<PAGE> 1
As filed with the Securities and Exchange Commission on April 15, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------------------------------------------
Washington, DC 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CMS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-2726431
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
EMPLOYEES' SAVINGS & INCENTIVE PLAN
OF CONSUMERS ENERGY COMPANY
(Full title of plans)
ALAN M. WRIGHT Copy to:
Senior Vice President and MICHAEL D. VAN HEMERT, ESQ.
Chief Financial Officer Assistant General Counsel
Fairlane Plaza South, Suite 1100 CMS Energy Corporation
330 Town Center Drive Fairlane Plaza South, Suite 1100
Dearborn, Michigan 48126 330 Town Center Drive
(313) 436-9560 Dearborn, Michigan 48126
(313) 436-9602
(Name, address, including ZIP code,
and telephone number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered price per share (1) offering price(1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, 5,000,000(2) $40.41 $202,050,000 $56,170
$.01 par value
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1) Estimated solely for the purpose of calculating the registration fee
and, pursuant to Rule 457(c) and Rule 457(h) of the Securities Act of
1933, based upon the average of the high and low sale prices of the
Common Stock, $.01 par value per share, of CMS Energy Corporation, on
the New York Stock Exchange on April 12, 1999.
(2) The entire 5,000,000 additional shares are being registered for issuance
pursuant to the Employees' Savings Incentive Plan of Consumers
Energy Company.
<PAGE> 2
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
STATEMENT UNDER GENERAL INSTRUCTION E - REGISTRATION OF ADDITIONAL SECURITIES
This Registration Statement on Form S-8 is being filed solely to
register additional securities in accordance with General Instruction E of Form
S-8. CMS Energy Corporation ("CMS Energy" or the "Corporation") hereby
incorporates by reference in this Registration Statement all contents, including
those incorporated by reference, of CMS Energy's Registration Statements on Form
S-8 dated June 30, 1989 (and Pre-Effective Amendment No. 1 dated July 19, 1989
and Post-Effective Amendment No. 1 dated July 29, 1992 thereto - Registration
No. 33-29681) and August 4, 1995 (Registration No. 33-61595). CMS Energy has
filed with the Securities and Exchange Commission (the "Commission"), and
incorporates herein by reference, the following:
SEC FILINGS (FILE NO. 1-9513) PERIOD/DATE
- Registration Statement on Form 8-B/A November 22, 1996.
- Annual Report on Form 10-K Year ended December 31, 1998
- Current Reports on Form 8-K Filed January 20, 1999 and
April 6, 1999
All documents subsequently filed with the Commission by CMS Energy
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold
shall be deemed to be incorporated herein by reference and to be a part hereof
from the dates of filing of such documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
A legal opinion will be rendered for CMS Energy by Michael D. Van
Hemert, Assistant General Counsel of CMS Energy. As of December 31, 1998, Mr.
Van Hemert beneficially owned approximately 4,025 shares of CMS Energy Common
Stock.
ITEM 6. 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.
<PAGE> 3
Article VIII of the Articles of Incorporation of CMS Energy reads:
A director shall not be personally liable to the Corporation or its
shareholders for monetary damages for breach of duty as a director except (i)
for a breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for a violation of
Section 551(l) of the Michigan Business Corporation Act, and (iv) any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article VIII, and no modification to its
provisions by law, shall apply to, or have any effect upon, the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment, repeal or
modification.
Article IX of the Articles of Incorporation of CMS Energy 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, as
amended, provides CMS Energy with the power to indemnify directors, officers,
employees and agents against certain expenses and payments, and to purchase and
maintain insurance on behalf of directors, officers, employees and agents.
Officers and directors 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 8. EXHIBITS
Exhibit Numbers
*(4)(a) - Indenture dated as of September 15, 1992
between CMS Energy and NBD Bank, as Trustee.
(Designated in CMS Energy's Form S-3
Registration Statement filed May 1, 1992, File
No. 33-47629, as Exhibit (4)(a).)
First Supplemental Indenture dated as of
October 1, 1992 between CMS Energy and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 8-K dated October 1, 1992, File No.
1-9513, as Exhibit (4).)
Second Supplemental Indenture dated as of
October 1, 1992 between CMS Energy and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 8-K dated October 1, 1992, File No.
1-9513, as Exhibit 4(a).)
Third Supplemental Indenture dated as of May
6, 1997 between CMS Energy and NBD Bank, as
Trustee. (Designated in CMS Energy's Form 10-Q
for the quarter ended March 31, 1997, File No.
1-9513, as Exhibit (4).)
<PAGE> 4
Fourth Supplemental Indenture dated September
26, 1997 between CMS Energy Corporation and
NBD Bank, as Trustee. (Designated in CMS
Energy's Form S-3 Registration Statement filed
October 6, 1997, File No. 333-37241, as
Exhibit 4(a).)
Fifth Supplemental Indenture dated November 4,
1997 between CMS Energy Corporation and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 10-Q for the quarter ended September 30,
1997, File No. 1-9513, as Exhibit 4(b).)
Sixth Supplemental Indenture dated January 13,
1998 between CMS Energy Corporation and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 10-K for the year ended December 31,
1997, File No. 1-9513, as Exhibit 4(a).)
Seventh Supplemental Indenture dated January
25, 1999 between CMS Energy Corporation and
NBD Bank, as Trustee (Designated in CMS
Energy's Form 10-K for the year ended December
31, 1998, File No. 1-9513, as Exhibit 4(d).)
Eighth Supplemental Indenture dated February
3, 1999 between CMS Energy Corporation and NBD
Bank, as Trustee (Designated in CMS Energy's
Form 10-K for the year ended December 31,
1998, File No. 1-9513, as Exhibit 4(d)(i).)
*(4)(b) - Indenture dated as of January 15, 1994 between
CMS Energy and The Chase Manhattan Bank, as
Trustee. (Designated in CMS Energy's Form 8-K
dated March 29, 1994, File No. 1-9513, as
Exhibit (4)(a).)
First Supplemental Indenture dated as of
January 20, 1994 between CMS Energy and The
Chase Manhattan Bank, as Trustee. (Designated
in CMS Energy's Form 8-K dated March 29, 1994,
File No. 1-9513, as Exhibit (4)(b).)
Second Supplemental Indenture dated as of
March 19, 1996 between CMS Energy and The
Chase Manhattan Bank, as Trustee. (Designated
in CMS Energy's Form 10-Q for the quarter
ended March 31, 1996, File No. 1-9513, as
Exhibit (4).)
Third Supplemental Indenture dated as of March
17, 1997 between CMS Energy and The Chase
Manhattan Bank, as Trustee. (Designated in CMS
Energy's Form 8-K dated May 1, 1997, File No.
1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated September
17, 1997 between CMS Energy Corporation and
The Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form S-3
Registration Statement filed September 22,
1997, File No. 333-36115, as Exhibit 4(d).)
Fifth Supplemental Indenture dated August 26,
1998 between CMS Energy Corporation and The
Chase Manhattan Bank, as Trustee. (Designated
in CMS Energy's Form S-4 Registration
Statement filed September 10, 1998, File No.
333-63229, as Exhibit 4(c).)
*(4)(c) - Indenture dated June 1, 1997 between CMS
Energy Corporation and The Bank of New York,
as Trustee. (Designated in CMS Energy's Form
8-K dated June 1, 1997, File No. 1-9513, as
Exhibit 4(a).)
First Supplemental Indenture dated June 20,
1997 between CMS Energy Corporation and The
Bank of New York, as Trustee. (Designated in
CMS Energy's Form 8-K dated July 1, 1997, File
No. 1- 9513, as Exhibit 4(b).)
*(4)(d) - Credit Agreement dated as of July 21, 1997,
among CMS Energy, the Banks, the
Administrative Agent, the Collateral Agent,
the Documentation Agent, the Syndication
Agent, the Co-Agents and
<PAGE> 5
the Lead Manager, all as defined therein, and
the Exhibits and Schedules thereto.
(Designated in CMS Energy's Form 10-Q for the
quarter ended June 30, 1997, File no. 1-9513,
as Exhibit 4.)
Amendment No. 1 dated January 30, 1998 to
Credit Agreement dated July 21, 1997, among
CMS Energy, the Banks, the Administrative
Agent, the Collateral Agent, the Documentation
Agent, the Syndication Agent, the Co-Agents
and the Lead Manager, all as defined therein,
and the Exhibits thereto. (Designated in CMS
Energy's Form S-4 Registration Statement file
September 10, 1998, File No. 333-63229, as
Exhibit 4(f)).
Amendment No. 2 dated November 2, 1998 to
Credit Agreement dated July 21, 1997, among
CMS Energy , the Banks, the Administrative
Agent, the Collateral Agent, the Documentation
Agent, the Syndication Agent, the Co-Agents
and the Lead Manager, all as defined therein,
and the Exhibits thereto. (Designated in CMS
Energy's Form 10-K for the year ended December
31, 1998, File No. 1-9513, as Exhibit 10(b)).
*(4)(e) - Restated Articles of Incorporation of CMS
Energy. (Designated in CMS Energy's Form S-4
dated June 6, 1995, File No. 1-9513, as
Exhibit (3)(i).
*(4)(f) - By-Laws of CMS Energy. (Designated in CMS
Energy's Form 10-K for the year ended December
31, 1994, File No. 1-5611, as Exhibit 3(c)).
**(4)(g) - Employees' Savings & Incentive Plan of
Consumers Energy Company, as first effective
November 1, 1961 and as most recently amended
January 1, 1998.
*(4)(h) - Form of election of Exercise of Nonqualified
Stock Option. (Designated in CMS Energy's Form
S-8 dated August 4, 1995, File No. 33-61595,
as Exhibit (4)(f)).
*(4)(i) - Form of certificate of option grant.
(Designated in CMS Energy's Form S-8 dated
August 4, 1995, File No. 33-61595, as Exhibit
(4)(g)).
(5) - Opinion of Michael D. Van Hemert, Esq.,
Assistant General Counsel for CMS Energy re:
legality of securities being offered.
(23)(a) - Consent of Michael D. Van Hemert, Esq.,
Assistant General Counsel for CMS Energy
(included in Exhibit 5 above).
(23)(b) - Consent of Arthur Andersen LLP regarding the
Company's Form 10-K.
(24) - Power of Attorney
- --------------------
*Previously Filed
**CMS Energy has submitted the Employees' Savings & Incentive Plan of
Consumers Energy Company and any amendment thereto to the Internal Revenue
Service in a timely manner and has made all changes required by the IRS in order
to qualify the plan.
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 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:
<PAGE> 6
(1) To file, during any period in which offers or sales 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 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 a 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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 hereof.
(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 6 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 that matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
<PAGE> 7
SIGNATURES
THE REGISTRANT
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-8 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 April 15, 1999.
CMS ENERGY CORPORATION
By: /s/ A.M. Wright
---------------------
Alan M. Wright
Senior Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in their
respective capacities as officers and/or directors of CMS Energy Corporation and
on the dates indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on April 15, 1999.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
(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/ A.M. Wright Senior Vice President and Chief Financial Officer
-------------------------------
Alan M. Wright
(iii)/s/ P.D. Hopper Senior Vice President, Controller and Chief Accounting
------------------------------- Officer
Preston D. Hopper
* Director
-------------------------------
(John M. Deutch)
* Director
-------------------------------
(James J. Duderstadt)
* Director
-------------------------------
(Kathleen R. Flaherty
* Director
-------------------------------
(Victor J. Fryling)
* Director
-------------------------------
(Earl D. Holton)
</TABLE>
<PAGE> 8
NAME TITLE
* Director
-------------------------------
(William U. Parfet)
* Director
-------------------------------
(Percy A. Pierre)
* Director
-------------------------------
(Kenneth L. Way)
* Director
-------------------------------
(Kenneth Whipple)
* Director
-------------------------------
(John B. Yasinsky)
By: /s/ A.M. Wright
-------------------------------
Alan M. Wright
Attorney-in-Fact
<PAGE> 9
THE PLAN
Pursuant to the requirements of the Securities Act of 1933, the Plan
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Jackson, State of
Michigan, on April 15, 1999.
EMPLOYEES' SAVINGS & INCENTIVE PLAN
OF CONSUMERS ENERGY COMPANY
By: /s/ Thomas A. McNish
----------------------------
Thomas A. McNish
Plan Administrator
<PAGE> 10
EXHIBIT INDEX
-------------
DESCRIPTION OF EXHIBITS
-----------------------
Exhibit Numbers
- ---------------
*(4)(a) - Indenture dated as of September 15, 1992
between CMS Energy and NBD Bank, as Trustee.
(Designated in CMS Energy's Form S-3
Registration Statement filed May 1, 1992, File
No. 33-47629, as Exhibit (4)(a).)
First Supplemental Indenture dated as of
October 1, 1992 between CMS Energy and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 8-K dated October 1, 1992, File No.
1-9513, as Exhibit (4).)
Second Supplemental Indenture dated as of
October 1, 1992 between CMS Energy and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 8-K dated October 1, 1992, File No.
1-9513, as Exhibit 4(a).)
Third Supplemental Indenture dated as of May
6, 1997 between CMS Energy and NBD Bank, as
Trustee. (Designated in CMS Energy's Form 10-Q
for the quarter ended March 31, 1997, File No.
1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated September
26, 1997 between CMS Energy Corporation and
NBD Bank, as Trustee. (Designated in CMS
Energy's Form S-3 Registration Statement filed
October 6, 1997, File No. 333-37241, as
Exhibit 4(a).)
Fifth Supplemental Indenture dated November 4,
1997 between CMS Energy Corporation and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 10-Q for the quarter ended September 30,
1997, File No. 1-9513, as Exhibit 4(b).)
Sixth Supplemental Indenture dated January 13,
1998 between CMS Energy Corporation and NBD
Bank, as Trustee. (Designated in CMS Energy's
Form 10-K for the year ended December 31,
1997, File No. 1-9513, as Exhibit 4(a).)
