of the
Company, dated as of the Settlement Date, to the effect set forth in
Section 6(A)(d), (ii) the opinion or opinions of the counsel to the
Company or such other counsel satisfactory to such Agent, dated as of
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<PAGE> 17
the Settlement Date, to the effect set forth in Section 6(A)(b), (iii)
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Agent, dated as of the Settlement Date, to the effect set forth in
Section 6(A)(c) and/or (iv) the letter or letters of Arthur Andersen
LLP, dated as of the Settlement Date, to the effect set forth in
Section 6(A)(e).
(c) The conditions set forth in Sections 6(A)(f) and 6(A)(g)
shall have been satisfied.
(d) Prior to the Settlement Date, the Company shall have
furnished to any Agent such further information, certificates and
documents as such Agent may reasonably request.
If any of the conditions specified in this Section 6(B) shall not have been
fulfilled in all material respects when and as provided in this Agreement and in
such Terms Agreement, or if any of the opinions and certificates mentioned above
or elsewhere in this Agreement and in such Terms Agreement shall not be in all
material respects reasonably satisfactory in form and substance to such Agent
and its counsel, such Terms Agreement and all obligations of any Agent
thereunder may be canceled at, or at any time prior to, the Settlement Date by
such Agent. Notice of such cancellation shall be given to the Company in writing
or by telephone or telegraph confirmed in writing.
7. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Agent against any losses, claims, damages or
liabilities, joint or several, to which such Agent may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
amendment or supplement to any of the foregoing, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Agent for any legal or other expenses
reasonably incurred by such Agent in connection with investigating or defending
any such action or claim; provided, however, that the Company shall not be
liable to provide any indemnity hereunder in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement, the Prospectus,
or any amendment or supplement to any of the foregoing in reliance upon and in
conformity with written information furnished to the Company by any Agent
expressly for use in any Preliminary Prospectus, the Registration Statement,
the Prospectus or any amendment or supplement to any of the foregoing and
provided further that the Company will not be liable to provide any indemnity
hereunder to any Agent with respect to any loss, claim, damage or liability
arising out of or based upon any untrue statement or alleged untrue statement
or omission or alleged omission to state a material fact in any Preliminary
Prospectus which had been corrected in the Prospectus as amended or
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<PAGE> 18
supplemented if the person asserting any such loss, claim, liability, charge or
damage purchased Notes from an Agent but was not sent or given a copy of the
Prospectus as so amended or supplemented at or prior to the written confirmation
of the sale of such Notes to such person.
(b) Each Agent, severally and not jointly, will indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus, or any amendment or supplement to any of the
foregoing, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement, the Prospectus, or any such amendment or supplement to any of the
foregoing in reliance upon and in conformity with written information furnished
to the Company by such Agent expressly for use therein; and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof, enclosing a copy of all papers served; but the omission to
so notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party unless, and only to the extent that, such
omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall assume the defense of any such litigation
or proceeding, including the employment of counsel and the payment of all
expenses. Such counsel shall be designated in writing by such Agent in the case
of parties indemnified pursuant to Section 7(b) and by the Company in the case
of parties indemnified pursuant to Section 7(a). Any indemnified party shall
have the right to participate in such litigation or proceeding and to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
(x) the indemnifying party and (y) the indemnified party and, in the written
opinion of counsel to such indemnified party, representation of both parties by
the same counsel would be inappropriate due to actual or likely conflicts of
interest between them, in either of which cases the reasonable fees and expenses
of counsel (including disbursements) for such indemnified party shall be
reimbursed by the indemnifying party to the indemnified party. If there is a
conflict as described in clause (ii) above, and the indemnified parties have
participated in the litigation or proceeding utilizing separate counsel
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<PAGE> 19
whose fees and expenses have been reimbursed by the indemnifying party and the
indemnified parties, or any of them, are found to be solely liable, such
indemnified parties shall repay to the indemnifying party such fees and expenses
of such separate counsel as the indemnifying party shall have reimbursed. It is
understood that the indemnifying party shall not, in connection with any
litigation or proceeding or related litigation or proceedings in the same
jurisdiction as to which the indemnified parties are entitled to such separate
representation, be liable under this Agreement for the reasonable fees and
out-of-pocket expenses of more than one separate firm (together with not more
than one appropriate local counsel) for all such indemnified parties. Subject to
the next paragraph, all such fees and expenses shall be reimbursed by payment to
the indemnified parties of such reasonable fees and expenses of counsel promptly
after payment thereof by the indemnified parties. An indemnifying party will not
be liable for any settlement or any action or claim effected without its written
consent (which consent will not be unreasonably withheld).
In furtherance of the requirement above that fees and expenses
of any separate counsel for the indemnified parties shall be reasonable, each
Agent and the Company agree that the indemnifying party's obligations to pay
such fees and expenses shall be conditioned upon the following:
(1) in case separate counsel is proposed to be retained by the
indemnified parties pursuant to clause (ii) of the preceding paragraph,
the indemnified parties shall in good faith fully consult with the
indemnifying party in advance as to the selection of such counsel; and
(2) reimbursable fees and expenses of such separate counsel
shall be detailed and supported in a manner reasonably acceptable to
the indemnifying party (but nothing herein shall be deemed to require
the furnishing to the indemnifying party of any information, including
without limitation, computer print-outs of lawyers' daily time entries,
to the extent that, in the judgment of such counsel, furnishing such
information might reasonably be expected to result in a waiver of any
attorney-client privilege); and
(3) the Company and such Agent shall cooperate in monitoring
and controlling the fees and expenses of separate counsel for
indemnified parties for which the indemnifying party is liable
hereunder, and the indemnified party shall use every reasonable effort
to cause such separate counsel to minimize the duplication of
activities as between themselves and counsel to the indemnifying party.
(d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such
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<PAGE> 20
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and an Agent on the other from the offering of the Notes
to which such loss, claim, damage or liability (or action in respect thereof)
relates; if, and only if, contribution solely on the basis of relative benefits
is found to be unavailable, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and such Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and such Agent on the other shall be deemed to be in the
same proportion as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by such Agent, in each case as set forth in the table on
the cover page of the Prospectus as amended or supplemented to relate to a
particular offering of Notes. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or such Agent on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
each Agent agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Agents were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Agent shall
be required to contribute any amount in excess of the amount by which the total
price at which the applicable Notes underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Agent has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Agents in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations with respect to such Notes and not joint. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 7(d), will notify any such party or parties from whom
contribution may be sought, but the omission to so notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 7(d). No party will be liable for
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
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(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Agent within the meaning of the Act; and the obligations of each Agent under
this Section 7 shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
8. Termination.
This Agreement may be terminated at any time either by the Company as
to any of the Agents or by any of the Agents insofar as this Agreement relates
to such Agent upon the giving of written notice of such termination to such
Agent or Agents or to the Company, as the case may be; provided that Section 10
shall survive only for the term provided therein and only with respect to the
parties covered thereby. In the event of termination of this Agreement (other
than with respect to section 10), no terminating party or parties with respect
to which this Agreement is terminated shall have any liability to the other
parties hereto, except as follows: (a) as provided in the first sentence of the
fourth paragraph of Section 1 and Sections 4(c), 5, 7, 9 and 11; (b) (i) if at
the time of termination a Terms Agreement is in effect between the Purchasing
Agent and the Company but the time of delivery to any Agent of the Note or Notes
relating thereto has not occurred or (ii) if the Agent or Agents shall then own
any Note or Notes purchased pursuant to a Terms Agreement, then the Company's
representations and warranties stated in Section 3 and its obligations under the
sixth paragraph of Section 1 and Sections 4(a), 4(b), 4(d), 4(e), 4(f), 4(i),
4(j) and 4(k), with respect to clause (i) above, shall remain in full force and
effect and not be terminated and, with respect to clause (ii) above, shall
remain in full force and effect and not be terminated until the earlier of the
date on which such Notes are resold or the expiration of 90 days from such
termination; provided, however that with respect to clause (ii) above, the
Company may repurchase any such Notes from the Agents at the net price sold to
the Agents on original issuance and thereby terminate its obligations hereunder;
and (c) if the Company shall terminate this Agreement within six months of the
date hereof, other than as a result of a breach hereof by an Agent, the Company
shall be obligated, in addition to any matters covered by clauses (a) and (b) of
this Section 8, to reimburse the Agents for the reasonable out-of-pocket
expenses incurred by the Agents in connection with the execution of this
Agreement and the offering and sale of Notes including, but not limited to, the
reasonable fees and expenses of one counsel for the Agents in connection with
the establishment of the program contemplated hereby.
9. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Agents set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Agents or the Company or any of the officers,
directors or controlling persons referred to in section 7 hereof, and will
survive delivery
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of and payment for the Notes, and the indemnity agreement contained in Section 7
hereof shall survive any termination of this Agreement.
10. Grant of License.
(a) Grant of Non-Exclusive License. Upon the terms and conditions
hereinafter set forth, the Purchasing Agent hereby grants to the Company and to
each other Agent (for purposes of this Section 10, each such party is referred
to as a "Licensee") and each Licensee hereby accepts a non-exclusive,
non-transferable (except as provided under paragraph (f) hereunder) license to
use the service marks owned by the Purchasing Agent in respect of the names
"General Term Notes" and "GTN" that it has used in connection with its business
activities, and in which the Purchasing Agent asserts common law interests
(hereinafter referred to collectively as "Marks") in connection with such
Licensee's furtherance of this Agreement, including use of such Marks as part of
such Licensee's marketing materials or other similar uses. No Licensee shall
have any interest in or right to use the Marks except as set forth herein.
(b) Non-Exclusivity of License. Nothing in this Section 10 shall
prevent the Purchasing Agent from granting any other license for the use of the
Marks or from utilizing the Marks or permitting the Marks to be utilized by
others in any manner whatsoever.
(c) Term. The term of this license shall continue in force as to the
Purchasing Agent and (without regard to any other Licensee) (i) with respect to
the Company, for so long as the Notes shall be outstanding and (ii) with respect
to each other Agent, for as long as this Agreement or that Co-Agent Agreement
between the Purchasing Agent and such Agent with respect to the Notes issued
under this Agreement shall be in effect, in each case subject to earlier
termination in accordance with the provisions of either this Agreement or any
such Co-Agent Agreement, as the case may be.
(d) Ownership of Marks. Each Licensee specifically acknowledges the
Purchasing Agent's ownership rights in the Marks. In connection with the use of
the Marks, no Licensee shall in any manner represent that it has any ownership
in the Marks or any registrations thereof and agrees that nothing in this
Agreement shall give such Licensee any ownership interest in any of the Marks
other than the right to use the Marks in accordance with this Section 10.
No Licensee will, during the term of this Section 10 or at any time
thereafter, attack the validity of any of the Marks or the Purchasing Agent's
interests therein, nor will any Licensee attack any application for registration
of any of the Marks, or take any position contrary to that of the Purchasing
Agent in any proceedings pertaining to registration of any of the Marks.
Each Licensee shall, whether during or after the term of this
Agreement, execute and deliver to the Purchasing Agent such documents as the
Purchasing Agent may reasonably request to establish or confirm the Purchasing
Agent's ownership interest in the Marks.
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(e) Quality Control and Regulatory Compliance. Each Licensee agrees
that it will make no use of the Marks that would tend to reflect adversely upon
the Purchasing Agent, its business reputation, the GTN business and/or market,
or would violate or reflect adversely upon the Purchasing Agent with regard to
the Commission, the NASD or any other governmental authority or securities
association or other regulatory matters. The common law understanding of the
reasonable man standard, given the facts and circumstances then facing such
Licensee, its agents and employees, shall apply when making a determination
pursuant to this paragraph (e). Any proposed use of the Marks outside of the
terms contemplated by this Paragraph shall be submitted to the Purchasing Agent
for its written approval prior to said proposed use.