Seventh Supplemental Indenture dated January
25, 1999 between CMS Energy Corporation and
NBD Bank, as Trustee (Designated in CMS
Energy's Form 10-K for the year ended December
31, 1998, File No. 1-9513, as Exhibit 4(d).)
Eighth Supplemental Indenture dated February
3, 1999 between CMS Energy Corporation and NBD
Bank, as Trustee (Designated in CMS Energy's
Form 10-K for the year ended December 31,
1998, File No. 1-9513, as Exhibit 4(d)(i).)
*(4)(b) - Indenture dated as of January 15, 1994 between
CMS Energy and The Chase Manhattan Bank, as
Trustee. (Designated in CMS Energy's Form 8-K
dated March 29, 1994, File No. 1-9513, as
Exhibit (4)(a).)
First Supplemental Indenture dated as of
January 20, 1994 between CMS Energy and The
Chase Manhattan Bank, as Trustee. (Designated
in CMS Energy's Form 8-K dated March 29, 1994,
File No. 1-9513, as Exhibit (4)(b).)
Second Supplemental Indenture dated as of
March 19, 1996 between CMS Energy and The
Chase Manhattan Bank, as Trustee. (Designated
in CMS Energy's Form 10-Q for the quarter
ended March 31, 1996, File No. 1-9513, as
Exhibit (4).)
Third Supplemental Indenture dated as of March
17, 1997 between CMS Energy and The Chase
Manhattan Bank, as Trustee. (Designated in CMS
Energy's Form 8-K dated May 1, 1997, File No.
1-9513, as Exhibit (4).)
Fourth Supplemental Indenture dated September
17, 1997 between CMS Energy Corporation and
The Chase Manhattan Bank, as Trustee.
(Designated in CMS Energy's Form S-3
Registration Statement filed September 22,
1997, File No. 333-36115, as Exhibit 4(d).)
Fifth Supplemental Indenture dated August 26,
1998 between CMS Energy Corporation and The
Chase Manhattan Bank, as Trustee. (Designated
in CMS Energy's Form S-4 Registration
Statement filed September 10, 1998, File No.
333-63229, as Exhibit 4(c).)
*(4)(c) - Indenture dated June 1, 1997 between CMS
Energy Corporation and The Bank of New York,
as Trustee. (Designated in CMS Energy's Form
8-K dated June 1, 1997, File No. 1-9513, as
Exhibit 4(a).)
First Supplemental Indenture dated June 20,
1997 between CMS Energy Corporation and The
Bank of New York, as Trustee. (Designated in
CMS Energy's Form 8-K dated July 1, 1997, File
No. 1-9513, as Exhibit 4(b).)
*(4)(d) - Credit Agreement dated as of July 21, 1997,
among CMS Energy, the Banks, the
Administrative Agent, the Collateral Agent,
the Documentation Agent, the Syndication
Agent, the Co-Agents and
<PAGE> 11
the Lead Manager, all as defined therein, and
the Exhibits and Schedules thereto.
(Designated in CMS Energy's Form 10-Q for the
quarter ended June 30, 1997, File no. 1-9513,
as Exhibit 4.)
Amendment No. 1 dated January 30, 1998 to
Credit Agreement dated July 21, 1997, among
CMS Energy, the Banks, the Administrative
Agent, the Collateral Agent, the Documentation
Agent, the Syndication Agent, the Co-Agents
and the Lead Manager, all as defined therein,
and the Exhibits thereto. (Designated in CMS
Energy's Form S-4 Registration Statement file
September 10, 1998, File No. 333-63229, as
Exhibit 4(f)).
Amendment No. 2 dated November 2, 1998 to
Credit Agreement dated July 21, 1997, among
CMS Energy , the Banks, the Administrative
Agent, the Collateral Agent, the Documentation
Agent, the Syndication Agent, the Co-Agents
and the Lead Manager, all as defined therein,
and the Exhibits thereto. (Designated in CMS
Energy's Form 10-K for the year ended December
31, 1998, File No. 1-9513, as Exhibit 10(b)).
*(4)(e) - Restated Articles of Incorporation of CMS
Energy. (Designated in CMS Energy's Form S-4
dated June 6, 1995, File No. 1-9513, as
Exhibit (3)(i).
*(4)(f) - By-Laws of CMS Energy. (Designated in CMS
Energy's Form 10-K for the year ended December
31, 1994, File No. 1-5611, as Exhibit 3(c)).
**(4)(g) - Employees' Savings & Incentive Plan of
Consumers Energy Company, as first effective
November 1, 1961 and as most recently amended
January 1, 1998.
*(4)(h) - Form of election of Exercise of Nonqualified
Stock Option. (Designated in CMS Energy's Form
S-8 dated August 4, 1995, File No. 33-61595,
as Exhibit (4)(f)).
*(4)(i) - Form of certificate of option grant.
(Designated in CMS Energy's Form S-8 dated
August 4, 1995, File No. 33-61595, as Exhibit
(4)(g)).
(5) - Opinion of Michael D. Van Hemert, Esq.,
Assistant General Counsel for CMS Energy re:
legality of securities being offered.
(23)(a) - Consent of Michael D. Van Hemert, Esq.,
Assistant General Counsel for CMS Energy
(included in Exhibit 5 above).
(23)(b) - Consent of Arthur Andersen LLP regarding the
Company's Form 10-K.
(24) - Power of Attorney
- --------------------
*Previously Filed
**CMS Energy has submitted the Employees' Savings & Incentive Plan of
Consumers Energy Company and any amendment thereto to the Internal Revenue
Service in a timely manner and has made all changes required by the IRS in order
to qualify the plan.
Exhibits listed above which have been filed with the Securities and
Exchange Commission are incorporated herein by reference with the same effect as
if filed with this Registration Statement.
<PAGE> 1
Exhibit 4(g)
EMPLOYEES' SAVINGS & INCENTIVE PLAN
OF CONSUMERS ENERGY
DATED: JANUARY 1, 1997
<PAGE> 2
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
===============================================
TABLE OF CONTENTS
===============================================
<TABLE>
<S> <C>
Introduction 1
Some Information about the Plan 2
Eligibility & Enrollment 3
Your Contributions 3
Company Contributions 5
Investment Funds 6
Your Account 7
Distributions 8
Withdrawals While You Are Employed 11
Loans 13
Beneficiary Designation 14
Domestic Relations Orders 15
Rollover Contributions 15
Claims Procedure 15
Statement of ERISA Rights 16
Securities Information 17
TEXT OF EMPLOYEES' SAVINGS AND INCENTIVE PLAN
SECTION 1. ESTABLISHMENT OF THE PLAN
Establishment of the Plan 18
SECTION 2. DEFINITIONS
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Definitions 18
Gender 24
SECTION 3. ELIGIBILITY
Eligibility 24
SECTION 4. ENROLLMENT
Enrollment 24
Acceptance of Plan by Participant 24
SECTION 5. CONTRIBUTIONS
Participant Contributions 24
Elective Employer Contributions 24
Voluntary Contributions 25
Designation of Investment Funds 25
Inactive Participants 26
Changes in Employment Status 26
Transfers of Employment From One of the Employers to Another 26
Transfer of Participant Contributions and
Voluntary Contributions to Trustee 26
Transfer of Elective Employer Contributions to Trustee 26
Matching Employer Contributions 26
Crediting of Matching Employer Contributions to Participants 27
Incentive Contributions 27
Limitation on Participant Contributions, Elective Employer
Contributions and Matching Employer Contributions to Participants 27
Rollover Contributions 28
Immediate Allocation Loan 28
Compliance with Applicable Law 29
SECTION 6. TRUST FUND AND THE TRUSTEE
Trust Agreement 29
Investment Funds 29
Investment Manager 29
Reinvestment of Investment Funds 29
Ownership of the Trust Fund 29
Voting of the Common Stock of CMS Energy Corporation 30
Expenses and Taxes 30
Valuation of Trust Fund 30
SECTION 7. MEMBERS' ACCOUNTS
Accounts and Records 30
Method of Determining Interests of Members 30
Accounting to Members 31
SECTION 8. DISTRIBUTION
Retirement, Disability or Layoff 31
Death 31
Termination of Employment 32
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Withdrawals 33
Application for Distribution 35
Eligible Rollover Distributions 36
SECTION 9. LOANS
Loans to Members 36
Loan Application 36
Period of Repayment 37
Repayment of Loans 37
Notice to Members 37
SECTION 10. BENEFICIARY DESIGNATION
Beneficiary Designation 38
SECTION 11. ADMINISTRATION
Administration of the Plan 38
SECTION 12. CONCERNING THE EMPLOYERS
Rights Against the Employers 38
Right of Employers To Examine the Records of the
Plan and Trust Fund 39
SECTION 13. NON-ALIENATION OF BENEFITS
Non-Alienation 39
SECTION 14. AMENDMENT AND TERMINATION
Amendment of the Plan 39
Termination of the Plan 39
Merger of Plan 39
SECTION 15. LITIGATION
Litigation 40
SECTION 16. UNCLAIMED ACCOUNTS
Unclaimed Accounts 40
SECTION 17. DISABILITY, INFIRMITY OR INCOMPETENCY
Disability, Infirmity or Incompetency 40
SECTION 18. APPLICABLE LAWS
Applicable Laws 40
SECTION 19. EMPLOYMENT RIGHTS
Employment Rights 41
SECTION 20. CLAIMS PROCEDURE
Claims Procedure 41
SECTION 21. CAPTIONS
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Captions 41
SECTION 22. TOP-HEAVY PLAN RULES
Top-Heavy Plan Rules 41
SECTION 23. EXCESS CONTRIBUTIONS
Recharacterization 47
Separate Application 51
APPENDIX A 52
</TABLE>
<PAGE> 6
===============================================
INTRODUCTION
===============================================
The description presented on the following pages is a summary of the Employees'
Savings and Incentive Plan and explains in general terms the principal features
of the Plan. For your convenience, the complete text of the Plan is also
included in this booklet if you should wish to review it in greater detail. This
description uses, sometimes without defining, certain terms which are defined in
the Plan section of this booklet. When used they are capitalized. If you want
further clarification of the terms and conditions of the Plan, you may contact
the Retirement Benefits Department, Consumers Energy Company, 212 West Michigan
Avenue, Jackson, Michigan 49201, Telephone Number (517) 788-0251.
General TAX NOTES are included which reflect our understanding of the Internal
Revenue Code of 1986 as amended; however, you should consult your tax adviser
for specific application of this complicated Act and any subsequent tax changes
to your own situation.
IF THERE ARE ANY INCONSISTENCIES BETWEEN THE PLAN LANGUAGE AND STATEMENTS
APPEARING IN THE SUMMARY PORTION OF THIS BOOKLET OR MADE BY ANY PERSON, THE
ACTUAL PROVISIONS OF THE PLAN SHALL GOVERN.
1
<PAGE> 7
===============================================
SOME INFORMATION ABOUT THE PLAN
===============================================
- - The Plan covers employees of Consumers and CMS Energy and their
subsidiaries which are at least 80% owned and which have adopted the
Plan.
- - You may contribute from 1% to 16% of your regular Compensation.
- - The Company will match at least one-half of the amount you contribute
up to a match of 3% of your salary.
- - The Company pays all the costs of the Plan.
- - Each Plan year ends on December 31.
- - The Plan is a defined contribution plan intended to qualify under
Section 401 of the Internal Revenue Code of 1986.
- - The Normal Retirement Date under the Plan is "Retirement Age" as
defined in Section 216(L) of the Social Security Act in effect on June
1, 1989.
- - The Plan Administrator is Consumers Energy Company, 212 West Michigan
Avenue, Jackson, Michigan 49201, Business Telephone (517) 788-0354.
- - T. A. McNish has been appointed by the Company to administer the Plan.
- - The Trustee of the Plan effective March 1, 1997 is State Street Bank
and Trust Company.
T. A. McNish, 212 West Michigan Avenue, Jackson, Michigan is the agent
for service of legal process. Service of process may also be made upon
the Trustee or the Plan Administrator.
- - The Employer Identification Number is 38-0442310.
- - The Plan Number is 002.
- - The Company has the right to amend or terminate the Plan at any time.
- - The Company's right to discipline or discharge employees is not
affected by any of the provisions of the Plan.
- - If you are eligible due to qualified military service, you may be able
to make additional contributions upon return to employment.
2
<PAGE> 8
===============================================
ELIGIBILITY & ENROLLMENT
===============================================
- - You are eligible to join the Plan if you are a regular employee.
- - To join the Plan, you should send an Enrollment Form to: The Retirement
Benefits Department, 212 West Michigan Avenue, Jackson, Michigan 49201.
The form is available in the Retirement Benefits Department or your
Human Resources office.
- - Enrollment will be effective on the next administratively feasible pay
date.
- - Transfers between participating CMS Energy companies will not affect
your continuing in the Plan.
===============================================
YOUR CONTRIBUTIONS
===============================================
ELECTIVE EMPLOYER - 401(K) (BEFORE TAX)
- - You may elect to have the Company contribute for you from 1% to 12% of
your regular straight-time salary or wages including cost of living
allowances by agreeing to have your Compensation reduced by the same
percentage.
- - If your regular annual Compensation for the prior year was $70,000 or
more (may be adjusted by Plan administrator) the most you can have
contributed is 9% of your regular current Compensation.
- - Your reduced Compensation will be the amount reported to Federal, State
and Local Governments for income tax purposes.
- - Your regular Compensation without reduction will be used by the Company
for all other purposes, for example, pension and insurance
calculations.
- - If your regular annual Compensation for last year was $70,000 or more
(may be adjusted by Plan administrator), the Company may have to reduce
your contribution to protect the qualified status of the Plan. If that
should happen, the reduction may be able to be treated as a Participant
or Voluntary Contribution and included in your Compensation for tax
purposes or it may be returned to you depending upon the discrimination
testing results.
PARTICIPANT CONTRIBUTIONS (AFTER TAX)
3
<PAGE> 9
- - You may contribute from 1% to 6% of your regular straight-time salary
or wages including cost of living allowances through payroll deduction.
- - The 6% limit is reduced by the percent of Elective Employer
Contributions, if any.
- - Your entire regular Compensation will be reported to Federal, State and
Local Governments for income tax purposes.
VOLUNTARY CONTRIBUTIONS (AFTER TAX)
- - You may also contribute from 1% to 10% of your regular straight-time
salary or wages including cost of living allowances through payroll
deduction.
- - The 10% limit is reduced by the percent by which Elective Employer
Contributions exceed 6%.
ADJUSTMENTS
If your annual regular Compensation for last year was $70,000 or more (may be
adjusted by Plan administrator), the Company may have to reduce your Participant
and Voluntary Contributions to prevent IRS disqualification of the Plan. If that
should happen, your Voluntary Contributions would be affected first, then your
Participant Contributions if necessary. The contributions would be returned to
you.
CHANGES
- - You can increase or decrease the amount of your contribution at any
time and it will be effective as soon as practicable.
- - If you discontinue Elective Employer or Participant Contributions,
further contributions cannot be made for three months.
===============================================
COMPANY CONTRIBUTIONS
===============================================
MATCHING EMPLOYER CONTRIBUTIONS
- - The Company will contribute one-half of your monthly contribution, up
to a maximum Matching Employer Contribution of 3% of your straight-time
salary or wages including cost of living.
INCENTIVE MATCHING CONTRIBUTIONS
4
<PAGE> 10
- - Each year the Company will set a performance goal of two factors, (1)
earnings and (2) comparison of the Company's gas and electric rates
with other major investor-owned utilities. The overall goal will be
based 70% on earnings and 30% on energy rates.
- - Additional Company match based on achievement of goal is:
<TABLE>
<CAPTION>
INCENTIVE MATCH
PERCENT OF GOAL AS PERCENT OF YOUR CONTRIBUTION
<S> <C>
80% 10%
90% 25%
100% 40%
110% 50%
</TABLE>
- - The Incentive Match will be prorated for exact percentage of goal
achieved above 80% and less than 110%.
- - The Incentive Match will be determined at the end of each year and will
be based on your net Elective Employer and Participant Contributions of
up to 6% of your Compensation for the year.
===============================================
INVESTMENT FUNDS
===============================================
FUND A
Consists of investment contracts issued by insurance companies or financial
institutions, U.S. Government obligations, corporate debt obligations and other
debt instruments, and temporary investments.
FUND B
Consists of common stocks of larger capitalized companies (other than CMS Energy
and Class G common stocks) and temporary investments.
FUND C
Consists of CMS Energy Corporation common stock and temporary investments.
FUND E
Consists of growth-oriented common stocks (other than CMS Energy and Class G
common stocks) and temporary investments.
5
<PAGE> 11
FUND F
Consists of common stocks (other than CMS Energy and Class G common stocks) of
non-U.S. companies and temporary investments.
FUND G
Consists of CMS Energy Corporation Class G common stock and temporary
investments.
DESIGNATION OF FUNDS
- - You choose the percentage of your contributions to be invested in one
or more of the various Funds.
- - You can allocate your contributions all in one fund or split them
between two or more funds.
- - The Company's contributions, Matching and Incentive, will be invested
in Fund C.
- - You may change the allocation of your future contributions at any time.
The change will be effective as soon as feasible.
- - You may switch past contributions between funds as of a future
Valuation Date (last business day of each month).
VOTING OF CMS ENERGY CORPORATION COMMON STOCK
- - You will be given an opportunity to give voting instructions for shares
in your account and the Trustee will comply with your instructions.
===============================================
YOUR ACCOUNT
===============================================
- - The value of your individual account is based on the number of units
held for you in any of the funds as of each Valuation Date (the last
business day of each month).
- - The value of the units is determined by dividing the market value of
each fund's investments by the total number of units held by all
employees in that fund.
- - If the market value of the fund's assets increases, your account will
increase in value; if the assets decrease in value, your account will
decline in value.
6
<PAGE> 12
- - With each monthly contribution you will purchase units. For example:
Compensation - $1,000 per month, 6% contribution, allocated to Fund C,
unit value $6.00
$1,000 Salary
x 6%
-------
$ 60 Contribution
/ 6.00 Unit Value
-------
10 Units of Fund C Purchase
- - Each quarter and each year-end you will receive a personal statement of
your account showing activity in your account for the period.
===============================================
DISTRIBUTIONS
===============================================
RETIREMENT OR DISABILITY
- - You may elect to receive your account balance, including Company
contributions, in:
(a) a single sum;
(b) annual installments over not more than the number of years shown
in Appendix A as of your nearest birthday;
(c) an eligible rollover distribution; or
(d) a deferred payment, either single sum or installments. However,
you must begin receiving a distribution by April 1 of the year
following the year in which you reach 70-1/2 years of age.
7
<PAGE> 13
INCOME TAX NOTE:
- - All distributions (except after-tax contributions) are generally
subject to taxation at the time of distribution and may be subject to
an additional excise tax of 10%; however, there is no 10% additional
tax on a distribution that is due to a qualifying disability or due
to retirement.
- - All taxable single sum cash distributions are subject to mandatory
20% Federal withholding.
- - Taxation may be deferred and withholding avoided by rolling taxable
amounts into another qualified plan or an IRA.
- - Five-year forward averaging is available for single sum distributions
prior to January 1, 2000 if you are at least age 59-1/2 at the time
of distribution.
- - If you were age 50 as of December 31, 1985, special tax treatment is
available for single sum distributions (see IRS Form 4972).
- - Annual installment payments will allocate after tax dollars on a pro-
rata basis.
LAYOFF
You may elect to receive your ENTIRE account balance including Company
contributions in:
(1) single sum;
(2) an eligible rollover distribution; or
(3) annual installments over not more than the number of years shown in
Appendix A as of your nearest birthday.
DEATH
If you die before retirement or distribution has been completed, the entire
balance in your account will be paid in a single sum to your spouse, or other
beneficiary if your spouse has given notarized consent. Your spouse or other
beneficiary may instead receive installments if you elect that option prior to
your death.
TERMINATION OF EMPLOYMENT
- - You will be entitled to receive the value of your Elective Employer,
Participant and Voluntary Contributions.
8
<PAGE> 14
- - You will be entitled to the vested portion of the Company
contributions, both Matching Employer, and Incentive Contributions.
Company contributions will vest at 10% of the value for each of the
first four years of service and 20% for each of the next three years.
After seven years of service you will be 100% vested.
--- You will receive one year of vested service in each calendar year
in which you have completed 1,000 Hours of Service. [For SE-W
(non-exempt) and OM&C employees, ALL Hours of Service including
overtime are counted. EA&P (exempt) employees are credited with
10 hours for each day compensated.]
- - You may receive the value of your account (including vested Company
contributions) in:
(a) a single sum at the time of termination of employment;
(b) a single sum at your Normal Retirement Date, if the taxable
portion is over $3,500; or
(c) an eligible rollover distribution.
INCOME TAX NOTE:
Taxable portion (all earnings, Elective Employer, Matching Employer
Contributions and Incentive Contributions) is fully taxable plus additional tax
of 10%; however, no tax is assessed on eligible amounts rolled over to an IRA as
long as certain requirements are met.
- - If you are reemployed within 24 months following your termination of
employment and you repay thereafter the entire amount of your Elective
Employer and Participant units, the amount you forfeited will be
restored to your account.
METHOD OF PAYMENT
All payments from other than Fund C and Fund G will be made only in cash. "Lump
sum" or single sum payments from Fund C and Fund G will be made in shares of
common stock or Class G common stock of CMS Energy and/or cash.
9
<PAGE> 15
INCOME TAX NOTE:
If you receive Company stock as part of a "lump sum" distribution, any net
unrealized appreciation attributable to Company contributions is not generally
taxable until the stock is sold, unless you elect to include it in your gross
income at the time of distribution.
===============================================
WITHDRAWALS WHILE YOU ARE EMPLOYED
===============================================
ELECTIVE EMPLOYER UNITS
- - After age 59-1/2 - you may withdraw all or part of the value of your
Elective Employer units.
- - Before age 59-1/2 - you may withdraw part of the value of these units
only in the event of financial hardship.
(a) You must have an immediate and heavy financial need for:
(1) medical expenses for you, your spouse or dependents
(2) expenses for the purchase of your principal residence
(3) college tuition for the next term for you, your spouse,
children or dependents
(4) expenses to prevent eviction from your principal residence
(b) The withdrawal must be necessary to meet the financial need and
you certify that it cannot be met by:
(1) reimbursement or compensation by insurance or otherwise
(2) reasonable liquidation of your assets without creating an
additional financial need
(3) stopping your contributions to the Plan
(4) all other withdrawals and loans from the Plan and loans from
commercial sources on reasonable terms
(5) all reasonably available resources of your spouse or minor
children
(c) Earnings on your Elective Employer Contributions earned after
January 1, 1989 are not available for a hardship withdrawal.
10
<PAGE> 16
INCOME TAX NOTE:
Withdrawals are fully taxable, plus additional tax of 10% of withdrawal if you
are younger than age 59-1/2.
PARTICIPANT UNITS
- - You may withdraw all or part of the value of your Participant units.
- - If you do, you will not be able to make another withdrawal for one
year.
VOLUNTARY UNITS
You may withdraw all or part of the value of your Voluntary units at any
Valuation Date.
11
<PAGE> 17
INCOME TAX NOTE:
a) After-tax contributions (not earnings) made before January 1, 1987 are
available without tax.
b) Withdrawals of amounts attributable to after-tax contributions made after
1986 will be prorated between contributions and earnings on all Participant
and Voluntary Contributions.
c) Additional 10% tax on taxable portion if you are younger than 59-1/2.
Example:
<TABLE>
<S> <C> <C>
Pre-1987 after-tax contributions $2,000
After-tax contributions made after 1986 1,000
Earnings on ALL after-tax contributions 500
Other Accounts: Elective Employer and
Earnings, Matching Employer, Incentive
Contributions and Earnings 3,000
------
Total account $6,500
</TABLE>
To withdraw $3,000 with minimum tax liability:
1. Withdraw $2,000 pre-1987 contribution on nontaxable basis.
2. Additional $1,000 is taxable in same proportion as after-tax contributions
and earnings ($1,000 = 2/3 of $1,500). Therefore, of the $1,000, $667 (2/3)
is nontaxable and $333 (1/3) is taxable. Other accounts are not considered.
Also additional tax of 10% will apply to $333 portion if you are younger
than 59-1/2.
MATCHING EMPLOYER AND INCENTIVE CONTRIBUTIONS
- - You can withdraw only that part which is vested. You will be fully
vested after seven years of Service.
- - Also, you cannot withdraw these units until they have been in your
account for at least two full years.
- - If you withdraw units before you are fully vested, you will forfeit the
non-vested part of your account. (You may repay the entire amount of
the withdrawal and the forfeited amount will be restored to your
account.)
12
<PAGE> 18
- - If you withdraw these units, you cannot resume participation in the
Plan as follows:
<TABLE>
<CAPTION>
AMOUNT OF WITHDRAWAL OF
MATCHING EMPLOYER AND INCENTIVE UNITS PERIOD OF TIME
<S> <C>
Less than 25% of the value 3 full calendar months
25% or more, but less than 50% of the value 6 full calendar months
50% or more, but less than 75% of the value 9 full calendar months
75% or more of the value 12 full calendar months
</TABLE>
INCOME TAX NOTE:
If you are younger than age 59-1/2, the amount is fully taxable, plus additional
tax of 10%.
===============================================
LOANS
===============================================
- - You can borrow money from the Plan for extraordinary or emergency
needs. For example, home purchase, home improvements, college expenses
or high school tuition for your children. The Plan administrator will
determine on a uniform basis what is an extraordinary or emergency
need.
- - Unless government regulations permit the loan to be secured by more
than 50% of the value of your total vested units, the amount of the
loan cannot be more than 50% of the value of your total vested units.
- - Your loan must be at least $1,000 and no more than $50,000.
- - Your loan will be secured by your account balance.
- - If you wish to borrow money from the Plan, you must complete an
application and return it to the Retirement Benefits Department.
- - Repayment of your loan must be by payroll deduction over not more than
five years.
13
<PAGE> 19
Exception: a loan to acquire your principal residence may be repaid
over a longer period not to exceed ten years.
- - Interest Rate - the Plan administrator will determine the interest rate
on loans based on many factors including generally prevailing rates.
(Current rate is available from Retirement Benefits Department or your
Human Resources office.)
- - As the loan is repaid, your payments including interest will be
credited to your account in the fund(s) to which you are currently
contributing.
- - Your loan will be considered in default if you leave employment or miss
any payments under the Plan. Upon default the Plan administrator is
authorized to use any legal means to assure the loan is repaid.
===============================================
BENEFICIARY DESIGNATION
===============================================
When you enroll in the Plan, you may designate a beneficiary with the notarized
consent of your spouse to receive any distribution in the event of your death.
If you die while you have units in your account, your spouse or your beneficiary
generally will receive the entire value of the units credited to your account in
a lump sum payment.
===============================================
DOMESTIC RELATIONS ORDERS
===============================================
Under law, the Plan administrator must follow certain court orders in domestic
relation situations which give all or a part of your account to one or more
alternate payees, such as a spouse, ex-spouse, child or other dependent. The
order may require the payment to the alternate payee whether or not you have
retired. You will be notified if a court order is received by the Plan
administrator.