(f) Assignment of Sublicense by Licensee. This Section 10 and all
rights and duties in and with respect to the Marks hereunder are personal to
each Licensee and shall not, without the prior written consent of the Purchasing
Agent, which consent may not be unreasonably withheld, be assigned, mortgaged,
sublicensed or otherwise encumbered or transferred by such Licensee, except by
operation of law. The Purchasing Agent may assign its rights under this Section
10 to any person or entity without the consent of any Licensee and upon such
assignment the Purchasing Agent shall be relieved from any further liability
under this Agreement. The Purchasing Agent shall furnish prior written notice of
any such assignment to each Licensee.
(g) Unauthorized Use. Each Licensee will notify the Purchasing Agent
in writing of any unauthorized use of any of the Marks which come to such
Licensee's attention.
(h) Indemnification; Infringement.
(I) The Purchasing Agent hereby indemnifies each Licensee and
holds it harmless from and against any loss, liability,
penalty, deficiency, damage or out-of-pocket expense
(including, without limitation, reasonable legal fees and
expenses) which such Licensee may suffer, sustain or become
subject to resulting from, arising out of or caused by any
suit, action or proceeding brought by a third party claiming
or alleging in any manner that the use of any of the Marks by
such Licensee has infringed upon the rights of others;
provided, however, that the Purchasing Agent shall not be
liable or responsible to indemnify a Licensee if the claimed
or alleged infringement results from such Licensee's violation
of this Section 10 or bad faith, willful misfeasance or gross
negligence.
(II) Each Licensee will notify the Purchasing Agent promptly in
writing of any claim that the use of any of the Marks
infringes the rights of others, or of the institution of any
legal actions or suits predicated upon such claimed
infringement, and any such suit or action will be diligently
defended at the sole expense of and under the sole control of
the Purchasing Agent.
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(i) Termination.
(I) This Section 10 shall remain in effect throughout the term
stated in paragraph (c) above until and unless it is earlier
terminated pursuant to the terms of paragraph (i)(II) below.
(II) This Section 10 may be terminated as to the Purchasing Agent
and any Licensee (without regard to another Licensee) as
follows:
A. By the Purchasing Agent in the event that such Licensee
shall fail to perform any obligation imposed upon such
Licensee by this Section 10 or violate any terms of this
Section 10. The Purchasing Agent will give such Licensee
written notice setting forth the particulars of any such
breach and, unless such Licensee has cured such breach or is
in the process of curing such breach, this Section 10 will
terminate ten (10) days after receipt by such Licensee of such
written notice. With respect to the Company, nothing in this
paragraph shall be construed to require such Licensee to
retire, redeem or repurchase any Notes issued by it pursuant
to this Distribution Agreement, or successor Distribution
Agreements, otherwise left outstanding in the event of
termination hereunder.
B. With respect to each other Agent (and not as to the
Company), in the event that any Co-Agent Agreement between the
Purchasing Agent and such Agent/Licensee terminates for any
reason, or in the event of its expiration, this Section 10
shall immediately and automatically terminate.
(j) Effect of Termination or Expiration. On termination or expiration
of this Section 10 all rights and licenses granted to each Licensee hereunder
shall immediately and automatically terminate. In such event, each Licensee
agrees to discontinue all uses of the Marks and any words confusingly similar
thereto within ten (10) days of such termination or expiration. After such
termination, no Licensee nor any affiliate of any Licensee shall allude in any
public statement or advertisement to the Marks. Each Licensee agrees that it
will at no future time adopt or use, without the Purchasing Agent's prior
written consent, a word or mark which is reasonably likely to be similar to or
confused with any of the Marks. The Purchasing Agent shall retain sole authority
and control over all of the Marks, and all rights in the Marks shall remain the
property of the Purchasing Agent.
(k) Royalty. The license granted herein shall be royalty-free.
(l) Reservation of Rights in the Marks. Rights in the Marks, other
than those specifically granted herein, are reserved by the Purchasing Agent
for its own use. Upon the termination of this Section 10 for any reason
whatsoever, all rights to the Marks shall revert to the Purchasing Agent
without the necessity of any act on its part.
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<PAGE> 25
(m) Unenforceable Provisions. If any provision or part of this Section
10 is declared unenforceable by a court of competent jurisdiction, each and
every other provision, or part hereof, shall continue in full force and effect.
(n) Waiver. The failure or delay of the Purchasing Agent or any
Licensee to insist upon the performance of any of the terms and conditions of
this Section 10 or to exercise or enforce any right or obligation herein
conferred, shall not be construed to be a waiver of any such terms, conditions,
rights or obligations and either party may, within the time provided by
applicable law, take measures to enforce any or all such rights and obligations.
(o) Remedies. In the event of the breach or default in the terms of
this Section 10 by the Purchasing Agent or any Licensee, the non-breaching or
non-defaulting party shall be entitled to all legal and equitable remedies
provided by law.
The Purchasing Agent and each Licensee agree that damages may be insufficient to
compensate the Purchasing Agent in the event that any of the terms of this
Section 10 are not complied with, and therefore, agree that in such event, the
Purchasing Agent may seek injunctive relief and specific performance of the
terms hereof, in addition to all other rights or remedies, and that to obtain
such an injunction the Purchasing Agent shall not be required to show any actual
damage or to post any bond or other security.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Company, will be mailed or
delivered or sent by facsimile transmission or telegraph and confirmed to it at
CMS Energy Corporation, Fairlane Plaza South, 330 Town Center Drive, Suite 1000,
Dearborn, Michigan 48126, attention: Alan M. Wright, Senior Vice President and
Chief Financial Officer, facsimile transmission number (313) 436-9258, and if
sent to any of the Agents, will be mailed or delivered or sent by facsimile
transmission or telegraph and confirmed to them at their respective addresses
and facsimile transmission numbers, as follows: if to J. W. Korth & Company, to
it at 32841 Middlebelt Road, Suite 400, Farmington Hills, Michigan 48334,
attention: Robert W. Haun, facsimile transmission number (248) 855-0805. Any
party hereto may change its address or facsimile number set out in this Section
11 by a notice given to the other parties in accordance herewith.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder. The term "successors"
as used in this Agreement shall not include a purchaser, as such purchaser, of
Notes from any Agent or from any selected dealer acting through such Agent.
13. Applicable Law. This Agreement and each Terms Agreement will be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such
jurisdiction, except that Section 10 of this
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<PAGE> 26
Agreement will be governed by and construed in accordance with the laws of the
State of Michigan.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
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<PAGE> 27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
CMS Energy Corporation
By: __________________________
Title: Senior Vice President and
Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
J. W. KORTH & COMPANY
By: __________________________
Title: _____________________
27
<PAGE> 1
EXHIBIT 4(a)(vi)
FIFTH SUPPLEMENTAL INDENTURE
DATED AS OF AUGUST ____, 1998
____________________
This Fifth Supplemental Indenture, dated as of the _____ day of August,
1998 between CMS Energy Corporation, a corporation duly organized and existing
under the laws of the State of Michigan (hereinafter called the "Company") and
having its principal office at Fairlane Plaza South, 330 Town Center Drive,
Suite 1100, Dearborn, Michigan 48126, and The Chase Manhattan Bank, a New York
banking corporation (hereinafter called the "Trustee") and having its principal
Corporate Trust Office at 450 West 33rd Street, 15th Floor, New York, New York
10001.
WITNESSETH:
WHEREAS, the Company and the Trustee entered into an Indenture, dated
as of January 15, 1994 (the "Original Indenture"), pursuant to which one or
more series of debt securities of the Company (the "Securities") may be issued
from time to time; and
WHEREAS, Section 301 of the Original Indenture permits the terms of any
series of Securities to be established in an indenture supplemental to the
Original Indenture; and
WHEREAS, Section 901(7) of the Original Indenture provides that a
supplemental indenture may be entered into by the Company and the Trustee
without the consent of any Holders of the Securities to establish the form and
terms of the Securities of any series; and
WHEREAS, the Company has requested the Trustee to join with it in the
execution and delivery of this Fifth Supplemental Indenture in order to
supplement and amend the Original Indenture by, among other things, establishing
the form and terms of a series of Securities to be known as the Company's
<PAGE> 2
"General Term Notes(R), Series E (the "General Term Notes"), providing for the
issuance of the General Term Notes and amending and adding certain provisions
thereof for the benefit of the Holders of the General Term Notes; and
WHEREAS, the Company and the Trustee desire to enter into this Fifth
Supplemental Indenture for the purposes set forth in Sections 301 and 901(7) of
the Original Indenture as referred to above; and
WHEREAS, all things necessary to make this Fifth Supplemental Indenture
a valid agreement of the Company and the Trustee and a valid supplement to the
Original Indenture have been done,
- ---------------------------
(R) Registered servicemark of J. W. Korth & Company
2
<PAGE> 3
NOW, THEREFORE, THIS FIFTH SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
General Term Notes to be issued hereunder by holders thereof, the Company and
the Trustee mutually covenant and agree, for the equal and proportionate benefit
of the respective holders from time to time of the General Term Notes, as
follows:
ARTICLE I
STANDARD PROVISIONS; DEFINITIONS
SECTION 101. Standard Provisions. The Original Indenture together with
this Fifth Supplemental Indenture and all indentures supplemental thereto
entered into pursuant to the applicable terms thereof are hereinafter sometimes
collectively referred to as the "Indenture." All of the terms, conditions,
covenants and provisions contained in the Original Indenture as heretofore
supplemented are incorporated herein by reference in their entirety and, except
as specifically noted herein or unless the context otherwise requires, shall be
deemed to be a part hereof to the same extent as if such provisions had been set
forth in full herein. All capitalized terms which are used herein and not
otherwise defined herein are defined in the Indenture and are used herein with
the same meanings as in the Indenture.
SECTION 102. Definitions. Section 101 of the Indenture is amended to
insert the new definitions applicable to the General Term Notes, in the
appropriate alphabetical sequence, as follows:
"Amortization Expense" means, for any period, amounts recognized during
such period as amortization of capital leases, depletion, nuclear fuel, goodwill
and assets classified as intangible assets in accordance with generally accepted
accounting principles.
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<PAGE> 4
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (i) the sum of the products
of (x) the number of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness and (y) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Capital Lease Obligation" of a Person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; the stated maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty; and
such obligation shall be deemed secured by a Lien on any property or assets to
which such lease relates.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock, including any Preferred Stock or Letter
Stock; provided that Hybrid Preferred Securities shall not be considered Capital
Stock for purposes of this definition.
"Change in Control" means an event or series of events by which (i) the
Company ceases to own beneficially, directly or indirectly, at least 80% of the
total voting power of all classes of Capital Stock then outstanding of Consumers
(whether arising from issuance of securities of the Company or Consumers, any
direct or indirect transfer of securities by the Company or Consumers, any
merger, consolidation, liquidation or dissolution of the Company or Consumers or
otherwise); (ii) any "person" or "group" (as such terms are used in Sections
4
<PAGE> 5
13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as such
term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person or group shall be deemed to have "beneficial ownership" of all shares
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 30% of the Voting Stock of the Company; or (iii) the
Company consolidates with or merges into another corporation or directly or
indirectly conveys, transfers or leases all or substantially all of its assets
to any Person, or any corporation consolidates with or merges into the Company,
in either event pursuant to a transaction in which the outstanding Voting Stock
of the Company is changed into or exchanged for cash, securities, or other
property, other than any such transaction in which (A) the outstanding Voting
Stock of the Company is changed into or exchanged for Voting Stock of the
surviving corporation and (B) the holders of the Voting Stock of the Company
immediately prior to such transaction retain, directly or indirectly,
substantially proportionate ownership of the Voting Stock of the surviving
corporation immediately after such transaction.
"Consolidated Assets" means, at any date of determination, the
aggregate assets of the Company and its Consolidated Subsidiaries determined on
a consolidated basis in accordance with generally accepted accounting
principles.
"Consolidated Capital" means, at any date of determination, the sum of
(a) Consolidated Indebtedness, (b) consolidated equity of the common
stockholders of the Company and the Consolidated Subsidiaries, (c) consolidated
equity of the preference stockholders of the Company and the Consolidated
Subsidiaries (d) consolidated equity of the preferred stockholders of the
Company and the Consolidated Subsidiaries and (e) the aggregate amount of all
Hybrid Preferred Securities, in each case determined at such date in accordance
with generally accepted accounting principles.