===============================================
ROLLOVER CONTRIBUTIONS
===============================================
The Plan permits under certain specified conditions rollovers from qualified
employee benefit plans of former employers. Distribution or withdrawal of these
contributions is likewise subject to specified legal and Plan conditions.
14
<PAGE> 20
=================================================
CLAIMS PROCEDURE
=================================================
In the administration of any complex program, occasional questions or problems
may arise. If you or your beneficiary have a claim for benefits under the Plan,
it must be filed with the Plan administrator, Consumers Employees' Savings and
Incentive Plan, 212 West Michigan Avenue, Jackson, Michigan 49201. Written
notice of the disposition of your claim will be sent within 30 days after the
claim is filed. If the claim is denied, the reasons for denial will be set forth
in writing. If a change could be made in the claim to bring about approval, an
explanation of what must be done will be given.
You, your beneficiary or your duly authorized representative may appeal the
denial of the claim, review pertinent documents and submit issues and comments
in writing to the Plan administrator. If further consideration is denied, a
hearing may be requested within 90 days after notification of the denied claim.
The hearing will take place within 30 days, and the decision in writing will be
sent within 30 days after the hearing.
==================================================================
STATEMENT OF ERISA RIGHTS
==================================================================
As a Participant in the Employees' Savings and Incentive Plan, you are entitled
to certain rights and protections under the Employee Retirement Income Security
Act of 1974 (ERISA). ERISA provides that all Plan Participants shall be entitled
to:
- - Examine, without charge, at the Plan Administrator's office and upon
request at local Human Resources' offices all Plan documents and copies
of all documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and Plan descriptions.
- - Obtain copies of all Plan documents and other Plan information upon
written request to the Plan administrator. The Administrator may make a
reasonable charge for the copies.
- - Receive a summary of the Plan's annual financial report. The Plan
administrator is required by law to furnish each Participant with a
copy of the summary annual report.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called "fiduciaries" of the Plan, have a duty
to do so
15
<PAGE> 21
prudently and in the interest of you and other Plan Participants and
beneficiaries. No one, including your employer, your union or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining an Employees' Savings and Incentive Plan benefit or exercising
your rights under ERISA. If your claim for a benefit is denied in whole or in
part, you must receive a written explanation of the reason for the denial. You
have the right to have the Plan administrator review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
thirty days, you may file suit in a federal court. In such a case, the court may
require the Plan administrator to provide the materials and pay you up to
$100.00 a day until you receive the materials, unless the materials were not
sent because of reasons beyond the administrator's control. If you have a claim
for benefits which is denied or ignored, in whole or in part, you may file suit
in a state or federal court. If it should happen that Plan fiduciaries misuse
the Plan's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay these costs
and fees, for example, if it finds your claim is frivolous.
If you have any questions about your Plan, you should contact the Plan
administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
==========================================================
SECURITIES INFORMATION
==========================================================
An indeterminate number of interests in the Plan, 3,478,260 shares of Common
Stock of CMS Energy $.01 par value, and 2,000,000 shares of Class G Common Stock
of CMS Energy, no par value, issued and to be issued pursuant to the Plan, are
registered by CMS Energy Corporation under the Securities Act of 1933
(Securities Act) with the Securities and Exchange Commission.
The summary description of the Plan and the Plan contained in this booklet
provide information required by Part I, Item I of Form S-8 of the Securities Act
and are hereby provided to the Plan Participants as part of the Securities Act
Section 10(a) prospectus.
Certain documents which are filed regularly with the Securities and Exchange
Commission are hereby incorporated by reference and are a part of this
Securities
16
<PAGE> 22
Act Section (10)(a) prospectus and the registration statement. These include CMS
Energy's annual report on Form 10-K, its quarterly reports on Form 10-Q, the
annual report of the Plan on Form 11-K and interim reports on Form 8-K.
As a Participant in the Employees' Savings and Incentive Plan, you are entitled
to obtain without charge, upon written or oral request, the documents which are
incorporated by reference into the Plan's registration statement. In addition,
you may obtain without charge, upon oral or written request, other documents
which are required to be delivered to employees pursuant to Rule 428(b) under
the Securities Act. These documents may be obtained from the Retirement Benefits
Department, Consumers Energy Company, 212 West Michigan Avenue, Jackson,
Michigan 49201, Telephone Number (517) 788-0251.
17
<PAGE> 23
EMPLOYEES' SAVINGS AND INCENTIVE PLAN
OF CONSUMERS ENERGY COMPANY
SECTION 1. ESTABLISHMENT OF THE PLAN
1.1 ESTABLISHMENT OF THE PLAN. Consumers Energy Company (hereinafter sometimes
referred to as "Consumers"), a Michigan corporation, with its principal
executive office and place of business at Jackson, Michigan, has established a
savings plan, effective as of November 1, 1961, which is described herein and
which, as it may be amended from time to time, shall be known as the "EMPLOYEES'
SAVINGS AND INCENTIVE PLAN OF CONSUMERS ENERGY COMPANY" (hereinafter referred to
as the "Plan"). This restatement of the Plan specifically includes Amendments
made through January 1, 1997.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall have the
respective meanings as set forth below, unless the context clearly indicates
otherwise:
"COMPENSATION" The sum of (i) a Participant's regular
straight-time salary or wages including cost of
living allowances from an Employer, and (ii) 25% of
commissions paid to a Participant paid on a salary
and commission basis (but only to the extent that
for such Participant regular straight-time salary
plus 25% of commissions does not exceed $80,000 or
such other amount as the Plan administrator shall
determine from time to time), before any adjustment
for Elective Employer Contributions under this
Plan, or deductions for taxes, Social Security,
etc., which, as so defined, shall continue to be
used by the Company in the administration of salary
and related benefit programs where applicable;
provided, however, that annual Compensation of any
Participant from the Employers shall be disregarded
for all purposes under the Plan to the extent on or
after January 1, 1994 such Compensation exceeds
$150,000 (or such other cost of living adjusted
amount as determined by the Secretary of the
Treasury or such other amount as may be established
by or is in accordance with Section 401(a)(17) of
the Internal Revenue Code, taking into account the
family aggregation rules of Section 414(q)(6) of
the Internal Revenue Code, except that in applying
such rules the term "family" shall include only the
spouse of the Employee and any lineal descendants
of the Employee who have not attained age 19 before
the close of the year).
"COMPENSATION RATE" The amount of a Participant's Compensation per pay
period.
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<PAGE> 24
"DISABILITY" Total and permanent disability of a Member as is
established by evidence satisfactory to the
Employer.
"ELECTIVE EMPLOYER Moneys or property received by the Trustee
CONTRIBUTIONS" resulting from a Participant's action under Section
5.2.
"EMPLOYEE" Any person regularly employed by an Employer.
"EMPLOYER/ Consumers and any one or more of the following
EMPLOYERS" corporations, CMS Energy Corporation, and its
subsidiaries which are at least 80% directly or
indirectly owned, if the Board of Directors of such
corporations determine to adopt the provisions of
the Plan; and each of such companies.
"ESOP LOAN" An immediate allocation loan made by an Employer
for the purpose of making contributions on behalf
of the Employers contemplated by Sections 5.10 and
5.12 and which satisfies the requirements of
Section 5.15. "FISCAL YEAR" A period commencing on
January 1 of any year and ending on December 31 of
such year.
"FORMER PARTICIPANT" A Participant who has died, has reached his
Retirement Date, has had his employment with an
Employer terminated on account of a Disability, or
otherwise has terminated his employment with an
Employer, or who because of change in employment
status with an Employer is no longer eligible as an
Employee under the Plan.
"FUND A" The Investment Fund forming part of the Trust Fund
consisting of the moneys which the Employers shall
direct the Trustee to place in such fund, and such
obligations issued or fully guaranteed by the
United States of America or any agency or
instrumentality thereof, corporate bonds, notes,
certificates, or any other similar evidence of
indebtedness, debentures (other than corporate
bonds and debentures issued by the Employers),
interest bearing deposits with financial
institutions other than the Trustee, and contracts
with insurance companies including but not limited
to deposit administration contracts, guaranteed
investment contracts, or similar type contracts,
together with all income and accretions thereon,
and cash, temporary investments of any type, or
cash equivalents, all within the limitations
specified in the trust agreement.
"FUND B" The Investment Fund forming part of the Trust Fund
consisting of the moneys which the Employers shall
direct the Trustee to place in such fund, and a
broadly diversified portfolio of common stocks,
sometimes referred to as "core equities," and
securities convertible into such common stock
(other than securities of the Employers), together
with all
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<PAGE> 25
income and accretions thereon, and cash, temporary
investments of any type, or cash equivalents, all
within the limitations specified in the trust
agreement.
"FUND C" The Investment Fund forming part of the Trust Fund
consisting of the moneys or securities which the
Employers shall direct the Trustee to place in such
fund, common stock of CMS Energy Corporation, and
other securities of CMS Energy Corporation
convertible into common stock of CMS Energy
Corporation, together with all income and
accretions thereon, and cash, temporary investments
of any type, or cash equivalents, all within the
limitations specified in the trust agreement.
"FUND D" The Investment Fund forming part of the Trust Fund
consisting of the promissory notes of Members,
which the Employers shall direct the Trustee to
place in such fund, together with all income and
accretions thereon.
"FUND E" The Investment Fund forming part of the Trust Fund
consisting of the moneys which the Employers shall
direct the Trustee to place in such fund, and such
common stocks and securities convertible into
common stock (other than securities of the
Employers) which are generally considered to be
growth oriented, together with all income and
accretions thereon, and cash, temporary investments
of any type, or cash equivalents, all within the
limitations specified in the trust agreement.
"FUND F" The Investment Fund forming part of the Trust Fund
consisting of the moneys which the Employers shall
direct the Trustee to place in such fund, and such
common stocks and securities convertible into
common stock (other than securities of the
Employers) of non-United States chartered
corporations or organizations, together with all
income and accretions thereon, and cash, temporary
investments of any type, or cash equivalents, all
within the limitations specified in the trust
agreement.
"FUND G" The Investment Fund forming part of the Trust Fund
consisting of the moneys or securities which the
Employers shall direct the Trustee to place in such
fund, Class G common stock of CMS Energy
Corporation and other securities of CMS Energy
Corporation convertible into Class G common stock
of CMS Energy Corporation, together with all income
and accretions thereon, and cash, temporary
investments of any type, or cash equivalents, all
within the limitations specified in the trust
agreement.
"HOURS OF SERVICE" The hours during a Fiscal Year for which an
Employee directly or indirectly is entitled to
Compensation as paid or as
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<PAGE> 26
becomes payable by an Employer for the performance
of duties during the applicable computation period,
and for other times for which no duties are
performed (irrespective of whether the employment
relationship has terminated) as for example,
vacations, holiday, sickness and incapacity but
excluding hours for payments for workers'
compensation, unemployment compensation, payments
under disability insurance, and retirement under
this Plan, provided overtime hours shall be at
straight time only, and provided further, each
Employee paid semimonthly shall be credited with
ten (10) Hours of Service per day for each day for
which the Employee is directly or indirectly
compensated by an Employer. Each Employee will also
be credited with an "Hour of Service" for each hour
of back pay, either awarded or agreed to by an
Employer, irrespective of mitigation of damages.
The aforesaid hours shall be credited in accordance
with Department of Labor Regulation 2530.200b2(b)
and 2(c), when applicable.
"INACTIVE PARTICIPANT" Participant who is not currently making Participant
Contributions under the Plan, and for whom Elective
Employer Contributions are not currently being made
under the Plan.
"INCENTIVE Money or property received by the Trustee under
CONTRIBUTIONS" Section 5.12.
"INVESTMENT FUND" An Investment Fund forming part of the Trust Fund
as may be established by the Plan administrator
from time to time, all within the limitations
specified in the Trust Agreement.
"INVESTMENT Any person, firm or corporation which is registered
MANAGER" as an Investment Adviser under the Investment
Advisers Act of 1940; is a bank as defined in that
Act; or is an insurance company qualified to
perform management services in more than one state,
and which has acknowledged in writing that it is a
fiduciary with respect to the Plan.
"LEASED EMPLOYEE" Any person (other than an Employee of the
recipient) who pursuant to an agreement between the
recipient and any other person ("leasing
organization") has performed services for the
recipient (or for the recipient and related persons
determined in accordance with Section 414(n)(6) of
the Internal Revenue Code of 1986, as amended) on a
substantially full-time basis for a period of at
least one year, and such services are of a type
historically performed by employees in the business
field of the recipient employer. Contributions or
benefits provided a Leased Employee by the leasing
organization which are attributable to service
performed for the recipient employer shall be
treated as provided by the recipient employer.
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<PAGE> 27
A Leased Employee shall not be considered an
Employee of the recipient if: (i) such employee is
covered by a money purchase pension plan providing:
(1) a non-integrated employer contribution rate of
at least ten percent (10%) of Compensation, as
defined in Section 2.1 of the plan, but including
amounts contributed pursuant to a salary reduction
agreement which are excludable from the employee's
gross income under Section 125, Section 402(e)(3),
Section (402)(h) or Section 403(b) of the Code; (2)
immediate participation; and (3) full and immediate
vesting; and (ii) Leased Employees do not
constitute more than twenty percent (20%) of the
recipient's non-highly compensated work force.
Notwithstanding any foregoing provisions to the
contrary, Leased Employees shall not be considered
Participants of this Plan.
"MATCHING EMPLOYER Moneys or property received by the Trustee under
CONTRIBUTIONS" Section 5.10.
"MEMBER" A Participant, Inactive Participant, or Former
Participant.
"NAMED The Employers who shall have authority to control
FIDUCIARY(S)" and manage the operation and administration of the
Plan.
"PARTICIPANT" Any Employee who meets the eligibility requirements
of the Plan, who elects to enroll under the Plan,
and who is currently making Participant
Contributions under the Plan or for whom Elective
Employer Contributions are being made under the
Plan.
"PARTICIPANT CONTRIBUTIONS" Moneys received by the Trustees from a Participant
under Section 5.1.
"RETIREMENT DATE" The Valuation Date immediately preceding the date a
Member actually retires from employment with his
Employer on his Normal, Early or Deferred
Retirement Date as set forth below:
(a) NORMAL RETIREMENT DATE. The first day of the
month upon which the Employee reaches
"Retirement Age" as defined in Section 216(L)
of the Social Security Act, as amended and in
effect on June 1, 1989.
(b) EARLY RETIREMENT DATE. The date, which shall be
the first day of a month, on which an Employee
retires at his election on or after the date
the Employee reaches age 55.
(c) DEFERRED RETIREMENT DATE. The date, which shall
be the first day of a month, of retirement
after Normal Retirement Date.
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<PAGE> 28
"ROLLOVER Moneys or property received by the Trustee under
CONTRIBUTIONS" Section 5.14.
"SERVICE" The number of years of employment with an Employer;
provided, however, that successive periods of
employment with any of the Employers shall be added
together in calculating a period of Service.
Moreover, employment with an Employer shall not be
regarded as having been interrupted by, and Service
shall include, periods of time during which a
person is laid off by an Employer on account of
lack of work, provided he returns to work with an
Employer within a reasonable time after he is
offered reemployment; and periods of time during
which a person is on leave of absence from an
Employer to serve in the Armed Forces of the United
States or of any State thereof, provided he returns
to work with an Employer within the time prescribed
by law for the exercise of reemployment rights; and
periods of time during which a person is on any
leave of absence authorized by an Employer. A year
of Service is any Fiscal Year during which the
Employee completes at least 1,000 Hours of Service.
Further, "Service" means all employment on or after
the effective date of this Plan including part-time
and temporary employment, with an Employer,
including companies which are members of a
controlled group with the Employer within the
meaning and application of Section 414 of the Code
and with entities which are predecessors to an
Employer as provided in the regulations issued
under ERISA.
"TRUST FUND" The moneys, securities, or other property held by
the Trustee under the trust agreement between the
Trustee and the Employers, including the Investment
Funds defined herein, held by the Trustee and into
which all contributions and earnings thereon shall
be paid, and out of which all payments and
distributions shall be made.
"TRUSTEE" The bank, banking association or trust company with
which the Employers enter into a trust agreement as
provided in the Plan.
"VALUATION DATE" The last business day or any other business day of
each calendar month designated by Consumers.
"VOLUNTARY Moneys received by the Trustee from a Participant
CONTRIBUTIONS" under Section 5.3.
2.2 GENDER. Any masculine terminology used herein shall also include the
feminine.
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<PAGE> 29
SECTION 3. ELIGIBILITY
3.1 ELIGIBILITY. Each Employee is eligible to become a Participant on date of
employment. Each Employee represented on July 1, 1992 by the Utility Workers
Union of America, AFL-CIO, and its Michigan State Utility Workers Council, with
respect to Employees of Consumers Energy Company, shall be first eligible to
become a Participant on August 1, 1992 for the first pay period beginning on or
after such date. If applicable, each Employee of Michigan Gas Storage Company
represented on September 1, 1992 by Local 358 of the Utility Workers Union of
America, AFL-CIO, shall be first eligible to become a Participant on October 1,
1992 for the first pay period beginning on or after such date. If a former
Participant is reemployed by an Employer as an Employee, he shall be eligible to
become a Participant on the first pay date next following the date of such
reemployment.
SECTION 4. ENROLLMENT
4.1 ENROLLMENT. An Employee eligible to become a Participant may enroll under
the Plan by making an application in writing on a form supplied by his Employer
and, upon receipt by the Plan administrator, such enrollment shall become
effective on a pay date following the date he is eligible to become a
Participant.
4.2 ACCEPTANCE OF PLAN BY PARTICIPANT. The filing of an application for
enrollment with the Plan administrator under the Plan shall constitute an
acceptance of the terms and provisions of the Plan.
SECTION 5. CONTRIBUTIONS
5.1 PARTICIPANT CONTRIBUTIONS. Each Participant may, so long as he remains a
Participant, contribute to the Plan each pay period not less than one percent
(1%) nor more than six percent (6%) of his then Compensation Rate; provided,
however, that such six percent (6%) maximum shall be reduced by the percent, if
any, elected under Section 5.2. Contributions of a Participant shall be deducted
by his Employer on each pay date from the Compensation of such Participant with
respect to such pay period. A Participant may adjust the rate of his
contribution at any time by giving his Employer advance notice in writing. A
Participant may discontinue contributions as of any pay date by giving his
Employer advance notice in writing, but if a Participant discontinues
contributions without at the same time making an election under Section 5.2, he
may not resume contributions before the first pay date following the lapse of
three (3) months from the date of discontinuance. Each Inactive Participant or
Former Participant, who is eligible to become a Participant, may resume
contributions under the Plan, by giving his Employer advance notice in writing.
5.2 ELECTIVE EMPLOYER CONTRIBUTIONS. Each Participant may, so long as he remains
a Participant, elect on a form provided by his Employer, to have his
Compensation reduced each pay period not less than one percent (1%) nor more
than nine percent (9%) of his then Compensation and to have his Employer
contribute such amount to the Plan out of its current or accumulated earnings
and profits; provided however, that a Participant whose annual Compensation is
less than $70,000 (or such other amount as the Plan administrator may prescribe)
may elect up to twelve percent (12%) of his then Compensation. A Participant may
adjust the rate of such contribution at any time by giving his Employer advance
notice in writing. A Participant may discontinue his electionas of any pay date
by giving his Employer advance notice in writing, but if a Participant
discontinues his election
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<PAGE> 30
without at the same time electing to make Participant Contributions under
Section 5.1, he may not make another election before the first pay date
following the lapse of three (3) months. Each Inactive Participant or Former
Participant, who is eligible to become a Participant, may elect under this
Section 5.2 by giving his Employer advance notice in writing. Notwithstanding
the foregoing, the Employer may reduce the percent elected for any group of or
all Participants for purposes of complying with Section 401(k) of the Internal
Revenue Code or regulations adopted pursuant thereto. In such event, such amount
not considered Elective Employer Contributions shall be considered as
Participant Contributions under Section 5.1 or Voluntary Contributions under
Section 5.3 as the Plan administrator may deem appropriate.
5.3 VOLUNTARY CONTRIBUTIONS. Each Participant may, so long as he remains a
Participant, contribute to the Plan each pay period, not less than one percent
(1%) nor more than ten percent (10%) of his then Compensation Rate; provided,
however, that such ten percent (10%) shall be reduced by the percent, if any, by
which contributions elected under Section 5.2 exceed six percent (6%).
Contributions of a Participant shall be deducted by his Employer on each pay
date from the Compensation of such Participant with respect to such pay period.
A Participant may adjust the rate of his contribution at any time by giving his
Employer advance notice in writing. A Participant may discontinue contributions
as of any pay date by giving his Employer advance notice in writing.
5.4 DESIGNATION OF INVESTMENT FUNDS. At the time of designation of his
Participant, Elective Employer, Voluntary, or Rollover Contributions under the
Plan, each Participant shall specify the proportions of such contributions to be
allocated to his account in various Investment Funds. A Participant may elect to
allocate such contributions entirely to one such fund or he may elect to have
such contributions allocated between two (2) or more of such funds; provided,
however, Participant and Voluntary Contributions may not be allocated or
reallocated to Fund C or Fund G unless an effective Registration Statement has
been filed with the Securities and Exchange Commission (SEC) or such
contributions are otherwise exempt under the Security Act of 1933. Since the
selection of investments involves an element of risk, the Participant shall make
his own decision concerning the investment of such contributions and no
representative of an Employer, or the Trustee, is authorized to make any
recommendation to any Participant concerning the various investment options
which are available under the Plan. Changes in the allocation of a Participant's
future contributions among the available Investment Funds may be effected at any
time by giving his Employer advance notice in writing of each such change. All
or a part of a Member's past Participant, Elective Employer, Voluntary, or
Rollover Contributions which are in a Member's account on a Valuation Date may
be reallocated among the Investment Funds on a Valuation Date by giving his
Employer advance notice in writing of such change. If a reallocation of such
prior contributions is made, the value of the units to be reallocated shall be
determined as of the Valuation Date selected by such Member and such units shall
be canceled. Units of value equal to the value of the units that were canceled
shall be placed in the Investment Fund(s), as requested by such Member, as of
the Valuation Date selected by such Member. The value of the units shall be
determined under the provisions of Section 7.2. A Member may not select a
Valuation Date which precedes the date of such request for a change in
allocation of such contributions.
5.5 INACTIVE PARTICIPANTS. Each Participant whose contributions have been
discontinued in accordance with the provisions of Section 5.1 or 5.2, so that
contributions are no longer being made under either Section, shall thereupon
become an Inactive Participant.
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<PAGE> 31
5.6 CHANGES IN EMPLOYMENT STATUS. If a Member's employment status with an
Employer is changed so that he is no longer eligible as an Employee under the
Plan, he shall be a Former Participant and, as such, he may not make or have
made by his Employer any contributions under the Plan. However, his account
shall share in the net income or loss of the Trust Fund. If such Former
Participant's employment status with an Employer is again changed so that he is
eligible as an Employee under the Plan, he may resume participation as of a pay
date following the date of such later change in employment status.
5.7 TRANSFERS OF EMPLOYMENT FROM ONE OF THE EMPLOYERS TO ANOTHER. If a Member's
employment is transferred from one of the Employers to another, the status of
such Member as a Participant, Inactive Participant or Former Participant shall
not be changed by reason of such transfer of employment.
5.8 TRANSFER OF PARTICIPANT CONTRIBUTIONS AND VOLUNTARY CONTRIBUTIONS TO
TRUSTEE. All payroll deductions of Participant Contributions and Voluntary
Contributions shall be held in trust by the Employers until paid over to the
Trustee. The amount of such deductions shall be transferred to the Trustee
monthly at such time, or times, as may be convenient to the Employers. Such
transfers to Fund C may be in the form of Company securities as described in
Section 5.10 for Matching Employer Contributions and shall be valued in the
manner therein provided.
5.9 TRANSFER OF ELECTIVE EMPLOYER CONTRIBUTIONS TO TRUSTEE. All Elective
Employer Contributions shall be transferred to the Trustee monthly at such time
or times as may be convenient to the Employers. Such transfers to Fund C may be
in the form of Company securities as described in Section 5.10 for Matching
Employer Contributions and shall be valued in the manner therein provided.
5.10 MATCHING EMPLOYER CONTRIBUTIONS. Each of the Employers shall contribute to
the Trustee each month out of its current or accumulated earnings and profits an
amount equal to fifty percent (50%) of that amount contributed by or for each of
its Participants for such month pursuant to Sections 5.1 and 5.2 as is not in
excess of six percent (6%) of each such Participant's then Compensation Rate.
All Matching Employer Contributions shall be allocated to Fund C. Such
contributions may, but need not be, in the form of authorized but unissued
common stock of CMS Energy Corporation or other securities convertible into such
common stock, treasury securities, or securities of CMS Energy Corporation
acquired by the Employers for purposes of such contributions. For purpose of
such contributions, such common stock or other securities shall be valued at the
average of the closing price for such common stock or other security, as shown
in a composite report of one or more generally recognized Exchanges, including
the New York Stock Exchange, for the five (5) trading days preceding the date of
transfer to the Trust.
5.11 CREDITING OF MATCHING EMPLOYER CONTRIBUTIONS TO PARTICIPANTS. The
contributions of each of the Employers shall be credited to the accounts of its
Participants in the same proportion as the amount of contributions of or for
each Participant of such Employer for such month pursuant to Sections 5.1 and
5.2 not in excess of six percent (6%) of such Participant's then Compensation
Rate bears to the total amount of such contributions of all Participants of such
Employer for such month.
5.12 INCENTIVE CONTRIBUTIONS. Each year the Company will determine and publish a
performance goal for such Fiscal Year which shall consist of two factors: (1)
earnings and (2) Consumers' gas and electric rates for customers as compared
with those of other major
26
<PAGE> 32
investor-owned utilities. Seventy percent (70%) of the award will be based on
earnings and thirty percent (30%) on energy rates. If eighty percent (80%) of
the determined performance goal for the year is achieved, the Employer will
contribute to the Trustee out of its current or accumulated earnings and profits
an amount equal to ten percent (10%) of that amount contributed for such Fiscal
Year pursuant to Sections 5.1 and 5.2 as is not in excess of six percent (6%) of
all Participants' Compensation, by or for all Participants who are such as of
December 31 of such Fiscal Year and Former Participants who retired, died, were
disabled, or were laid off for lack of work during such Fiscal Year; if ninety
percent (90%) of the determined goal is achieved, the contribution shall be
twenty-five percent (25%); if 100%, the contribution will be forty percent
(40%); and if 110%, the contribution will be fifty percent (50%). The
contribution percentage will be prorated based on actual achievement percent of
performance goal between eighty percent (80%) and 110%. The entire Incentive
Contributions shall be allocated to Fund C. Such contributions may be in the
form of Company securities as described in Section 5.10 and shall be valued in
the manner therein provided. The Plan administrator may exclude Incentive
Contributions to the accounts of certain Officers of Employers.
5.13 LIMITATION ON PARTICIPANT CONTRIBUTIONS, ELECTIVE EMPLOYER CONTRIBUTIONS
AND MATCHING EMPLOYER CONTRIBUTIONS TO PARTICIPANTS. Notwithstanding the
foregoing, there shall not be credited to any Participant's account during a
calendar year an amount exceeding the lesser of $30,000 (or such larger amount
as the Secretary may prescribe) or twenty-five percent (25%) of the
Participant's Compensation representing the sum of (a) any Employer's
contribution; (b) the Participant's contributions; and (c) forfeitures. The
foregoing limitations of this Section 5.13 for a Participant shall be further
reduced with respect to Participants eligible in this Plan and in other defined
contribution plans of the Employer such that such limitations with respect to
this Plan and such other defined contribution plan or plans shall apply as
aggregate limitations to all defined contribution plans of the Employer.