5
<PAGE> 6
"Consolidated Coverage Ratio" with respect to any period means the
ratio of (i) the aggregate amount of Operating Cash Flow for such period to (ii)
the aggregate amount of Consolidated Interest Expense for such period.
"Consolidated Indebtedness" means, at any date of determination, the
aggregate Indebtedness of the Company and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles provided, however that Consolidated Indebtedness shall not
include any subordinated debt owned by any Hybrid Preferred Securities
Subsidiary.
"Consolidated Interest Expense" means, for any period, the total
interest expense in respect of Consolidated Indebtedness of the Company and its
Consolidated Subsidiaries, including, without duplication, (i) interest expense
attributable to capital leases, (ii) amortization of debt discount, (iii)
capitalized interest, (iv) cash and noncash interest payments, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs under Interest Rate Protection
Agreements (including amortization of discount) and (vii) interest expense in
respect of obligations of other Persons deemed to be Indebtedness of the Company
or any Consolidated Subsidiaries under clause (v) or (vi) of the definition of
Indebtedness, provided, however, that Consolidated Interest Expense shall
exclude any costs otherwise included in interest expense recognized on early
retirement of debt.
"Consolidated Leverage Ratio" means, at any date of determination, the
ratio of Consolidated Indebtedness to Consolidated Capital.
6
<PAGE> 7
"Consolidated Net Income" means, for any period, the net income of the
Company and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that there shall not be included in such Consolidated Net Income:
(i) any net income of any Person if such Person is not a
Subsidiary, except that (A) the Company's equity in the net income of
any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by
such Person during such period to the Company or a Consolidated
Subsidiary as a dividend or other distribution and (B) the Company's
equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income;
(ii) any net income of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition; and
(iii) any gain or loss realized upon the sale or other
disposition of any property, plant or equipment of the Company or its
Consolidated Subsidiaries which is not sold or otherwise disposed of in
the ordinary course of business and any gain or loss realized upon the
sale or other disposition of any Capital Stock of any Person.
"Consolidated Net Worth" of any Person means the total of the amounts
shown on the consolidated balance sheet of such Person and its consolidated
subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles, as of any date selected by such Person not more
than 90 days prior to the taking of any action for the purpose of which the
determination is being made (and adjusted for any material events since such
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<PAGE> 8
date), as (i) the par or stated value of all outstanding Capital Stock plus (ii)
paid-in capital or capital surplus relating to such Capital Stock plus (iii) any
retained earnings or earned surplus less (A) any accumulated deficit, (B) any
amounts attributable to Redeemable Stock and (C) any amounts attributable to
Exchangeable Stock.
"Consolidated Subsidiary" means, any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Company in accordance
with generally accepted accounting principles.
"Consumers" means Consumers Energy Company, a Michigan corporation, all
of whose common stock is on the date hereof owned by the Company.
"Enterprises" means CMS Enterprises Company, a Michigan corporation.
"Event of Default" with respect to the General Term Notes has the
meaning specified in Article VI of this Fifth Supplemental Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable Stock" means any Capital Stock of a corporation that is
exchangeable or convertible into another security (other than Capital Stock of
such corporation that is neither Exchangeable Stock, or Redeemable Stock).
"Hybrid Preferred Securities" means any preferred securities issued by
a Hybrid Preferred Securities Subsidiary, where such preferred securities have
the following characteristics:
(i) such Hybrid Preferred Securities Subsidiary lends
substantially all of the proceeds from the issuance of such
preferred securities to the Company or Consumers in exchange
for
8
<PAGE> 9
subordinated debt issued by the Company or Consumers,
respectively;
(ii) such preferred securities contain terms providing for the
deferral of distributions corresponding to provisions
providing for the deferral of interest payments on such
subordinated debt; and
(iii) the Company or Consumers (as the case may be) makes periodic
interest payments on such subordinated debt, which interest
payments are in turn used by the Hybrid Preferred Securities
Subsidiary to make corresponding payments to the holders of
the Hybrid Preferred Securities.
"Hybrid Preferred Securities Subsidiary" means any business trust (or
similar entity)(i) all of the common equity interest of which is owned (either
directly or indirectly through one or more wholly-owned Subsidiaries of the
Company or Consumers)at all times by the Company or Consumers, (ii) that has
been formed for the purpose of issuing Hybrid Preferred Securities and (iii)
substantially all of the assets of which consist at all times solely of
subordinated debt issued by the Company or Consumers (as the case may be) and
payments made from time to time on such subordinated debt.
"Indebtedness" of any Person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
9
<PAGE> 10
(iii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business);
(iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, bankers' acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (i)
through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the
third Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit);
(v) all obligations of the type referred to in clauses (i) through (iv)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable as obligor,
guarantor or otherwise; and
(vi) all obligations of the type referred to in clauses (i) through (v)
of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
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<PAGE> 11
"Letter Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
intended to reflect the separate performance of certain of the businesses or
operations conducted by such corporation or any of its subsidiaries.
"Lien" means any lien, mortgage, pledge, security interest, conditional
sale, title retention agreement or other charge or encumbrance of any kind.
"Net Proceeds" means, with respect to any issuance or sale or
contribution in respect of Capital Stock, the aggregate proceeds of such
issuance, sale or contribution, including the fair market value (as determined
by the Board of Directors and net of any associated debt and of any
consideration other than Capital Stock received in return) of property other
than cash, received by the Company, net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts, or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof, provided,
however, that if such fair market value as determined by the Board of Directors
of property other than cash is greater than $25 million, the value thereof shall
be based upon an opinion from an independent nationally recognized firm
experienced in the appraisal or similar review of similar types of transactions.
"NOMECO" means, CMS NOMECO Oil & Gas Co., a Michigan corporation and
wholly-owned subsidiary of the Company.
"Non-Convertible Capital Stock" means, with respect to any corporation,
any non-convertible Capital Stock of such corporation and any Capital Stock of
such corporation convertible solely into non-convertible Capital Stock other
than Preferred Stock of such corporation; provided, however, that
Non-Convertible Capital Stock shall not include any Redeemable Stock or
Exchangeable Stock.
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<PAGE> 12
"Operating Cash Flow" means, for any period, with respect to the
Company and its Consolidated Subsidiaries, the aggregate amount of Consolidated
Net Income after adding thereto Consolidated Interest Expense (adjusted to
include costs recognized on early retirement of debt), income taxes,
depreciation expense, Amortization Expense and any noncash amortization of debt
issuance costs, any nonrecurring, noncash charges to earnings and any negative
accretion recognition.
"Other Rating Agency" means any of Duff & Phelps Credit Rating Co.,
Fitch Investors Service, L.P. or Moody's Investors Service, Inc., and any
successor to any of these organizations which is a nationally recognized
statistical rating organization.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation; provided that Hybrid Preferred Securities shall not be considered
"Preferred Stock" for purposes of this definition.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed prior to the first anniversary of the
Maturity of any Outstanding General Term Notes or is redeemable at the option of
the holder thereof at any time prior to the first anniversary of the Maturity of
any Outstanding General Term Notes.
"Restricted Subsidiary" means any Subsidiary (other than Consumers and
its subsidiaries) of the Company which, as of the date of the Company's most
recent quarterly consolidated balance sheet, constituted at least 10% of the
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<PAGE> 13
total Consolidated Assets of the Company and its Consolidated Subsidiaries and
any other Subsidiary which from time to time is designated a Restricted
Subsidiary by the Board of Directors provided that no Subsidiary may be
designated a Restricted Subsidiary if, immediately after giving effect thereto,
an Event of Default or event that, with the lapse of time or giving of notice or
both, would constitute an Event of Default would exist or the Company and its
Restricted Subsidiaries could not incur at least $1 of additional Indebtedness
under Section 510, and (i) any such Subsidiary so designated as a Restricted
Subsidiary must be organized under the laws of the United States or any State
thereof, (ii) more than 80% of the Voting Stock of such Subsidiary must be owned
of record and beneficially by the Company or a Restricted Subsidiary, (iii) such
Restricted Subsidiary must be a Consolidated Subsidiary, and (iv) such
Subsidiary must not theretofore have been designated as a Restricted Subsidiary.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw Hill Inc., and any successor thereto which is a nationally
recognized statistical rating organization, or if such entity shall cease to
rate the General Term Notes or shall cease to exist and there shall be no such
successor thereto, any other nationally recognized statistical rating
organization selected by the Company which is acceptable to the Trustee.
"Support Obligations" means, for any person, without duplication, any
financial obligation, contingent or otherwise, of such person guaranteeing or
otherwise supporting any debt or other obligation of any other person in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such debt or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such debt, (ii) to purchase property, securities or services for the purpose
of assuring the owner of such debt of the payment of such debt, (iii) to
maintain
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working capital, equity capital, available cash or other financial statement
condition of the primary obligor so as to enable the primary obligor to pay such
debt, (iv) to provide equity capital under or in respect of equity subscription
arrangements (to the extent that such obligation to provide equity capital does
not otherwise constitute debt), or (v) to perform, or arrange for the
performance of, any non-monetary obligations or non-funded debt payment
obligations of the primary obligor.
"Tax-Sharing Agreement" means the Amended and Restated Agreement for
the Allocation of Income Tax Liabilities and Benefits, dated January 1, 1994, as
amended or supplemented from time to time, by and among Company, each of the
members of the Consolidated Group (as defined therein), and each of the
corporations that become members of the Consolidated Group.
Certain terms, used principally in Articles Three, Four and Seven of
this Fifth Supplemental Indenture, are defined in those Articles.
ARTICLE II
DESIGNATION AND TERMS OF THE GENERAL TERM NOTES; FORMS
SECTION 201. Establishment of Series. There is hereby created a series
of Securities to be known and designated as the "General Term Notes(R), Series E
and limited in aggregate principal amount (except as contemplated in Section
301(2) of the Indenture) to $400,000,000.
Each General Term Note will be dated and issued as of the date of its
authentication by the Trustee. Each General Term Note shall also bear an
Original Issue Date (as hereinafter defined) which, with respect to any General
Term Note (or any portion thereof), shall mean the date of its original issue,
as specified in such General Term Note (the "Original Issue Date"), and such
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<PAGE> 15
Original Issue Date shall remain the same if such General Term Note is
subsequently issued upon transfer, exchange, or substitution of such General
Term Note regardless of its date of authentication. Principal on any General
Term Note shall become due and payable from nine months to twenty-five years
from the Original Issue Date of such General Term Note, as specified on such
General Term Note.
Each General Term Note will bear interest from the Original Issue Date,
or from the most recent date to which interest has been paid or duly provided
for, at the rate per annum stated therein until the principal thereof is paid or
made available for payment. Interest will be payable either monthly, quarterly
or semi-annually on each Interest Payment Date and at Maturity, as specified
below and in each General Term Note. Interest will be payable to the person in
whose name a General Term Note is registered at the close of business on the
Regular Record Date next preceding each Interest Payment Date; provided,
however, interest payable at Maturity will be payable to the person to whom
principal shall be payable. Interest on the General Term Notes will be computed
on the basis of a 360-day year of twelve 30-day months.
The Interest Payment Dates for a General Term Note that provides for
monthly interest payments shall be the fifteenth day of each calendar month;
provided, however, that in the case of a General Term Note issued between the
first and fifteenth day of a calendar month, interest otherwise payable on the
fifteenth day of such calendar month will be payable on the fifteenth day of the
next succeeding calendar month. In the case of a General Term Note that provides
for quarterly interest payments, the Interest Payment Dates shall be the
fifteenth day of each of the months specified in such General Term Note,
commencing on the day that is three months from (i) the day on which such
General Term Note is issued, if such General Term Note is issued on the
fifteenth day of a calendar month, or (ii) the fifteenth day of the calendar
month immediately
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<PAGE> 16
preceding the calendar month in which such General Term Note is issued, if such
General Term Note is issued prior to the fifteenth day of a calendar month, or
(iii) the fifteenth day of the calendar month in which such General Term Note is
issued, if such General Term Note is issued after the fifteenth day of a
calendar month. In the case of a General Term Note that provides for semi-annual
interest payments, the Interest Payment Dates shall be the fifteenth day of each
of the months specified in such General Term Note, commencing on the day that is
six months from (i) the day on which such General Term Note is issued, if such
General Term Note is issued on the fifteenth day of a calendar month, or (ii)
the fifteenth day of the calendar month immediately preceding the calendar month
in which such General Term Note is issued, if such General Term Note is issued
prior to the fifteenth day of a calendar month, or (iii) the fifteenth day of
the calendar month in which such General Term Note is issued, if such General
Term Note is issued after the fifteenth day of a calendar month.
Payment of principal of the General Term Notes (and premium, if any)
and, unless otherwise paid as hereinafter provided, any interest thereon will be
made at the office or agency of the Company in New York, New York; provided,
however, that payment of interest (other than interest at Maturity) may be made
at the option of the Company by check or draft mailed to the Person entitled
thereto at such Person's address appearing in the Security Register or by wire
transfer to an account designated by such Person not later than ten days prior
to the date of such payment.
The Regular Record Date referred to in Section 301 of the Indenture for
the payment of the interest on any General Term Note payable on any Interest
Payment Date (other than at Maturity) shall be the first day (whether or not a
Business Day) of the calendar month in which such Interest Payment Date occurs
as is specified in such General Term Note, and, in the case of interest payable
at Maturity, the Regular Record Date shall be the date of Maturity. Unless
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<PAGE> 17
otherwise specified in such General Term Notes, the cities of New York, New York
and Chicago, Illinois shall be the reference cities for determining a Business
Day.
The General Term Notes may be issued only as registered notes, without
coupons, in denominations of $1,000 and any larger denomination which is in an
integral multiple of $1,000.
Upon the execution of this Fifth Supplemental Indenture, or from time
to time thereafter, General Term Notes may be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said General Term Notes in accordance with the
procedures set forth in or upon a Company Order complying with Sections 301 and
303 of the Indenture.
SECTION 202. Forms Generally. The General Term Notes shall be in
substantially the form set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such General Term
Notes, as evidenced by their execution thereof.
The definitive General Term Notes shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such General Term Notes, as evidenced by
their execution thereof.
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<PAGE> 18
SECTION 203. Form of Face of General Term Note.
[Insert any legend required by the Internal Revenue
Code and the regulations thereunder.]
CMS ENERGY CORPORATION
GENERAL TERM NOTE(R), Series E
No. ________ $__________
[Initial Redemption Date]
CMS Energy Corporation, a corporation duly organized and existing under
the laws of the State of Michigan (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _________________________________, or
registered assigns, the principal sum of ____________________ Dollars on
__________________________ and to pay interest thereon from _____________ (the
"Original Issue Date") or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, [choose one of the following --
monthly/quarterly/semi-annually [insert as applicable -- on ___________
[________, ____________] and _________ in each [year/month], commencing
______________, and at Maturity at the rate of ____% per annum, until the
principal hereof is paid or made available for payment [if applicable, insert
- --, and at the rate of ___% per annum on any overdue principal and premium and
on any overdue installment of interest]. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this General Term Note (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the first day of the
calendar month in which such Interest Payment Date occurs (whether or not a
Business Day) next preceding such Interest Payment Date except that the Regular
Record Date for interest payable at Maturity shall be the date of Maturity. Any
such interest not so punctually paid or duly
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<PAGE> 19
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this General Term
Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of General
Term Notes not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the General Term Notes may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
said Indenture.
[If the General Term Note is not to bear interest prior to Maturity,
insert -- The principal of this General Term Note shall not bear interest except
in the case of a default in payment of principal upon acceleration, upon
redemption or at Stated Maturity and in such case the overdue principal of this
General Term Note shall bear interest at the rate of ___% per annum, which shall
accrue from the date of such default in payment to the date payment of such
principal has been made or duly provided for. Interest on any overdue principal
shall be payable on demand. Any such interest on any overdue principal that is
not so paid on demand shall bear interest at the rate of ____% per annum, which
shall accrue from the date of such demand for payment to the date payment of
such interest has been made or duly provided for, and such interest shall also
be payable on demand.]
Payment of the principal of (and premium, if any) and interest, if any,
on this General Term Note will be made at the office or agency of the Company
maintained for that purpose in New York, New York (the "Place of Payment"), in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however, that
at the option of the Company payment of interest (other than interest payable at
Maturity) may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register or by wire
transfer to an account
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<PAGE> 20
designated by such Person not later than ten days prior to the date of such
payment.
Reference is hereby made to the further provisions of this General Term
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this General
Term Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
CMS ENERGY CORPORATION
By_______________________________
Attest:
_________________________
SECTION 204. Form of Reverse of General Term Note.
This General Term Note(R), Series E is one of a duly authorized issue
of securities of the Company (herein called the "General Term Notes"), issued
and to be issued in one or more series under an Indenture, dated as of January
15, 1994, as supplemented by certain supplemental indentures, including the
Fifth Supplemental Indenture, dated as of ________, 1998 (herein collectively
referred to as the "Indenture"), between the Company and The Chase Manhattan
Bank, a New York banking corporation, as Trustee (herein called the "Trustee",
which term
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<PAGE> 21
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee, the Holders of the General Term Notes and of the terms
upon which the General Term Notes are, and are to be, authenticated and
delivered. This General Term Note is one of the series designated on the face
hereof, limited in aggregate principal amount to $400,000,000.
[If applicable, insert -- The General Term Notes of this series are
subject to redemption upon not more than 60 nor less than 30 days' notice as
provided in the Indenture, at any time [on or after __________, _____,] as a
whole or in part from time to time, at the election of the Company, at the
following Redemption Prices (expressed as percentages of the principal amount):
If redeemed [on or before _____________, ___%, and if redeemed] during the
12-month period beginning ____________ of the years indicated,
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
- ---- ----- ---- -----
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such General Term
Notes, or one or more Predecessor Securities, of record at the close of business
on the relevant Record Dates referred to on the face hereof, all as provided in
the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
__________, redeem this General Term Note as a part of, or in anticipation of,
any refunding
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<PAGE> 22
operation by the application, directly or indirectly, of moneys borrowed having
an effective interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than the effective interest cost
to the Company (similarly calculated) of this General Term Note.]
[If the General Term Note is subject to redemption, insert -- In the
event of redemption of this General Term Note in part only, a new General Term
Note or Notes of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.]
If a Change in Control occurs, the Company shall notify the Holder of
this General Term Note of such occurrence and such Holder shall have the right
to require the Company to make a Required Repurchase of all or any part of this
General Term Note at a Change in Control Purchase Price equal to 101% of the
principal amount of this General Term Note to be so purchased as more fully
provided in the Indenture and subject to the terms and conditions set forth
therein. In the event of a Required Repurchase of only a portion of this General
Term Note, a new General Term Note or Notes for the unrepurchased portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
[If this General Term Note is subject to redemption upon exercising a
Survivor's Option, insert -- As more fully provided in the Indenture and subject
to the terms and conditions set forth therein, the Company will repay this
General Term Note (or portion thereof) properly tendered for repayment by or on
behalf of the person (the "Representative") that has authority to act on behalf
of a deceased owner of the beneficial interest in this General Term Note under
the laws of the appropriate jurisdiction (including, without limitation, the
personal representative or executor of such deceased beneficial owner) at a
price equal to 100% of the principal amount hereof plus accrued interest to the
date of such repayment. Notwithstanding the foregoing, the Survivor's Option
will not be
22
<PAGE> 23
available to persons who are surviving joint tenants or surviving tenants by the
entirety. The Company may, in its sole discretion, limit the aggregate principal
amount of all outstanding General Term Notes as to which exercises of this
option (the "Survivor's Option") will be accepted in any calendar year to one
percent (1%) of the outstanding principal amount of all General Term Notes as of
the end of the most recent fiscal year, but not less than $500,000 in any such
calendar year, or such greater amount as the Company in its sole discretion may
determine for any calendar year, and may limit to $100,000, or such greater
amount as the Company in its sole discretion may determine for any calendar
year, the aggregate principal amount of General Term Notes (or portions thereof)
as to which exercise of the Survivor's Option will be accepted in such calendar
year with respect to any individual deceased owner of beneficial interests in
such General Term Notes. Notwithstanding the foregoing, the Survivor's Option
will not be available to persons who are surviving joint tenants or surviving
tenants by the entirety.
[If the General Term Note is not an Original Issue Discount Security,
insert -- If an Event of Default with respect to this General Term Note shall
occur and be continuing, the principal of this General Term Note may be declared
due and payable in the manner and with the effect provided in the Indenture.]
In any case where any Interest Payment Date, Redemption Date, Repayment
Date, Stated Maturity or Maturity of any General Term Note shall not be a
Business Day at any Place of Payment, then (notwithstanding any other provision
of the Indenture or this General Term Note), payment of interest or principal
(and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date,
Redemption Date or Repayment Date or at the Stated Maturity or Maturity;
provided that no interest shall accrue on the amount so payable for the period
from and after such Interest
23
<PAGE> 24
Payment Date, Redemption Date, Repayment Date, Stated Maturity or Maturity, as
the case may be, to such Business Day.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of all Outstanding Securities under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in principal amount of all Outstanding
Securities affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of all Outstanding
Securities, on behalf of the Holders of all Outstanding Securities, to waive
compliance by the Company with certain provisions of the Indenture. Any such
consent or waiver by the Holder of this General Term Note shall be conclusive
and binding upon such Holder and upon all future Holders of this General Term
Note and of any General Term Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this General Term Note.
The Indenture permits the Holders of not less than a majority in
principal amount of all Outstanding Securities of any series thereunder to waive
on behalf of the Holders of all Outstanding Securities of such series any past
default by the Company, provided that no such waiver may be made with respect to
a default in the payment of the principal of or premium, if any, or the interest
on any Security of such series or the default by the Company in respect of
certain covenants or provisions of the Indenture, the modification or amendment
of which must be consented to by the Holder of each Outstanding Security of each
series affected.
As set forth in, and subject to, the provisions of the Indenture, no
Holder of any General Term Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such Holder
24
<PAGE> 25
shall have previously given to the Trustee written notice of a continuing Event
of Default, the Holders of not less than 25% in principal amount of the
Outstanding General Term Notes shall have made written request, and offered
satisfactory indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the Holders of a majority in
principal amount of the Outstanding General Term Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days; provided, however, that such limitations do not apply to a suit instituted
by the Holder hereof for the enforcement of payment of the principal of (and
premium, if any) or any interest on this General Term Note on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this General
Term Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this General Term Note at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this General Term Note is registerable in the
Security Register, upon surrender of this General Term Note for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this General Term Note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new General Term Notes of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The General Term Notes of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof.
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<PAGE> 26
As provided in the Indenture and subject to certain limitations therein set
forth, General Term Notes of this series are exchangeable for a like aggregate
principal amount of General Term Notes of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
[If this General Term Note is redeemable at the option of the Company,
insert -- The Company shall not be required (i) to issue, register the transfer
of or exchange this General Term Note if this General Term Note may be among
those selected for redemption during a period beginning at the opening of
business 15 days before selection of the General Term Notes to be redeemed under
Section 1103 of the Indenture and ending at the close of business on the day of
the mailing of the relevant notice of redemption, (ii) to register the transfer
of or exchange any General Term Note so selected for redemption in whole or in
part, except, in the case of any General Term Note to be redeemed in part, the
portion thereof not to be redeemed, or (iii) to issue, register the transfer of
or exchange any General Term Note which has been surrendered for repayment at
the option of the Holder, except the portion, if any, of such General Term Note
not to be so repaid.]
Prior to due presentment of this General Term Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this General Term Note is registered as the
owner hereof for all purposes, whether or not this General Term Note be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
26
<PAGE> 27
All terms used in this General Term Note without definition which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
______________________________
(R) Registered servicemark of J. W. Korth & Company
________________________
SECTION 205. Form of Legend for Global Notes. Any Global Note (as
defined in Article VII below) authenticated and delivered hereunder shall bear a
legend in substantially the following form:
"This Security is a Global Note within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This General Term Note is not exchangeable for
General Term Notes registered in the name of a Person other than the
Depositary or its nominee except in the limited circumstances described in
the Indenture, and no transfer of this General Term Note (other than a
transfer of this General Term Note as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary) may be registered except
in the limited circumstances described in the Indenture."