Participant Contributions and/or Employer Contributions under this Plan may be
further reduced to the extent necessary as determined by the Plan administrator
to prevent the sum of the following fraction, computed as of the close of the
Plan's Fiscal Year, from exceeding 1.0:
The fraction obtained by dividing the Participant's projected
annual Retirement Income under the Employer's Pension Plan by the
lesser of (i) 125% of the dollar limit in effect under Section
415(b)(1)(A) of the Internal Revenue Code for the limitation
year, or (ii) 140% of the Participant's average Compensation for
his highest three consecutive years of service.
If, as a result of either the allocation of forfeitures or a reasonable error in
estimating a Participant's annual Compensation, the annual additions for a
particular Participant would cause the limitations of Section 415 applicable to
that Participant for the limitation year to be exceeded, the excess amounts in
the Participant's account must be used to reduce Matching Employer Contributions
for the next limitation year (and succeeding limitation years, as necessary) for
that Participant if that Participant is covered by the Plan of the Employer as
of the end of the limitation year. However, if that Participant is not covered
by the Plan of the Employer as of the end of the limitation year, then the
excess amounts must be held unallocated in a suspense account for the limitation
year and allocated and reallocated in the next limitation year to all of the
remaining Participants in the Plan (subject to the limitations of Section 415)
before any Matching Employer Contributions and
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<PAGE> 33
Employee contributions which would constitute annual additions may be made to
the Plan for that limitation year. Furthermore, the excess amounts must be used
to reduce Matching Employer Contributions for the next limitation year (and
succeeding limitation years, as necessary) for all of the remaining Participants
in the Plan. For purposes of this paragraph, excess amounts may not be
distributed to Participants or Former Participants.
5.14 ROLLOVER CONTRIBUTIONS. The Plan may receive on behalf of a Member any
portion of an eligible rollover distribution as defined in Section 402(c)(4) of
the Internal Revenue Code, as amended, resulting from participation of the
Member in an employee benefit plan maintained by a former employer. Any eligible
rollover distribution shall not include amounts in excess of the maximum amount
which may be rolled over as defined in Section 402(c)(2) of the Internal Revenue
Code as amended. The provisions of Sections 5.10, 5.11, 5.12 and 5.13 shall not
apply to Rollover Contributions. The Plan administrator in his sole discretion
may require satisfactory evidence from the Member or from a transferring Trustee
that the distribution is an eligible rollover distribution and that the prior
employee benefit plan is a qualified Plan under the Internal Revenue Code. The
Plan administrator may establish any other terms or conditions as he may deem
appropriate to accept such transfer.
5.15 IMMEDIATE ALLOCATION LOAN. The proceeds of an immediate allocation loan
shall be contributed by the Employers to the Trustee within twelve (12) months
of the closing date of the loan and such amounts shall be allocated to
Participants in accordance with the provisions of Sections 5.10 and 5.12. The
Trustee shall purchase shares of common stock of CMS Energy Corporation within
thirty (30) days of receipt of each such contribution. An Employer may enter
into one or more such loans in accordance with the terms of this Plan and the
Trust Agreement and in conformity with any applicable federal or state law. Each
such loan shall be for a specific period not to exceed 84 months. The Employers
shall be the sole guarantor of such loan and the assets of this Plan shall not
be encumbered in any way by such loan.
With respect to any Matching Employer or Incentive Units allocated to a
Participant's account with the proceeds of an immediate allocation loan, if the
Member has attained age 55 and has been a Participant in the Plan for ten (10)
years after September 1, 1989, he may, but need not, diversify the portion of
his account representing twenty-five percent (25%) of such units within ninety
(90) days after the close of each Fiscal Year of a five- (5) year period
beginning with the year following the year in which he has attained age 55 and
completed ten (10) years of participation, except for the last year of such
period when the percentage available for diversification shall be fifty percent
(50%). Such Member may elect to have such amount distributed to him or be
allocated to any other fund offered pursuant to the Plan. Such distribution or
reallocation shall be effected as of the Valuation Date coincident with or next
succeeding the Member's election.
5.16 COMPLIANCE WITH APPLICABLE LAW. This Plan shall be tested in compliance
with the requirements of Sections 401(k) and 401(m) of the Internal Revenue Code
of 1986 and regulations issued in accordance with said Sections, and the Plan
shall operate in compliance with all applicable requirements. Specifically, the
provisions and requirements of Sections 401(k)(3) and 401(m)(2) and applicable
regulations are incorporated by reference. Participants covered by a collective
bargaining agreement shall be tested separately from other Participants as a
group. Notwithstanding any other provision of this Plan, contributions, benefits
and service credit with respect to qualified military service will be provided
in accordance with Section 414(u) of the Internal Revenue Code.
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<PAGE> 34
SECTION 6. TRUST FUND AND THE TRUSTEE
6.1 TRUST AGREEMENT. The Employers will enter into a trust agreement with a
bank, banking association, or trust company. The trust agreement shall be deemed
to form a part of the Plan and any and all rights and benefits which may accrue
to any Member under the Plan or his beneficiaries shall be subject to all the
terms and provisions of the trust agreement. It will provide for the
administration of the Trust Fund by the Trustee. The Employers shall have the
right to change the Trustee and to add trustees, and the right to terminate or
amend the trust agreement, in whole or in part, provided that no such
termination, amendment or other action by the Employers shall divert any part of
the Trust Fund to purposes other than the exclusive benefit of the Members under
the Plan or their beneficiaries. The Trustee shall account to the Employers from
time to time for all contributions under the Plan received by it and the
earnings on the Trust Fund.
6.2 INVESTMENT FUNDS. The investments of the Trust Fund shall be held and
maintained by the Trustee in seven (7) separate funds to be known as Fund A,
Fund B, Fund C, Fund D, Fund E, Fund F, or Fund G as hereinbefore defined or
such other Investment Funds as may be established from time to time by the Plan
administrator. The contributions of the Members shall be allocated to such Funds
by the Trustee, pursuant to the direction of the Employers. The entire Matching
Employer and Incentive Contributions of the Employers shall be allocated to Fund
C. All of the foregoing provisions of this subsection are subject to the
provisions of Section 5.13.
6.3 INVESTMENT MANAGER. The Employers may at any time enter into an agreement
with an Investment Manager to employ it to direct the Trustee with respect to
the investment of all or a portion of the Trust Fund.
6.4 REINVESTMENT OF INVESTMENT FUNDS. All interest, dividends, and other income
produced by Investment Funds shall be reinvested in the same Investment Fund
which produced such interest, dividends and other income.
6.5 OWNERSHIP OF THE TRUST FUND. The Trustee shall hold the Trust Fund for the
exclusive benefit of the Members under the Plan, or their beneficiaries.
However, the ownership of the Trust Fund shall be in the Trustee, as such, and,
except as otherwise provided herein, the Trustee shall have the same powers of
management with respect to any and all of the assets of the Trust Fund as if it
were the absolute owner thereof.
6.6 VOTING OF THE COMMON STOCK OF CMS ENERGY CORPORATION. Each Member under the
Plan shall be entitled to give voting instructions with respect to his interest
in the common stock, including fractional shares, of CMS Energy Corporation held
by the Trustee in Fund C or Fund G. Written notice of any meeting of
shareholders of CMS Energy Corporation and a request for voting instructions
will be mailed by CMS Energy Corporation to each Member for return to the
Trustee or its designee. The Trustee shall vote the common stock of CMS Energy
Corporation held by the Trustee in accordance with the written instructions
received from the Members. The Trustee shall vote only those shares of common
stock of CMS Energy Corporation held by the Trustee for which it receives
written instructions from Members.
6.7 EXPENSES AND TAXES. Brokerage fees, commissions, stock transfer taxes and
other charges and expenses in connection with the purchase and sale of
securities for each Investment Fund, or distributions therefrom, shall be
charged to such fund. Any income
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<PAGE> 35
and other taxes payable with respect to each Investment Fund shall likewise be
charged to such fund. Except as otherwise provided in Section 15.1, all other
expenses and charges incurred in the administration of the Plan, including the
Trustee's fees and expenses, shall be paid by the Employers, with each Employer
bearing such portion thereof as may be mutually agreed by them.
6.8 VALUATION OF TRUST FUND. The value of each Investment Fund shall be
determined separately by the Trustee as of each Valuation Date. In determining
such value, the Trustee shall take into account, among other things, the market
value of the securities held, accrued income and expense and uninvested cash.
SECTION 7. MEMBERS' ACCOUNTS
7.1 ACCOUNTS AND RECORDS. The accounts and records of the Plan shall be
maintained by the Employers and will disclose the status of the accounts of the
Members under the Plan in each Investment Fund.
7.2 METHOD OF DETERMINING INTERESTS OF MEMBERS. The interest of each Member
under the Plan in an Investment Fund shall be represented by units allocated to
his account. The initial value of each unit in an Investment Fund shall be One
Dollar ($1.00) and one unit will be credited to each Member's account for each
dollar paid into the Trust Fund on his behalf prior to the first Valuation Date.
On each subsequent Valuation Date the value of a unit in each fund shall be
determined by dividing the value of such fund on that date by the number of
outstanding units. Any amount paid into the Trust Fund on behalf of a Member
subsequent to the first Valuation Date shall be allocated to such Member as of
the most recent Valuation Date and credited to his account in terms of units,
the number of which shall be calculated by dividing such amount so allocated by
the then unit value. The units credited to a Member's account in each Investment
Fund shall be designated "Participant units," "Elective Employer units,"
"Voluntary units," "Matching Employer units," "Incentive units," or "Rollover
units," as the case may be, to reflect the source of the contributions as
provided in Sections 5.1, 5.2, 5.3, 5.10, 5.12 and 5.14. Each unit of each
Investment Fund shall have an equal beneficial interest in a fund and none shall
have any preference or priority over any other. All determinations made by the
Plan administrator shall be made in accordance with generally accepted
principles of trust accounting, and such determinations when so made by the Plan
administrator shall be conclusive with respect to the facts so found and shall
be binding upon the persons having any interest under the Plan.
7.3 ACCOUNTING TO MEMBERS. Employers shall, not less frequently than annually,
mail to each Member having an account balance under the Plan a statement setting
forth such Member's account under the Plan. Such statement shall be deemed to
have been accepted as correct unless written notice of specific objection
thereto is received by the Employer within thirty (30) days after such mailing
to the Member.
SECTION 8. DISTRIBUTION
8.1 RETIREMENT, DISABILITY OR LAYOFF. As of a Member's Retirement Date, or the
date his employment with his Employer is terminated on account of a Disability,
or the date he is laid off by his Employer on account of lack of work, the value
of the units credited to the Member's account shall be available for
distribution to such Member. Such Member shall elect one of the following
methods of distribution of the value of the units credited to the
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<PAGE> 36
Member's account in each Investment Fund, (i) in a lump sum; (ii) in annual
installments of approximately the same number of units over not more than the
number of years shown in Appendix A; (iii) deferment of payment; provided,
however, that if the distribution is occasioned by layoff, the Member may select
this option (iii) only if the taxable portion of such distribution exceeds Three
Thousand Five Hundred Dollars ($3,500). With respect to (i), the value of the
distribution will be based on the entire value (as of the Valuation Date next
succeeding or coincident with such event) of the units credited to the Member's
account. With respect to (ii), the value of each distribution will be based on
the entire value (as of the Valuation Dates selected by the Members) of the
units to be distributed on such Valuation Date. The initial distribution shall
be within the twelve-month (12-month) period following the Member's Retirement,
Disability or Layoff. With respect to (iii), the Member shall notify the Plan
administrator prior to the future Valuation Date as of which he elects a lump
sum or annual installments as provided in subparagraph (ii) above. Such payments
from Investment Funds other than Fund C will be made only in cash. Lump sum
distributions from Fund C will be made in common stock of CMS Energy Corporation
and/or cash. Matching Employer Contributions shall be nonforfeitable upon the
Employee's attainment of normal retirement age. A distribution must begin no
later than April 1 of the year following the year in which the Member attains
age 70-1/2 whether such Member is retired or an Employee. Unless the Member
elects otherwise on or before his Retirement Date, his account value, after any
required tax withholding, will be paid to him in a lump sum as provided above,
in which event such distribution from Fund C will be made only in common stock
of CMS Energy Corporation. (Cash will be paid in lieu of fractional shares.)
Notwithstanding any other provision, a Member who has retired may reallocate
Matching Employer and Incentive units to other Investment Funds as of a future
Valuation Date coincident with or subsequent to his retirement.
8.2 DEATH. Upon the death of a Member prior to his Retirement Date, there shall
be paid to the Member's spouse, if the Member is married, or, if such spouse
consents and such consent is witnessed by a Notary Public, to the beneficiary or
beneficiaries designated by such Member in a lump sum the entire value of the
units credited to the account of such Member in each Investment Fund, unless the
Member has elected installment payments for such spouse or for such beneficiary
or beneficiaries, in which event the provisions of Section 8.1 governing such
payments shall be applicable. Upon the death of a Member following the date he
commences to receive a distribution hereunder, the entire value of any units
credited to his account in each Investment Fund shall be paid to his spouse, if
the Member is married, or, if such spouse consents and such consent is witnessed
by a Notary Public, to his designated beneficiary or beneficiaries in a lump sum
in cash, unless the Member has elected installment payments for such spouse or
for such beneficiary or beneficiaries, in which event the provisions of Section
8.1 governing such payments shall be applicable. However, before a distribution
under this Section 8.2 is made to such beneficiary or beneficiaries, the
Employer may require proof satisfactory to it that the Member was not married at
the time of death.