SECTION 206. Form of Trustee's Certificate of Authentication. The
Trustee's certificates of authentication shall be in substantially the following
form:
This is one of the General Term Notes of the series designated therein
referred to in the within-mentioned Indenture.
_________________________________,
as Trustee
By _______________________________
Authorized Officer
27
<PAGE> 28
ARTICLE III
REDEMPTION OF GENERAL TERM NOTES; CHANGE OF CONTROL
SECTION 301. Redemption of General Term Notes. (a) Each General Term
Note may be redeemed by the Company in whole or in part if so provided in, and
in accordance with, the terms of such General Term Note issued by the Company.
The Company may redeem any General Term Note which by its terms is redeemable
prior to Stated Maturity without also redeeming any other General Term Note
which is redeemable prior to Stated Maturity.
(b) Change of Control. Upon the occurrence of a Change in Control (the
effective date of such Change in Control being the "Change in Control Date"),
each Holder of a General Term Note shall have the right to require that the
Company repurchase (a "Required Repurchase") all or any part of such Holder's
General Term Note at a repurchase price payable in cash equal to 101% of the
principal amount of such General Term Note plus accrued interest to the Purchase
Date (the "Change in Control Purchase Price").
(1) Within 30 days following the Change in Control Date, the Company
shall mail a notice (the "Required Repurchase Notice") to each Holder with
a copy to the Trustee stating:
(i) that a Change in Control has occurred and that such Holder
has the right to require the Company to repurchase all or any part of
such Holder's General Term Notes at the Change of Control Purchase
Price;
(ii) the Change of Control Purchase Price;
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<PAGE> 29
(iii) the date on which any Required Repurchase shall be made
(which shall be no earlier than 60 days nor later than 90 days from the
date such notice is mailed) (the "Purchase Date");
(iv) the name and address of the Paying Agent; and
(v) the procedures that Holders must follow to cause the
General Term Notes to be repurchased, which shall be consistent with
this Section and the Indenture.
(2) Holders electing to have a General Term Note repurchased must
deliver a written notice (the "Change in Control Purchase Notice") to the
Paying Agent (initially the Trustee) at its office in The City of New York,
or any other office of the Paying Agent maintained for such purposes, not
later than 30 days prior to the Purchase Date. The Change in Control
Purchase Notice shall state: (i) the portion of the principal amount of any
General Term Notes to be repurchased, which portion must be $1,000 or an
integral multiple thereof; (ii) that such General Term Notes are to be
repurchased by the Company pursuant to the change in control provisions of
the Indenture; and (iii) unless the General Term Notes are represented by
one or more Global Notes, the certificate numbers of the General Term Notes
to be delivered by the Holder thereof for repurchase by the Company. Any
Change in Control Purchase Notice may be withdrawn by the Holder by a
written notice of withdrawal delivered to the Paying Agent not later than
three Business Days prior to the Purchase Date. The notice of withdrawal
shall state the principal amount and, if applicable, the certificate
numbers of the General Term Notes as to which the withdrawal notice relates
and the principal amount of such General Term Notes, if any, which remains
subject to a Change in Control Purchase Notice.
29
<PAGE> 30
If a General Term Note is represented by a Global Note (as described in
Article VII below), the Depositary or its nominee will be the Holder of
such General Term Note and therefore will be the only entity that can elect
a Required Repurchase of such General Term Note. To obtain repayment
pursuant to this Section 301(b) with respect to such General Term Note, the
beneficial owner of such General Term Note must provide to the broker or
other entity through which it holds the beneficial interest in such General
Term Note (i) the Change in Control Purchase Notice signed by such
beneficial owner, and such signature must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States, and (ii) instructions to such
broker or other entity to notify the Depositary of such beneficial owner's
desire to obtain repayment pursuant to this Section 301(b). Such broker or
other entity will provide to the Paying Agent (i) the Change of Control
Purchase Notice received from such beneficial owner and (ii) a certificate
satisfactory to the Paying Agent from such broker or other entity stating
that it represents such beneficial owner. Such broker or other entity will
be responsible for disbursing any payments it receives pursuant to this
Section 301(b) to such beneficial owner.
(3) Payment of the Change of Control Purchase Price for a General Term
Note for which a Change in Control Purchase Notice has been delivered and
not withdrawn is conditioned (except in the case of a General Term Note
represented by one or more Global Notes) upon delivery of such General Term
Note (together with necessary endorsements) to the Paying Agent at its
office in The City of New York, or any other office of the Paying Agent
maintained for such purpose, at any time (whether prior to, on or after the
Purchase Date) after the delivery of such Change in Control Purchase
Notice. Payment of the Change of Control Purchase Price for such General
Term Note will be made promptly following the later of the Purchase Date or
the time of delivery
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<PAGE> 31
of such General Term Note. If the Paying Agent holds, in accordance
with the terms of the Indenture, money sufficient to pay the Change in
Control Purchase Price of such General Term Note on the Business Day
following the Purchase Date, then, on and after such date, interest will
cease accruing, and, if applicable, amounts will no longer accrue on any
such General Term Note that is an Original Issue Discount Security, whether
or not such General Term Note is delivered to the Paying Agent, and all
other rights of the Holder shall terminate (other than the right to receive
the Change of Control Purchase Price upon delivery of the General Term
Note).
(4) The Company shall comply with the provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act, which may then be
applicable and shall file Schedule 13E-4 or any other schedule required
thereunder in connection with any offer by the Company to repurchase
General Term Notes at the option of Holders upon a Change in Control.
(5) No General Term Note may be repurchased by the Company as a result
of a Change in Control if there has occurred and is continuing an Event of
Default (other than a default in the Payment of the Change in Control
Purchase Price with respect to the General Term Notes).
ARTICLE IV
REPAYMENT UPON DEATH
If so specified in any General Term Note, the Holder of such General
Term Note will have the option (the "Survivor's Option") to elect repayment of
such General Term Note prior to its Stated Maturity in the event of the death of
the beneficial owner of such General Term Note.
31
<PAGE> 32
Pursuant to exercise of the Survivor's Option, if applicable, the
Company will repay any General Term Note (or portion thereof) properly tendered
for repayment by or on behalf of the person (the "Representative") that has
authority to act on behalf of the deceased beneficial owner of such General Term
Note under the laws of the appropriate jurisdiction (including, without
limitation, the personal representative or executor of such deceased beneficial
owner) at a price equal to one-hundred percent (100%) of the principal amount of
the beneficial interest of the deceased owner of such General Term Note plus
accrued interest to the date of such payment, subject to the following
limitations. Notwithstanding the foregoing, the Survivor's Option will not be
available to persons who are surviving joint tenants or surviving tenants by the
entirety. The Company may, in its sole discretion, limit the aggregate principal
amount of General Term Notes as to which exercises of the Survivor's Option will
be accepted in any calendar year (the "Annual Put Limitation") to one percent
(1%) of the outstanding principal amount of the General Term Notes as of the end
of the most recent fiscal year, but not less than $500,000 in any such calendar
year, or such greater amount as the Company in its sole discretion may determine
for any calendar year, and may limit to $100,000, or such greater amount as the
Company in its sole discretion may determine for any calendar year, the
aggregate principal amount of General Term Notes (or portions thereof) as to
which exercise of the Survivor's Option will be accepted in such calendar year
with respect to any individual deceased owner of beneficial interests in such
General Term Notes (the "Individual Put Limitation"). Moreover, the Company will
not make principal repayments pursuant to exercise of the Survivor's Option in
amounts that are less that $1,000, and, in the event that the limitations
described in the preceding sentence would result in the partial repayment of any
General Term Note, the principal amount of such General Term Note remaining
outstanding after repayment must be at least $1,000 (the minimum authorized
denomination of the General Term Notes). Any General Term Note (or portion
thereof) tendered pursuant to exercise of the Survivor's Option may be
32
<PAGE> 33
withdrawn by a written request of its Holder received by the Trustee prior to
its repayment.
Each General Term Note (or portion thereof) that is tendered pursuant
to a valid exercise of the Survivor's Option will be accepted promptly in the
order all such General Term Notes are tendered, except for any General Term Note
(or portion thereof) the acceptance of which would contravene (i) the Annual Put
Limitation, if applied, or (ii) the Individual Put Limitation, if applied, with
respect to the relevant individual deceased owner of beneficial interests
therein. If, as of the end of any calendar year, the aggregate principal amount
of General Term Notes (or portions thereof) that have been accepted pursuant to
exercise of the Survivor's Option for such year has not exceeded the Annual Put
Limitation, if applied, for such year, any exercise(s) of the Survivor's Option
with respect to General Term Notes (or portions thereof) not accepted during
such calendar year because such acceptance would have contravened the Individual
Put Limitation, if applied, with respect to an individual deceased owner of
beneficial interests therein will be accepted in the order all such General Term
Notes (or portions thereof) were tendered, to the extent that any such exercise
would not exceed the Annual Put Limitation, if applied, for such calendar year.
Any General Term Note (or portion thereof) accepted for repayment pursuant to
exercise of the Survivor's Option will be repaid no later than the first
Interest Payment Date that occurs 20 or more calendar days after the date of
such acceptance. Each General Term Note (or any portion thereof) tendered for
repayment that is not accepted in any calendar year because of the application
of the Annual Put Limitation will be deemed to be tendered in the following
calendar year in the order in which all such General Term Notes (or portions
thereof) were originally tendered, unless any such General Term Note (or portion
thereof) is withdrawn by the Representative for the deceased owner prior to its
repayment. In the event that a General Term Note (or any portion thereof)
tendered for repayment pursuant to valid exercise of the Survivor's Option is
not accepted, the Trustee will deliver a notice by first-class
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mail to the registered Holder thereof at its last known address as indicated in
the Security Register that states the reasons such General Term Note (or portion
thereof) has not been accepted for repayment.
Subject to the foregoing, in order for a Survivor's Option to be
validly exercised with respect to any General Term Note (or portion thereof),
the Trustee must receive from the Representative of the individual deceased
owner of beneficial interests therein (i) a written request for payment signed
by the Representative, and such signature must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, (ii) if any such General Term Note is not
represented by a Global Note (as described in Article VII below), tender of the
General Term Note (or portion thereof) to be repaid, (iii) appropriate evidence
satisfactory to the Company and the Trustee that (A) the Representative has
authority to act on behalf of the individual deceased beneficial owner, (B) the
death of such beneficial owner has occurred and (C) the deceased individual was
the owner of a beneficial interest in such General Term Note at the time of
death, (iv) if applicable, a properly executed assignment or endorsement, and
(v) if the beneficial interest in such General Term Note is held by a nominee of
the deceased beneficial owner, a certificate satisfactory to the Trustee from
such nominee attesting to the deceased's ownership of a beneficial interest in
such General Term Note. All questions as to the eligibility or validity of any
exercise of the Survivor's Option will be determined by the Company, in its sole
discretion, which determinations will be final and binding on all parties.
If a General Term Note is represented by a Global Note (as described in
Article VII below), the Depositary or its nominee will be the Holder of such
General Term Note and therefore will be the only entity that can exercise the
Survivor's Option for such General Term Note. To obtain repayment pursuant to
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exercise of the Survivor's Option with respect to such General Term Note, the
Representative must provide to the broker or other entity through which the
beneficial interest in such General Term Note is held by the deceased owner (i)
the documents described in clauses (i) and (iii) of the preceding paragraph and
(ii) instructions to such broker or other entity to notify the Depositary of
such Representative's desire to obtain repayment pursuant to exercise of the
Survivor's Option. Such broker or other entity shall provide to the Trustee (i)
the documents received from the Representative referred to in clause (i) of the
preceding sentence and (ii) a certificate satisfactory to the Trustee from such
broker or other entity stating that it represents the deceased beneficial owner.
Such broker or other entity will be responsible for disbursing any payments it
receives pursuant to exercise of the Survivor's Option to the appropriate
Representative.
ARTICLE V
ADDITIONAL COVENANTS OF THE COMPANY
WITH RESPECT TO THE GENERAL TERM NOTES
SECTION 501. Statement by Officers as to Default. (a) The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year a
brief certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this Fifth
Supplemental Indenture. For such purposes, such compliance shall be determined
without regard to any period of grace or requirement of notice provided
hereunder and, if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible and
in any event within 10 days after the Company becomes aware of the occurrence of
an Event of Default or an event which, with notice or the lapse of time or both,
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would constitute an Event of Default, an Officers' Certificate setting forth the
details of such Event of Default or default, and the action which the Company
proposes to take with respect thereto.
SECTION 502. Existence. So long as any of the General Term Notes are
Outstanding, subject to Article 8 of the Indenture, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and all rights (charter and statutory) and franchises
other than rights or franchises the loss of which would not be disadvantageous
in any material respect to the Holders of the General Term Notes.
SECTION 503. Maintenance of Properties. So long as any of the General
Term Notes are Outstanding, the Company will cause all properties used or useful
in the conduct of its business to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business and not disadvantageous
in any material respect to the Holders.
SECTION 504. Payment of Taxes and Other Claims. So long as any of the
General Term Notes are Outstanding, the Company will pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (1) all
taxes, assessments and governmental charges levied or imposed upon the Company
or any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (2) all lawful claims for labor, materials and supplies which,
if
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unpaid, might by law become a Lien upon the property of the Company or any
Subsidiary; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim the amount of which, applicability or validity is being contested in good
faith by appropriate proceedings.
SECTION 505. Insurance. So long as any of the General Term Notes are
Outstanding, the Company shall, and each of its Restricted Subsidiaries and
Consumers shall, keep insured by financially sound and reputable insurers all
property of a character usually insured by entities engaged in the same or
similar businesses similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such entities and carry such amounts
of other insurance as is usually carried by such entities.
SECTION 506. Compliance with Laws. So long as any of the General Term
Notes are Outstanding, the Company shall, and each of its Restricted
Subsidiaries and Consumers shall, comply in all material respects with all laws
applicable to the Company or such Restricted Subsidiary or Consumers, as the
case may be, its respective business and properties.
SECTION 508. Limitation on Certain Liens. (a) So long as any of the
General Term Notes are outstanding, the Company shall not create, incur, assume
or suffer to exist any Lien or any other type of arrangement intended or having
the effect of conferring upon a creditor of the Company or any Subsidiary a
preferential interest (hereinafter in this Section referred to as a "Lien") upon
or with respect to the Capital Stock of Consumers, Enterprises or NOMECO without
making effective provision whereby the General Term Notes shall (so long as any
such other creditor shall be so secured) be equally and ratably secured (along
with any other creditor similarly entitled to be secured) by a direct Lien on
all
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property subject to such Lien, provided, however, that the foregoing
restrictions shall not apply to:
(i) Liens for taxes, assessments or governmental charges or levies to
the extent not past due;
(ii) pledges or deposits to secure (a) obligations under workmen's
compensation laws or similar legislation, (b) statutory obligations of the
Company or (c) Support Obligations not to exceed $30 million at any one time
outstanding;
(iii) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's Liens and other similar Liens arising in
the ordinary course of business securing obligations which are not overdue or
which have been fully bonded and are being contested in good faith;
(iv) purchase money Liens upon or in property acquired and held by the
Company in the ordinary course of business to secure the purchase price of such
property or to secure Indebtedness incurred solely for the purpose of financing
the acquisition of any such property to be subject to such Liens, or Liens
existing on any such property at the time of acquisition, or extensions,
renewals or replacements of any of the foregoing for the same or a lesser
amount, provided that no such Lien shall extend to or cover any property other
than the property being acquired and no such extension, renewal or replacement
shall extend to or cover property not theretofore subject to the Lien being
extended, renewed or replaced, and provided, further, that the aggregate
principal amount of the Indebtedness at any one time outstanding secured by
Liens permitted by this clause (iv) shall not exceed $10,000,000; and
(v) Liens not otherwise permitted by clauses (i) through (iv) of this
Section securing Indebtedness of the Company; provided that on the date such
Liens are
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created, and after giving effect to such Indebtedness, the aggregate principal
amount at maturity of all of the secured Indebtedness of the Company at such
date shall not exceed 10% of Consolidated Assets at such date.
SECTION 509. Limitation on Consolidation, Merger, Sale or Conveyance.
In addition to the limitations set forth in Article 8 of the Indenture, so long
as the General Term Notes are Outstanding and until the General Term Notes are
rated BBB- or above (or an equivalent rating) by Standard & Poor's and one Other
Rating Agency (or if Standard & Poor's shall change its rating system, an
equivalent of such rating then employed by such organization) at which time the
Company shall be permanently released from the following provisions, the Company
shall not consolidate with or merge into any other Person or sell, lease or
convey the property of the Company in the entirety or substantially as an
entirety unless (i) immediately after giving effect to such transaction the
Consolidated Net Worth of the surviving entity is at least equal to the
Consolidated Net Worth of the Company immediately prior to the transaction, and
(ii) after giving effect to such transaction, the surviving entity would be
entitled to incur at least one dollar of additional Indebtedness (other than
revolving Indebtedness to banks) without violation of the limitations in Section
510 hereof.
SECTION 510. Limitation on Consolidated Indebtedness. (a) So long as
any of the General Term Notes are Outstanding and until the General Term Notes
are rated BBB- or above (or an equivalent rating) by Standard & Poor's and one
Other Rating Agency (or if Standard & Poor's shall change its rating system, an
equivalent of such rating then employed by such organization) at which time the
Company shall be permanently released from the provision of this Section 510,
the Company shall not, and shall not permit any Restricted Subsidiary of the
Company to, issue, create, assume, guarantee, incur or otherwise become liable
for (collectively, "issue"), directly or indirectly, any Indebtedness unless (i)
the Consolidated Coverage Ratio of the Company and its Consolidated Subsidiaries
for
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the four consecutive fiscal quarters immediately preceding the issuance of such
Indebtedness (as shown by a pro forma consolidated income statement of the
Company and its Consolidated Subsidiaries for the four most recent fiscal
quarters ending at least 30 days prior to the issuance of such Indebtedness
after giving effect to (i) the issuance of such Indebtedness and (if applicable)
the application of the net proceeds thereof to refinance other Indebtedness as
if such Indebtedness was issued at the beginning of the period, (ii) the
issuance and retirement of any other Indebtedness since the first day of the
period as if such Indebtedness was issued or retired at the beginning of the
period and (iii) the acquisition of any company or business acquired by the
Company or any Subsidiary since the first day of the period (including giving
effect to the pro forma historical earnings of such company or business),
including any acquisition which will be consummated contemporaneously with the
issuance of such Indebtedness, as if in each case such acquisition occurred at
the beginning of the period) exceeds a ratio of 1.6 to 1.0 and (ii), immediately
after giving effect to the issuance of such Indebtedness and (if applicable) the
application of the net proceeds thereof to refinance other Indebtedness, the
Consolidated Leverage Ratio is equal to or less than a ratio of 0.75 to 1.0.
(b) Notwithstanding the foregoing paragraph, the Company or any
Restricted Subsidiary may issue, directly or indirectly, the following
Indebtedness:
(1) Revolving Indebtedness to banks not to exceed $1,000,000,000 in the
aggregate outstanding principal amount at any time;
(2) Indebtedness (other than Indebtedness described in clause (1) of
this Subsection) outstanding on the date of the original Indenture, as set
forth on Schedule 510(b)(2) attached hereto and made a part hereof, and
Indebtedness issued in exchange for, or the proceeds of which are used to
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refund or refinance, any Indebtedness permitted by this clause (2);
provided, however, that (i) the principal amount (or accreted value in the
case of Indebtedness issued at a discount) of the Indebtedness so issued
shall not exceed the principal amount (or accreted value in the case of
Indebtedness issued at a discount) of, premium, if any, and accrued but
unpaid interest on, the Indebtedness so exchanged, refunded or refinanced
and (ii) the Indebtedness so issued (A) shall not mature prior to the
stated maturity of the Indebtedness so exchanged, refunded or refinanced,
(B) shall have an Average Life equal to or greater than the remaining
Average Life of the Indebtedness so exchanged, refunded or refinanced and
(C) if the Indebtedness to be exchanged, refunded or refinanced is
subordinated to the General Term Notes, the Indebtedness is subordinated to
the General Term Notes in right of payment;
(3) Indebtedness of the Company owed to and held by a Subsidiary and
Indebtedness of a Subsidiary owed to and held by the Company; provided,
however, that, in the case of Indebtedness of the Company owed to and held
by a Subsidiary, (i) any subsequent issuance or transfer of any Capital
Stock that results in any such Subsidiary ceasing to be a Subsidiary or
(ii) any transfer of such Indebtedness (except to the Company or a
Subsidiary) shall be deemed for the purposes of this Subsection to
constitute the issuance of such Indebtedness by the Company;
(4) Indebtedness of the Company issued in exchange for, or the proceeds
of which are used to refund or refinance, Indebtedness of the Company
issued in accordance with Subsection (a) of this Section, provided that (i)
the principal amount (or accreted value in the case of Indebtedness issued
at a discount) of the Indebtedness so issued shall not exceed the principal
amount (or accreted value in the case of Indebtedness issued at a discount)
of, premium, if any, and accrued but unpaid interest on, the Indebtedness
so
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exchanged, refunded or refinanced and (ii) the Indebtedness so issued
(A) shall not mature prior to the stated maturity of the Indebtedness so
exchanged, refunded or refinanced, (B) shall have an Average Life equal to
or greater than the remaining Average Life of the Indebtedness so
exchanged, refunded or refinanced and (C) if the Indebtedness to be
exchanged, refunded or refinanced is subordinated to the General Term
Notes, the Indebtedness so issued is subordinated to the General Term Notes
in right of payment; and
(5) Indebtedness of a Restricted Subsidiary issued in exchange for, or
the proceeds of which are used to refund or refinance, Indebtedness of a
Restricted Subsidiary issued in accordance with Subsection (a) of this
Section, provided that (i) the principal amount (or accreted value in the
case of Indebtedness issued at a discount) of the Indebtedness so issued
shall not exceed the principal amount (or accreted value in the case of
Indebtedness issued at a discount) of, premium, if any, and accrued but
unpaid interest on, the Indebtedness so exchanged, refunded or refinanced
and (ii) the Indebtedness so issued (A) shall not mature prior to the
stated maturity of the Indebtedness so exchanged, refunded or refinanced
and (B) shall have an Average Life equal to or greater than the remaining
Average Life of the Indebtedness so exchanged, refunded or refinanced.
SECTION 511. Limitation on Restricted Payments. (a) So long as the
General Term Notes are Outstanding and until the General Term Notes are rated
BBB- or above (or an equivalent rating) by Standard & Poor's and one Other
Rating Agency (or if Standard & Poor's shall change its rating system, an
equivalent of such rating then employed by such organization) at which time the
Company shall be permanently released from the provision of this Section 511,
the Company shall not, and shall not permit any Restricted Subsidiary of the
Company, directly or indirectly, to (i) declare or pay any dividend or make any
distribution on the Capital Stock of the Company to the direct or indirect
holders of the Capital Stock
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of the Company (except dividends or distributions payable solely in
Non-Convertible Capital Stock of the Company or in options, warrants or other
rights to purchase such Non-Convertible Capital Stock and except dividends or
distributions payable to the Company or a Subsidiary), (ii) purchase, redeem or
otherwise acquire or retire for value any Capital Stock of the Company (any such
dividend, distribution, purchase, redemption, other acquisition or retirement
being hereinafter referred to as a "Restricted Payment") if at the time the
Company or such Subsidiary makes such Restricted Payment:
(1) an Event of Default, or an event that with the lapse of time
or the giving of notice or both would constitute an Event of Default,
shall have occurred and be continuing (or would result therefrom); or
(2) the aggregate amount of such Restricted Payment and all
other Restricted Payments made since September 30, 1993, would exceed the
sum of:
(A) $120,000,000;
(B) 100% of Consolidated Net Income, accrued during the period
(treated as one accounting period) from September 30, 1993 to the
end of the most recent fiscal quarter ending at least 45 days prior
to the date of such Restricted Payment (or, in case such sum shall
be a deficit, minus 100% of the deficit); and
(C) the aggregate Net Proceeds received by the Company from the
issue or sale of or contribution with respect to its Capital Stock
subsequent to September 30, 1993.