8.3 TERMINATION OF EMPLOYMENT. In the event a Member's employment with his
Employer shall be terminated for any reason other than those specified in
Sections 8.1 and 8.2, there shall be paid to such Member, the value of any
Participant, Elective Employer, Voluntary, or rollover units credited to his
account, in a lump sum at his election, either as of the Valuation Date next
succeeding or coincident with the date of termination of employment, or (if the
amount of the distribution exceeds Three Thousand Five Hundred Dollars ($3,500))
as of the Valuation Date coincident with his Normal Retirement Date, plus the
value at such Valuation Date of ten percent (10%) of any Matching Employer and
Incentive
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<PAGE> 37
units credited to his account in such Investment Funds, determined as of the
Valuation Date next succeeding or coincident with his termination of employment,
for each of the first four (4) years of Service he had with the Employers, and
twenty percent (20%) for each of the next three (3) years of Service up to one
hundred percent (100%) of the value of any Employer units credited to his
account after seven (7) full years of Service he had with the Employers. If the
Member is paid as of the Valuation Date next succeeding or coincident with the
date of termination of employment and if the total value of (i) such Member's
Participant, Elective Employer or Voluntary units credited to his account in all
Investment Funds, and of (ii) any Matching Employer units payable to him
pursuant to the next preceding sentence, and of (iii) any withdrawals previously
paid to such Member is less than the total Participant, Elective Employer and
Voluntary Contributions allocated to such funds, then such Member shall be
entitled to receive in addition such of the remaining part of the value of the
Matching Employer units credited to his account in the Investment Funds as will
not exceed the difference between the total Participant, Elective Employer or
Voluntary Contributions and the total value of (i) his Participant, Elective
Employer, and Voluntary units in the Investment Funds, and of (ii) any Matching
Employer units payable to him pursuant to the next preceding sentence, and of
(iii) any withdrawals previously paid to him. Any Matching Employer and
Incentive units credited to such Member's account which are not payable to him
under this Section 8.3 shall be forfeited and shall be applied to reduce the
Matching Employer's Contributions to the Plan; provided, however, that if the
Member returns to the employ of an Employer within twenty-four (24) months after
his termination, and if the Plan has not been terminated or partially terminated
at such time, and if at any time after his reemployment, the Member repays the
entire amount of the units distributed at termination, the amounts previously
forfeited, if any, shall be credited to the Member's account balance as Matching
Employer units. In such case, the Employer whose Matching Contributions were
reduced as a result of such forfeiture shall contribute an amount equal in value
to such units credited to the Member's account. The repayment of Participant,
Elective Employer or Voluntary units will be allocated to a fund or funds
selected by the Participant on the next succeeding Valuation Date following such
repayment. The units so credited to the Participant's account will be determined
based on the unit value of such fund or funds on such Valuation Date. A transfer
of employment from one of the Employers to the other shall not be considered a
termination of employment under this Section 8.3. A Member's or a Participant's
account balances resulting from Participant, Elective Employer, Voluntary or
Rollover Contributions shall be nonforfeitable at all times. Notwithstanding any
foregoing provision to the contrary, there shall be no distribution of Matching
Employer units in excess of Three Thousand Five Hundred Dollars ($3,500) to a
Member whose employment has terminated and which would result in a forfeiture of
any remaining part of the value of Matching Employer units credited to such
Member's account which is not payable to him under this Section 8.3 unless said
Member consents to such distribution.
8.4 WITHDRAWALS. In the event a Member requests the withdrawal of all or part of
the value of his account balance under the Plan while remaining in the employ of
an Employer, such withdrawal will be made as follows, at the Member's option:
(a) Withdrawal of the value of all or any portion of the Participant units
credited to his account: The value of the distribution will be based on the
entire value (as of a Valuation Date chosen by the Member succeeding or
coincident with the date of the withdrawal request) of the units to be
withdrawn. A Member may withdraw all or a part of the value of his
Participant units; however, when a Member has withdrawn all or a part of
his Participant units, he shall thereupon be ineligible to make another
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<PAGE> 38
withdrawal for a period of one (1) year from such date. Withdrawal of units
from Investment Funds other than Fund C will be made only in cash;
withdrawal of units from Fund C, if applicable, will be made in common
stock of CMS Energy Corporation and/or cash; and/or
(b) Withdrawal of the value of all or any portion of the Elective Employer
units credited to his account: The value of the distribution will be based
on the entire value (as of a Valuation Date chosen by the Member succeeding
or coincident with the date of the withdrawal request) of the units to be
withdrawn. A Member may not withdraw all or a part of the value of his
Elective Employer units unless he has attained the age of 59-1/2 or upon
the existence of a hardship by the Member. If the Member experiences an
immediate and heavy financial need for (i) medical expenses for the Member,
his spouse or dependents; (ii) expenses for the purchase of Member's
principal residence; (iii) college tuition for the next term for the
Member, his spouse, children, or dependents; or (iv) expenses to prevent
eviction from the Member's principal residence, and the withdrawal is
necessary to meet such financial need, he may apply for a withdrawal of
that portion of the value of his Elective Employer units which does not
represent earnings on his Elective Employer Contributions earned after
January 1, 1989. Such application shall be in such form as the Plan
administrator shall prescribe and shall include a certification by the
Member that the financial need cannot be met by (i) reimbursement or
Compensation by insurance or otherwise; (ii) reasonable liquidation of his
assets without creating an additional, immediate and heavy financial need;
(iii) stopping his contributions to the Plan; or (iv) all other
distributions and nontaxable loans that the Member can obtain from any
qualified retirement plan and through loans available from commercial
sources on reasonable terms and the amount needed is not reasonably
available from all resources of his spouse and/or minor children, if such
applies. The withdrawal shall not include any Elective Employer units
credited to his account within two (2) full years preceding the date of
withdrawal unless the Member has continuously been a Participant in the
Plan for a period of at least sixty (60) full calendar months preceding the
withdrawal and has not, within such period, received a withdrawal under
Section 8.4(a), (b) or (d). A Member who has withdrawn any portion of his
Elective Employer units in order to meet such financial need shall be
ineligible to make contributions as provided under Sections 5.1 and 5.3, or
to elect to have contributions made for him under 5.2 of the Plan and may
only resume participation, if otherwise eligible under the Plan, on the
first administratively feasible or any succeeding pay date next following
the lapse of twelve (12) full calendar months. Such withdrawal will be made
only in cash; and/or
(c) Withdrawal of the value of all or any portion of the Voluntary units
credited to his account: The value of the distribution will be based on the
entire value (as of a Valuation Date chosen by the Member succeeding or
coincident with the date of the withdrawal request) of the units to be
withdrawn. Withdrawal of units from an Investment Fund other than Fund C
will be made only in cash; withdrawal of units from Fund C, if applicable,
will be made in common stock of CMS Energy Corporation and/or cash; and/or
(d) Withdrawal of all or any portion of the units credited to his account
representing Matching Employer or Incentive Contributions as hereinafter
determined: The value of any such Employer units that a Participant may
withdraw is equal to ten percent (10%) of the value (as of a Valuation Date
chosen by the Member succeeding or coincident with the date of the
withdrawal request) of any such Employer units credited to his account for
each of the first four (4) years of Service he had with the Employers, and
twenty percent (20%) for each of the next three (3) years of such Service,
up to one hundred percent (100%) of the value of any Matching Employer or
Incentive units credited
33
<PAGE> 39
to his account after seven (7) years of Service he had with the Employers.
A Member may withdraw all or a part of the value of his vested Matching
Employer or Incentive units. Withdrawal of Matching Employer or Incentive
units from Fund C, if applicable, will be made in common stock of CMS
Energy Corporation and/or cash.
(e) Withdrawal of the value of all or any portion of the Rollover units
credited to his account: The value of the distribution will be based on the
entire value (as of a Valuation Date chosen by the Member succeeding or
coincident with the date of the withdrawal request) of the units to be
withdrawn. The Plan administrator shall apply the requirements of paragraph
(b) to all of such distribution unless he shall have received evidence
satisfactory to him that all or part of such distribution is not
attributable to contributions made to an employee benefit plan pursuant to
Section 401(k) of the Internal Revenue Code.
The portion of the Matching Employer and Incentive units whose value is so
included in the value of the account balance of such Member shall be his vested
Matching Employer and Incentive units.
If such Member requests the withdrawal of his entire account balance of
Participant and Elective Employer units and if the total value of (i) such
Member's units credited to his account in Fund A, Fund B, and Fund C, and of
(ii) any vested Matching Employer units payable to him pursuant to this Section
8.4, and of (iii) any withdrawals previously paid to such Member is less than
his total Participant and Elective Employer Contributions under the Plan, then,
in addition, such Member shall be entitled to receive such of the remaining part
of the value of the Matching Employer units credited to his account in the
Investment Funds as will not exceed the difference between his total Participant
Contributions and Elective Employer Contributions and the total value of (i) his
Participant and Elective Employer units in the Investment Funds, and of (ii) any
vested Matching Employer units payable to him pursuant to this Section 8.4, and
of (iii) any withdrawals previously paid to him. Notwithstanding any of the
foregoing provisions of this Section 8.4, such Member may not withdraw any part
of the value of Matching Employer or Incentive units credited to his account
until such units have been so credited to his account for at least two (2) full
years unless the Member has continuously been a Participant in the Plan for a
period of at least sixty (60) full calendar months preceding the withdrawal and
has not within such period received a withdrawal under Section 8.4(a), (b) or
(d). If a Member requests the withdrawal of all of such units, the portion of
such units which is not vested and not otherwise payable to him under this
Section 8.4 shall be forfeited. If a Member requests the withdrawal of a part of
his Matching Employer or Incentive units, the portion of such units which is not
vested shall be forfeited in the proportion that the amount withdrawn bears to
the value of such Member's account balance. The forfeited amounts of Matching
Employer and Incentive units credited to a Member's account shall be applied to
reduce the Employer's contributions to the Plan; provided, however, that if the
Member repays the entire amount previously withdrawn, the amount forfeited as a
result of such withdrawal, if any, shall be credited to the Member's account
balance as Matching Employer units and the Employer, whose contributions were
reduced as a result of the forfeiture, shall contribute an amount equal in value
to the units credited to the Member's account. The actual number of such units
shall be determined by dividing the amount forfeited by the value of the units
on the next succeeding Valuation Date. Notwithstanding any other provision of
this Section 8.4,
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<PAGE> 40
if a Member requests the withdrawal of all or part of his account balance of
Participant, Elective Employer, or Voluntary Units, no portion of his Matching
Employer or Incentive Units shall be forfeited because of such request.
When a Member has withdrawn all or part of his Matching Employer and/or
Incentive units, he shall thereupon be ineligible to make contributions as
provided under Sections 5.1 and 5.3, or to elect to have contributions made for
him under Section 5.2 of the Plan and may only resume participation, if
otherwise eligible under the Plan, on the first administratively feasible or any
succeeding pay date next following the lapse of a period of time from the date
of such withdrawal as follows:
<TABLE>
<CAPTION>
AMOUNT OF WITHDRAWAL
OF MATCHING EMPLOYER AND INCENTIVE UNITS PERIOD OF TIME
<S> <C>
Less than 25% of the value 3 full calendar months
25% or more, but less than 50% of the value 6 full calendar months
50% or more, but less than 75% of the value 9 full calendar months
75% or more of the value 12 full calendar months
</TABLE>
8.5 APPLICATION FOR DISTRIBUTION. Each person eligible to receive a distribution
under the Plan shall apply for such distribution by signing an application form
to be furnished by the Employer which last employed the Member requesting the
distribution or through whom such distribution is claimed. Each such person
shall also furnish such Employer with such documents, evidence, data or
information in support of such application as the Employer deems necessary or
advisable.
8.6 ELIGIBLE ROLLOVER DISTRIBUTIONS. Notwithstanding any other provisions of the
Plan to the contrary that would otherwise limit a Distributee's election under
this subsection, effective January 1, 1993, a Distributee may elect to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan.
For purposes of this subsection, an Eligible Rollover Distribution means any
distribution to a Distributee of all or any portion of the balance in the
Member's Account, except that an Eligible Rollover Distribution does not include
any distributions which is one of a series of substantially equal periodic
payments made for the life of the Distributee or the joint lives of the
Distributee and the Distributee's designated beneficiary, or for a specified
period of 10 years or more or to the extent the distribution is required under
Section 401(a)(9) of the Internal Revenue Code.
An Eligible Retirement Plan is an individual retirement account described in
Section 408(a) of the Internal Revenue Code, an individual retirement annuity
described in Section 408(b) of the Internal Revenue Code, an annuity plan
described in Section 403(a) of the Internal Revenue Code or a qualified trust
described in Section 401(a) of the Internal Revenue Code that accepts the
Distributee's Eligible Rollover Distribution.
The term Distributee includes an employee, former employee or a spouse or former
spouse as an alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Internal Revenue Code.
35
<PAGE> 41
SECTION 9. LOANS
9.1 LOANS TO MEMBERS. The Trustee shall, upon the approval and direction of the
Plan administrator, lend from Fund D to a Member an amount, which shall not
exceed the lesser of (a) fifty percent (50%) of the then current value of his
Participant, Elective Employer, Voluntary, vested Matching Employer, vested
Incentive, and Rollover units as appearing on the record of the Plan or (b)
$50,000; provided, however, that if such loan amount is less than $10,000, it
may exceed fifty percent (50%) of the Member's account balance to the extent
that governmental regulations permit the use of more than fifty percent (50%) of
the Member's account balance as the sole security for the loan, but it shall not
exceed eighty percent (80%) of the then current value of his Participant,
Elective Employer, Voluntary, vested Matching Employer, vested Incentive, and
Rollover units as appearing on the records of the Plan. Cash equal to the amount
of such loan shall first be transferred to Fund D from the account balances of
the Member in other Investment Funds, as the Plan administrator, after
consultation with the Member, shall determine and instruct the Trustee, and the
amount of the loan shall then be paid in cash to the Member from Fund D as soon
as practicable after such transfer. Records shall be maintained by the Plan
administrator to evidence the interest of each Member in Fund D, subject to the
terms and conditions of the loan. It is not contemplated that the basic
procedures of Section 7.2 will be applied to Fund D, but that loan
disbursements, repayments, and earnings will be debited and credited to
individual accounts of Members in Fund D. All loans shall comply with the terms
and conditions set forth in this Section 9. Members shall have only one loan
outstanding at any time.