For the purpose of determining the amount of any Restricted Payment not in the
form of cash, the amount shall be the fair value of such Restricted Payment as
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determined in good faith by the Board of Directors, provided that if the value
of the non-cash portion of such Restricted Payment as determined by the Board of
Directors is in excess of $25 million, such value shall be based on the opinion
from a nationally recognized firm experienced in the appraisal of similar types
of transactions.
(b) The provisions of Section 511(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the
Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than Redeemable Stock or Exchangeable Stock); provided, however, that
such purchase or redemption shall be excluded from the calculation of
the amount of Restricted Payments;
(ii) dividends or other distributions paid in respect of any
class of the Company's Capital Stock issued in respect of the
acquisition of any business or assets by the Company or a Restricted
Subsidiary if the dividends or other distributions with respect to such
Capital Stock are payable solely from the net earnings of such business
or assets;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section; provided, however, that at the time of
payment of such dividend, no Event of Default shall have occurred and
be continuing (or result therefrom), and provided further, however,
that such dividends shall be included (without duplication) in the
calculation of the amount of Restricted Payments; or
(iv) payments pursuant to the Tax-Sharing Agreement.
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SECTION 512. Limitation on Transactions with Affiliates. So long as any
of the General Term Notes are Outstanding, the Company shall not directly or
indirectly, conduct any business or enter into any transaction or series of
related transactions (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with an Affiliate unless the terms of
such business, transaction or series of transactions are as favorable to the
Company as terms that could be obtainable at the time for a comparable
transaction or series of related transactions in arm's-length dealings with an
unrelated third Person. This Section shall not apply to (x) compensation paid to
officers and directors of the Company which has been approved by the Board of
Directors of the Company or (y) loans to the Company or an Affiliate pursuant to
a global cash management program, which loans mature within one year from the
date thereof.
ARTICLE VI
ADDITIONAL EVENTS OF DEFAULT
WITH RESPECT TO THE GENERAL TERM NOTES
SECTION 601. Definition. All of the events specified in Section 501 of
the Indenture and the events specified in Section 602 of this Article shall be
"Events of Default" with respect to the General Term Notes.
SECTION 602. Additional Events of Default. As contemplated by Sections
301(15) and 501(7) of the Indenture, any one of the following events (whatever
the reason for such Event of Default and whether or not it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall be an Event of Default with respect
to the General Term Notes for all purposes of the Indenture:
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(a) a default or event of default in respect of any Indebtedness of the
Company having an aggregate outstanding principal amount at the time of such
default in excess of $25,000,000 shall occur which results in the acceleration
of such Indebtedness or Indebtedness of the Company having an outstanding
principal amount at maturity in excess of $25,000,000 shall not be paid at
maturity thereof, which default shall not have been waived by the holder or
holders of such Indebtedness within 30 days of such default; or
(b) the entry of a final judgment or judgments against the Company
aggregating in excess of $25,000,000 which remain undischarged or unbonded for a
period (during which execution shall not be effectively stayed) of 60 days.
ARTICLE VII
GLOBAL NOTES
The General Term Notes will be issued initially in the form of Global
Notes. "Global Note" means a registered General Term Note evidencing one or more
General Term Notes issued to a depositary (the "Depositary") or its nominee, in
accordance with this Article and bearing the legend prescribed in this Article.
A single Global Note will represent all General Term Notes issued on the same
date and having the same terms, including, but not limited to, the same Interest
Payment Dates, rate of interest, Stated Maturity, and redemption provisions (if
any). The Company shall execute and the Trustee shall, in accordance with this
Article and the Company Order with respect to the General Term Notes,
authenticate and deliver one or more Global Notes in temporary or permanent form
that (i) shall represent and shall be denominated in an aggregate amount equal
to the aggregate principal amount of the General Term Notes to be represented by
such Global Note or Notes, (ii) shall be registered in the name of the
Depositary for such Global Note or Notes or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions and (iv) shall
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bear a legend substantially to the following effect: "Unless this Global Note is
presented by an authorized representative of the Depositary to the Company or
its agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of the Depositary or in such other name as is
requested by the Depositary, any transfer, pledge or other use hereof for value
or otherwise by or to any person shall be wrongful inasmuch as the registered
owner hereof, the Depositary, has an interest herein."
Notwithstanding Section 305 of the Indenture, unless and until it is
exchanged in whole or in part for General Term Notes in definitive form, a
Global Note representing one or more General Term Notes may not be transferred
except as a whole by the Depositary, to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
for General Term Notes or a nominee of such successor Depositary.
If at any time the Depositary for the General Term Notes is unwilling
or unable to continue as Depositary for the General Term Notes, the Company
shall appoint a successor Depositary with respect to the General Term Notes. If
a successor Depositary for the General Term Notes is not appointed by the
Company by the earlier of (i) 90 days from the date the Company receives notice
to the effect that the Depositary is unwilling or unable to act, or the Company
determines that the Depositary is unable to act or (ii) the effectiveness of the
Depositary's resignation or failure to fulfill its duties as Depositary, the
Company will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive General Term Notes, will authenticate
and deliver General Term Notes in definitive form in an aggregate principal
amount equal to the principal amount of the Global Note or Notes representing
such General Term Notes in exchange for such Global Note or Notes.
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The Company may at any time and in its sole discretion determine that
the General Term Notes issued in the form of one or more Global Notes shall no
longer be represented by such Global Note or Notes. In such event the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive General Term Notes, will authenticate
and deliver General Term Notes in definitive form in an aggregate principal
amount equal to the principal amount of the Global Note or Notes representing
such General Term Notes in exchange for such Global Note or Notes.
The Depositary for such General Term Notes may surrender a Global Note
or Notes for such General Term Notes in exchange in whole or in part for General
Term Notes in definitive form on such terms as are acceptable to the Company and
such Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge:
(i) to each Person specified by such Depositary a new General
Term Note or Notes, of any authorized denomination as requested by such
Person in aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Global Note; and
(ii) to such Depositary a new Global Note in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Note and the aggregate principal amount of General
Term Notes in definitive form delivered to Holders thereof.
In any exchange provided for in this Article, the Company will execute
and the Trustee will authenticate and deliver General Term Notes in definitive
registered form in authorized denominations.
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Upon the exchange of a Global Note for General Term Notes in definitive
form, such Global Note shall be canceled by the Trustee. General Term Notes in
definitive form issued in exchange for a Global Note pursuant to this Article
shall be registered in such names and in such authorized denominations as the
Depositary for such Global Note, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee or Security
Registrar. The Trustee shall deliver such General Term Notes to the persons in
whose names such General Term Notes are so registered.
ARTICLE VIII
DEFEASANCE
All of the provisions of Article Fourteen of the Original Indenture
shall be applicable to the General Term Notes. Upon satisfaction by the Company
of the requirements of Section 1404 of the Indenture, in connection with any
covenant defeasance (as provided in Section 1403 of the Indenture), the Company
shall be released from its obligations under Article Eight of the Original
Indenture and under Articles III and V of this Fifth Supplemental Indenture with
respect to the General Term Notes.
ARTICLE IX
SUPPLEMENTAL INDENTURES
This Fifth Supplemental Indenture is a supplement to the Original
Indenture. As supplemented by this Fifth Supplemental Indenture, the Original
Indenture is in all respects ratified, approved and confirmed, and the Original
Indenture and this Fifth Supplemental Indenture shall together constitute one
and the same instrument.
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The Company may, by supplemental indenture, amend this Fifth
Supplemental Indenture to provide for additional definitions, terms and
provisions relating to General Term Notes. Any such supplemental indenture shall
not adversely affect the rights and privileges of Holders of General Term Notes
issued prior to such supplemental indenture. Any such supplemental indenture may
include,
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but is not limited to including, additional provisions permitting payment of
General Term Notes prior to Stated Maturity at the option of the Holders,
issuance of General Term Notes in currencies other than Dollars, and special
provisions relating to interest rate provisions.
TESTIMONIUM
This Fifth Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Supplemental Indenture to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first written
above.
CMS ENERGY CORPORATION
By:________________________
Attest:
________________________
(Corporate Seal)
THE CHASE MANHATTAN BANK
as Trustee
By:________________________
Attest:
________________________
(Corporate Seal)
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Schedule 510(b)(2)
Indebtedness of CMS Energy Corporation outstanding on January 20, 1994:
1. $146,000,000 of Series A Senior Deferred Coupon Notes due 1997; and
2. $248,000,000 of Series B Senior Deferred Coupon Notes due 1999.
52
<PAGE> 1
EXHIBIT (5)
[CMS ENERGY LETTERHEAD]
MICHAEL D. VAN HEMERT, ESQ.
Assistant General Counsel
August 5, 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 (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 $400,000,000 aggregate principal amount
of General Term Notes, Series E (the "Debt Securities"). Capitalized terms not
otherwise defined herein have the respective meanings specified in the
Registration Statement.
In rendering this opinion, I have examined and relied upon a
copy of the Registration Statement. I have also examined, or have arranged for
the examination by an attorney or attorneys under my general supervision,
originals, or copies of originals certified to my satisfaction, of such
agreements, documents, certificates and other statements of governmental
officials and other instruments, and have examined such questions of law and
have satisfied myself as to such matters of fact, as I have considered relevant
and necessary as a basis for this opinion. I have assumed the authenticity of
all documents submitted to me as originals, the genuineness of all signatures,
the legal capacity of all natural persons and the conformity with the original
documents of any copies thereof submitted to me for examination.
Based on the foregoing, it is my opinion that:
1. The Company is duly incorporated and validly existing
under the laws of the State of Michigan.
<PAGE> 2
EXHIBIT (5)
2. The Indenture dated as of January 15, 1994, as
supplemented (the AIndenture@) between the Company and
the Chase Manhattan Bank, a New York banking
corporation, as trustee ("Trustee"), has been duly
authorized, executed and delivered and the Company has
the corporate power and authority to execute and deliver
the Fifth Supplemental Indenture to the Indenture (the
"Supplemental Indenture") between the Company and the
Chase Manhattan Bank, a New York banking corporation, as
Trustee, to be filed as Exhibit (4)(a)(vi) to the
Registration Statement, under which the Debt Securities
are to be issued, and to authorize and sell the Debt
Securities.
3. The Debt Securities will be legally issued and binding
obligations of the Company (except to the extent
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting the enforcement
of creditors' rights generally and by the effect of
general principles of equity, regardless of whether
enforceability is considered in a proceeding in equity
or at law) when: (i) the Registration Statement, as
finally amended (including any necessary post-effective
amendments), shall have become effective under the
Securities Act and the Indenture (including any
necessary supplemental indentures) shall have been
qualified under the Trust Indenture Act of 1939, as
amended, and duly executed and delivered by the Company
and the Trustee; (ii) an appropriate Pricing Supplement
with respect to the particular Debt Securities then
being sold by the Company shall have been filed with the
Commission pursuant to Rule 424 under the Securities
Act; (iii) the Company's Board of Directors or a duly
authorized committee or delegate thereof shall have
taken final action authorizing the issuance and sale of
the particular Debt Securities then being sold by the
Company as contemplated by the Registration Statement
and the Indenture; and (iv) the Supplemental Indenture
under which the Debt Securities are to be issued shall
have been duly authorized, executed and delivered and
the particular Debt Securities then being sold by the
Company shall have been duly executed and authenticated
as provided in the Indenture and such resolutions, and
shall have been duly delivered to the purchasers thereof
against payment of the agreed consideration therefor.
For purposes of this opinion, I have assumed that there will be
no changes in the laws currently applicable to the Company and that such laws
will be the only laws applicable to the Company.
I do not find it necessary for the purposes of this opinion to
cover, and accordingly I express no opinion as to, the application of the
securities or blue sky laws of the various states to the sale of the Debt
Securities.
I am a member of the bar of the State of Michigan and I express
no opinion as to the laws of any jurisdiction other than the State of Michigan
and the federal law of the United States of America.
<PAGE> 3
EXHIBIT (5)
I hereby consent to the filing of this opinion as an exhibit to
the Company's Registration Statement on Form S-3 relating to the Debt Securities
and to all references to me included in or made a part of the Registration
Statement.
Very truly yours,
/s/ Michael D. Van Hemert
----------------------------
Michael D. Van Hemert
<PAGE> 1
EXHIBIT (12)
CMS ENERGY CORPORATION
Ratio of Earnings to Fixed Charges and
Preferred Securities Dividends and Distributions
(Millions of Dollars)
<TABLE>
<CAPTION>
Three Months
Ended Years Ended December 31
March 31, 1998 1997 1996 1995 1994 1993
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(b)
Earnings as defined (a)
Consolidated net income $ 45 $ 244 $ 224 $ 195 $ 177 $ 130
Income taxes 19 108 137 113 91 62
Exclude equity basis subsidiaries (19) (80) (85) (57) (18) (6)
Fixed charges as defined, adjusted to
exclude capitalized interest of $5, $13,
$5, $4, $2, and $5 million for the three
months ended March 31, 1998 and for the
years ended December 31, 1997, 1996,
1995, 1994 and 1993, respectively 98 360 313 299 253 247
----------------------------------------------------------
Earnings as defined $ 143 $ 632 $ 589 $ 550 $ 503 $ 433
===========================================================
Fixed charges as defined (a)
Interest on long-term debt $ 76 $ 273 $ 230 $ 224 $ 193 $ 204
Estimated interest portion of lease rental 2 8 10 9 9 12
Other interest charges 12 49 43 42 30 25
Preferred securities dividends and
distributions 19 67 54 42 36 17
----------------------------------------------------------
Fixed charges as defined $ 109 $ 397 $ 337 $ 317 $ 268 $ 258
==========================================================
Ratio of earnings to fixed charges and
preferred securities dividends and distributions 1.31 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 (15)
To CMS Energy Corporation:
We are aware that CMS Energy Corporation has incorporated by reference
in this registration statement its Form 10-Q for the quarter ended March 31,
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,
August 4, 1998.
<PAGE> 1
EXHIBIT (23)(b)
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,
August 4, 1998.
<PAGE> 1
EXHIBIT 24
May 22, 1998
Mr. Alan M. Wright and
Mr. Thomas A. McNish
Consumers Energy Company
212 West Michigan Avenue
Jackson, MI 49201
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 $225 million of debt securities of the Company (plus
an additional 20% for the purpose of covering underwriters' over-allotments,
price adjustments, or sale of additional securities).
Very truly yours,
/s/William T. McCormick, Jr. /s/Victor J. Fryling
- ---------------------------- -----------------------------
William T. McCormick, Jr. Victor J. Fryling
/s/John M. Deutch /s/William U. Parfet
- ---------------------------- -----------------------------
John M. Deutch William U. Parfet
/s/James J. Duderstadt /s/Percy A. Pierre
- ---------------------------- -----------------------------
James J. Duderstadt Percy A. Pierre
/s/Kathleen R. Flaherty /s/Kenneth Whipple
- ---------------------------- -----------------------------
Kathleen R. Flaherty Kenneth Whipple
/s/Earl D. Holton
- ---------------------------- -----------------------------
Earl D. Holton 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 May 22, 1998.
- - - - - - - -
Proposed Issue and Sale of General Term Notes
* * *
RESOLVED: That the Board of Directors approves the issue and
sale, from time to time, in one or more series, of not more than $400
million aggregate principal amount of senior unsecured debt in the form of
General Term Notes (the "Notes") (plus an additional 20% for the purpose
of covering underwriters' over-allotments, price adjustments, or sale of
additional securities) and the officers of the Corporation, and each of
them, are authorized in their discretion, on its behalf, to execute and
file with the Securities and Exchange Commission a Registration Statement
on Form S-3 under the Securities Act of 1933, as amended (the "Act") with
respect to the issue and sale of not more than $400 million aggregate
principal amount of the Notes (plus an additional 20% for the purpose of
covering underwriters' over-allotments, price adjustments, or sale of
additional securities), in such form as may be approved by the officers
executing the same, and to do all other things necessary to make such
registration effective, including the execution and filing of any
necessary or appropriate amendments or supplements thereto; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized in their discretion, on its behalf, to take all
actions necessary or advisable to consummate the negotiation,
registration, and sale of up to $400 million aggregate principal amount of
the Notes (plus an additional 20% for the purpose of covering
underwriters' over-allotments, price adjustments, or sale of additional
securities), which Notes shall be issued pursuant to an Indenture dated as
of January 15, 1994 entered into between the Corporation and The Chase
Manhattan Bank, as Trustee, to be supplemented by a Fifth Supplemental
Indenture (such indenture as so supplemented, the "Indenture"); and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized to execute and deliver the Fifth Supplemental
Indenture, to be entered into between the Corporation and The Chase
Manhattan Bank, as Trustee, on behalf of the Corporation in such form as
may be approved by the officers executing the same and as counsel may
advise; and
RESOLVED FURTHER: That any one of the following persons: the
Chairman of the Board, the President, the Chief Financial Officer, or the
Treasurer of the Corporation, or Martin R. Walicki, Rahul (Sonny) R. Lulla
or Janet Sanders, as agents for the Corporation, are authorized in their
discretion, to
<PAGE> 3
execute, issue, deliver and sell from time to time up to $400 million
aggregate principal amount of the Notes (plus an additional 20% for the
purpose of covering underwriters' over-allotments, price adjustments, or
sale of additional securities) pursuant to and in accordance with the
Indenture and a distribution agreement hereinafter described and
authorized, but subject to the effectiveness of the Registration Statement
under the Act; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized in their discretion, to execute and deliver, on
its behalf, a distribution agreement relating to the sale of up to $400
million aggregate principal amount of the Notes (plus an additional 20%
for the purpose of covering underwriters' over-allotments, price
adjustments, or sale of additional securities) in such form as may be
approved by the officers executing the same and as counsel may advise, and
such officers are authorized to perform all acts and things necessary to
effect the transactions contemplated by said distribution agreement; and
RESOLVED FURTHER: That each Note issued by the Corporation shall
be sold at a price equal to 100% of the principal amount thereof and have
such terms (including, without limitation, interest rate, maturity date,
redemption provisions (if any) and other terms permitted or contemplated
by the Indenture) as shall be set forth in a certificate delivered to the
Trustee pursuant to the terms of the Indenture, and any one of the
following persons: the Chairman of the Board, the President, the Chief
Financial Officer, or the Treasurer of the Corporation, or Martin R.
Walicki, Rahul (Sonny) R. Lulla or Janet Sanders, as agents of the
Corporation, are empowered to approve and authorize such terms and to
execute and deliver such certificate setting forth the same; and
RESOLVED FURTHER: That each Note issued by the Corporation shall
bear interest at such rate, pay interest and principal on such dates, and
have such other terms and provisions (including, but not limited to,
redemption terms or a survivors's option), and shall be issued in
definitive registered form as a global note pursuant to the terms of the
Indenture, as determined by any one of the following persons: the Chairman
of the Board, the President, the Chief Financial Officer, or the Treasurer
of the Corporation, or Martin R. Walicki, Rahul (Sonny) R. Lulla or Janet
Sanders, as agents for the Corporation; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized to take any and all action that any of such
officers may deem necessary or advisable in order to effect the
registration or qualification, or to request an exemption from such
registration or qualification, of part or all of the Notes for offer and
sale under the securities or Blue Sky laws of any of the States of the
United States of America or other jurisdiction, and, in connection
therewith, to execute, acknowledge, verify, deliver, file and publish all
such
<PAGE> 4
applications, reports, resolutions, consents and other papers and
instruments as may be required under such laws, and to take any and all
further action that any such officer may deem necessary or advisable in
order to maintain any such registration or qualification, or exemption
therefrom, for as long as such officers may deem to be in the best
interests of the Corporation; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized and empowered to sign, seal and deliver such
papers and documents, and to do or cause to be done all acts and things
which any of them may consider necessary or advisable to carry out the
intent and purposes of all the foregoing resolutions with respect to the
issue and sale of up to $400 million aggregate principal amount of the
Notes of the Corporation (plus an additional 20% for the purpose of
covering underwriters' over-allotments, price adjustments, or sale of
additional securities).
- - - - - - - -
I, Joyce H. Norkey, Assistant Secretary of CMS Energy Corporation, do hereby
certify that the foregoing is a true and correct copy of resolutions duly and
regularly adopted at a meeting of the Board of Directors of CMS Energy
Corporation duly called and held on May 22, 1998, at which a quorum was in
attendance and voting throughout and that said resolutions have not since been
rescinded but are still in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this 19th day of June, 1998.
/s/Joyce H. Norkey
----------------------------
Joyce H. Norkey
Assistant Secretary
<PAGE> 1
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
CMS ENERGY CORPORATION
(Exact name of obligor as specified in its charter)
MICHIGAN 38-2726431
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
330 TOWN CENTER DRIVE
DEARBORN, MICHIGAN 48126
(Address of principal executive offices) (Zip Code)
-------------------------------------------------
GENERAL TERM NOTES, SERIES E
(Title of the indenture securities)
------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, Suite 2310, 5 Empire State
Plaza, Albany,
New York 12223. Board of Governors of the Federal Reserve System
20th and C
Street NW, Washington, D.C., 20551 Federal Reserve Bank of New
York,
District No. 2, 33 Liberty Street, New York, N.Y. 10045.
Federal Deposit Insurance Corporation, 550 Seventeenth Street NW
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 30th day of July, 1998 .
THE CHASE MANHATTAN BANK
By /s/James P. Freeman
----------------------------------
James P. Freeman
Assistant Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1998, 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 MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin........................................................ $ 12,037
Interest-bearing balances............................................ 4,054
Securities:............................................................................
Held to maturity securities......................................................... 2,340
Available for sale
securities................................................. 50,134
Federal funds sold and securities purchased under
agreements to resell..................................................... 24,982
Loans and lease financing receivables:
Loans and leases, net of unearned income $127,958
Less: Allowance for loan and lease losses 2,797
Less: Allocated transfer risk reserve .......______0
Loans and leases, net of unearned income,
allowance, and reserve................................................. 125,161
Trading Assets....................................................................... 61,820
Premises and fixed assets (including capitalized
leases).............................................................................. 2,961
Other real estate owned....................................................... 347
Investments in unconsolidated subsidiaries and
associated companies................................................... 242
Customers' liability to this bank on acceptances
outstanding.................................................................... 1,380
Intangible assets.................................................................... 1,549
Other assets........................................................................... 11,727
-------
TOTAL ASSETS....................................................................... $298,734
==========
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits
In domestic offices..................................................... $96,682
Noninterest-bearing.........................................$38,074
Interest-bearing............................................ 58,608
------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's.......................................................................72,630
Noninterest-bearing ........................................$3,289
Interest-bearing.........................................69,341
Federal funds purchased and securities sold under agree-
ments to repurchase............................................................... 42,735
Demand notes issued to the U.S. Treasury........................ 872
Trading liabilities................................................................... 45,545
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less ........... 4,454
With a remaining maturity of more than one year .
through three years.......................................................... 231
With a remaining maturity of more than three years......................... 106
Bank's liability on acceptances executed and outstanding 1,380
Subordinated notes and debentures..................................... 5,708
Other liabilities........................................................................ 11,295
TOTAL LIABILITIES
.................................................................. 281,638
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock....................................................................... 1,211
Surplus (exclude all surplus related to preferred stock)... 10,291
Undivided profits and capital reserves................................. 5,579
Net unrealized holding gains (losses)
on available-for-sale securities............................................... (1)
Cumulative foreign currency translation adjustments......... 16
TOTAL EQUITY CAPITAL........................................................ 17,096
------
TOTAL LIABILITIES AND EQUITY CAPITAL...................................... $298,734
=========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and
is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