9.2 LOAN APPLICATION. An application for a loan by a Member shall be made in
writing to the Plan administrator, whose action thereon shall be final. All
loans shall be subject to the approval of the Plan administrator, who shall
investigate each application for a loan. Loans shall be permitted for
extraordinary or emergency needs only as determined by the Plan administrator in
his sole discretion on a reasonably equivalent basis without regard to an
employee's race, color, religion, sex or national origin, and shall not exceed
the actual amount of such extraordinary or emergency needs. Such needs shall
include, but shall not be limited to, purchase of or a major improvement to the
Member's residence, college expenses and/or high school tuition for the Member
or the Member's spouse, child and/or children, and unusual medical or related
expenses for the Member or a member of the Member's family, and purchase of
securities of the Company or affiliates of the Company.
9.3 PERIOD OF REPAYMENT. The period of repayment for any loan shall be arrived
at by mutual agreement between the Plan administrator and the borrowing Member
(the "borrower"), but such period shall not exceed five (5) years; provided,
however, that for a loan for the purpose of purchasing a principal residence of
the Member, such period shall not exceed ten (10) years. Each loan shall be made
against collateral which shall be the assignment of the borrower's right, title
and interest in and to the Trust Fund, but only to the extent of the outstanding
balance of the loan, and shall be supported by the borrower's collateral
promissory note for the amount of the loan, including interest, payable to the
order of the Trustee. Each loan shall bear a reasonable rate of interest to be
fixed by the Plan administrator and, in determining the interest rate, the Plan
administrator shall take into consideration interest rates currently being
charged and the earnings of the Investment Funds other than Fund D. The Plan
administrator shall not discriminate among Members in the matter of interest
rates; but loans granted at different times may bear different interest rates
if, in the opinion of the Plan administrator, the difference in rates is
justified by a change in general economic conditions. Notwithstanding the
provisions of Section 13,
36
<PAGE> 42
no distribution shall be made to any Member or to a beneficiary of any such
Member unless and until all unpaid loans, including accrued interest thereon,
have been liquidated. No withdrawal shall be permitted to any Member which would
result in his outstanding loan balance being more than fifty percent (50%) of
the then current value of his Participant, Elective Employer, Voluntary, vested
Matching Employer, vested Incentive, and Rollover units; provided, however, that
if such loan balance is less than $10,000 then his loan balance after such
withdrawal shall not be more than the lesser of, eighty percent (80%) of such
then current value, or the maximum percentage of the account balance that may be
the sole security for the loan under government regulations. A Participant's
loan will be in default if at any time an Employee leaves the service of the
Company or misses a loan payment. Upon default, the Plan administrator, at his
sole discretion, may use any lawful means to collect the entire amount due.
9.4 REPAYMENT OF LOANS. It is contemplated that loans will normally be repaid by
payroll deductions. The amount of each loan repayment received by the Trustee,
both principal and interest, will be credited to the Member's Fund D account for
transfer, from time to time as determined by the rules of the Plan
administrator, but at least quarterly, together with any earnings realized
thereon while in Fund D, to the Member's account in the fund (or, in the same
proportions, the funds) from which the amount of the loan was originally
transferred to Fund D, or as otherwise directed by the Member, except with
respect to Matching Employer and Incentive Contributions.
9.5 NOTICE TO MEMBERS. The Plan administrator shall in his sole discretion
establish and communicate to Members such rules as may be necessary or desirable
governing the terms and conditions of loans made and to be made under this
Section 9, including but not limited to rules governing personal and financial
data required of Members in loan applications, permissible prepayment and
refinancing of existing loans, and satisfaction of a loan from the Member's
interest under the Plan pledged as security for the loan in the event of the
Member's termination of employment prior to repayment or other circumstances in
which repayment in full is not made.
SECTION 10. BENEFICIARY DESIGNATION
10.1 BENEFICIARY DESIGNATION. At the time of enrollment under the Plan, an
Employee may designate, upon forms provided by his Employer for that purpose, a
beneficiary or beneficiaries to receive any distribution under the Plan in the
event of his death and the manner of such distribution; provided, however, such
designation is contingent upon the consent of the Member's spouse, if any, which
consent must be witnessed by a Notary Public. A Member may, without the consent
of any beneficiary, change or cancel any such designation. The designation of a
beneficiary or beneficiaries, or a change or cancellation thereof, shall not be
effective for any purpose unless or until it has been filed by the Member with
his Employer. In the event a Member shall not be married, or shall not have
designated a beneficiary or beneficiaries in the manner set forth in this
Section, or if for any reason such designation shall be legally ineffective, or
if such beneficiary or beneficiaries shall predecease the Member or shall die
prior to complete distribution of a Member's account, the value of his account
or the undistributed portion thereof shall be paid to the legal representative
of the estate of the Member or to such other person as is duly authorized to
receive payment by order of a court of competent jurisdiction.
SECTION 11. ADMINISTRATION
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<PAGE> 43
11.1 ADMINISTRATION OF THE PLAN. The Employers shall be responsible for the
general administration of the Plan and for carrying out the provisions thereof.
They may establish rules and regulations to carry out the provisions of the
Plan; and in making any determinations, rules, or regulations they shall pursue
uniform policies and shall not discriminate in favor of or against any Employee
or Member. The Board of Directors of Consumers shall appoint such persons, who
may be Members under the Plan, as it determines at any time to act as Plan
administrator in all dealings under the Plan. The Employers are hereby
designated as the Named Fiduciaries and Plan sponsors for the Plan.
SECTION 12. CONCERNING THE EMPLOYERS
12.1 RIGHTS AGAINST THE EMPLOYERS. Neither the establishment of the Plan or the
Trust Fund, nor any modification thereof, nor the payments of any benefits
hereunder, nor any of the provisions hereof, shall be construed as giving to any
person whomsoever any legal or equitable rights against the Employers, or either
of them, or against their officers, directors or shareholders, as such, or as
giving any person the right to be retained in the employment of an Employer, and
the Employers shall have no liability except for failure to make contributions
to the Trust Fund as herein provided and to pay expenses and charges incurred in
the administration of the Plan to the extent required of the Employers in
Section 6.7 hereof. All benefits payable under the Plan shall be paid or
provided for solely from the Trust Fund.
12.2 RIGHT OF EMPLOYERS TO EXAMINE THE RECORDS OF THE PLAN AND TRUST FUND. An
Employer may at its own expense obtain an examination and report of the books
and records of the Plan and of the Trust Fund at any time by such of its
attorneys, accountants, and auditors or other agents as the Employer shall
select for that purpose.
SECTION 13. NON-ALIENATION OF BENEFITS
13.1 NON-ALIENATION. Except as may be required by a qualified domestic relations
order as defined in Section 104 of the Retirement Equity Act of 1984, in no
event shall the Trustee pay or assign over any part of the interest of a Member
under the Plan, or his beneficiary or beneficiaries, in the Trust Fund which is
payable, distributable or credited to his account, to any assignee or creditor
of such Member or his beneficiary or beneficiaries. Prior to the time of
distribution, a Member, his beneficiary or beneficiaries or legal representative
shall have no right by way of anticipation or otherwise to assign or otherwise
dispose of any interest which may be payable, distributable or credited to the
account of the Member under the Plan, or his beneficiary or beneficiaries, in
the Trust Fund, and every attempted assignment or other disposition of such
interest in the Trust Fund shall not be merely voidable but absolutely void.
SECTION 14. AMENDMENT AND TERMINATION
14.1 AMENDMENT OF THE PLAN. The Employers expect the Plan to be permanent, but
since future conditions affecting the Plan cannot be anticipated or foreseen,
the Employers reserve the right, by action of the Board of Directors of
Consumers, to terminate or amend the Plan in whole or in part. In addition, and
without action of the Board of Directors, Consumers (acting by its Chairman,
President or a Vice President and its Secretary or Assistant Secretary) may make
any modifications or amendments to the Plan that are necessary or appropriate to
qualify or maintain the Plan as a plan meeting the requirements
38
<PAGE> 44
of Section 401 of the Internal Revenue Code of 1986 as amended, any other
applicable provisions of the Internal Revenue Code or the Employee Retirement
Income Security Act of 1974, all as now in effect, or hereafter amended, or the
regulations or rulings issued thereunder. Notwithstanding the foregoing, it
shall be impossible for any part of the Trust Fund to be used for or diverted to
any purpose other than for the exclusive benefit of the Members under the Plan
or their beneficiaries, either by amendment, operation or termination of the
Plan or by other means.
14.2 TERMINATION OF THE PLAN. Upon termination or partial termination of the
Plan, or upon a complete discontinuance of contributions, the interest of each
person having an interest in the Trust Fund shall be determined as of that date.
The interest of each such person shall then be segregated and set aside by the
Trustee for the special account of each Member or his beneficiary or
beneficiaries. Thereafter, distribution shall be made in accordance with the
provisions of Section 8, except that the forfeiture provisions applicable in the
case of distributions to be made under Sections 8.3 and 8.4 relating to
termination of employment and withdrawals shall not apply and one hundred
percent (100%) of the value of the Matching Employer units credited to the
account of a person having an interest in the Trust Fund shall be vested in such
person.
14.3 MERGER OF PLAN. In the case of any merger or consolidation with, or
transfer of assets or liabilities to, any other plan, each Participant in the
Plan shall be entitled to a benefit under the successor plan immediately after
such merger, consolidation, or transfer which is equal to or greater than the
benefit and according to the terms and conditions of the plan that he would have
been entitled to receive immediately before the merger, consolidation or
transfer, the same as if this Plan were then terminated.
SECTION 15. LITIGATION
15.1 LITIGATION. In order to protect the Trust Fund against depletion as a
result of litigation in the event that any Member under the Plan, or any person
claiming an interest by or through such Member, shall bring any legal or
equitable action arising under the Plan against the Trustee or the Employers or
any of them, or in the event that the Trustee or the Employers or any of them
find it necessary to bring any legal or equitable action arising under the Plan
against any Member, or any person claiming an interest by or through such
Member, each Employer shall have the right to join in any such action, or to
join the Trustee and the other Employer(s) or either of them in any such action,
as a party defendant or as a party plaintiff. All expenses of defending or
bringing any such action shall be paid by the Trustee from the appropriate
Investment Fund or Funds to which the litigation relates.
SECTION 16. UNCLAIMED ACCOUNTS
16.1 UNCLAIMED ACCOUNTS. Should the whereabouts of a Member entitled to a
distribution of benefits hereunder be unknown, or unascertainable after
reasonable inquiry by his Employer, for a period of five (5) years from the date
he becomes entitled to such distribution, the interest of such Member shall be
distributed to his designated beneficiary or beneficiaries, if any. If the
whereabouts of such beneficiary or beneficiaries is not known, then the interest
of such Member shall be distributed to the following alternative beneficiaries
(in the following order of preference and in equal shares if there be more than
one person in a particular class): the spouse, a child, a parent, or a brother
or sister of such Member.
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<PAGE> 45
SECTION 17. DISABILITY, INFIRMITY OR INCOMPETENCY
17.1 DISABILITY, INFIRMITY OR INCOMPETENCY. Every person receiving or claiming
benefits under the Plan shall be conclusively presumed to be mentally competent
until the Employer which processes the application for benefits has received a
written notice that such person is incompetent or that a guardian or other
person legally vested with the care of the estate of such person has been
appointed by a court of competent jurisdiction; provided, however, that if the
Employer shall find that any person to whom a benefit is payable under the Plan
is unable to care for his affairs because of any disability or infirmity, any
payment due (unless a prior claim therefor shall have been made by a duly
appointed legal representative of his estate) in the amount of Five Hundred
Dollars ($500) or less may be paid to the following beneficiaries (in the
following order of preference and in equal shares if there be more than one
person in a particular class): the spouse, a child, a parent, or a brother or
sister, of such person.
SECTION 18. APPLICABLE LAWS
18.1 APPLICABLE LAWS. The Plan shall be construed, administered and governed in
all respects under and by the laws of the State of Michigan and any applicable
Federal laws.
SECTION 19. EMPLOYMENT RIGHTS
19.1 EMPLOYMENT RIGHTS. An Employer's right to discipline or discharge Employees
shall not be affected by reason of any of the provisions of the Plan.
SECTION 20. CLAIMS PROCEDURE
20.1 CLAIMS PROCEDURE. Claims of an Employee of one of the Employers for
enrollment in the Plan or for a distribution from the Plan shall be filed, on
forms to be supplied by the Employers, with the Plan administrator, Consumers
Energy Company, 212 West Michigan Avenue, Jackson, Michigan 49201. Written
notice of the disposition of a claim shall be furnished by the Employer to the
claimant within thirty (30) days after such claim is filed. In the event the
claim is denied, the reasons for the denial shall be set forth in writing and
pertinent provisions of the Plan shall be cited. An explanation as to how the
claimant can perfect the claim will be provided when appropriate. Any Employee
or his beneficiary or beneficiaries whose claim has been denied may appeal the
denial of such claim by furnishing the Plan administrator with the reason for
the appeal in writing. If the claimant wishes further consideration of his
position, he may request in writing to the Plan administrator for a hearing,
together with a written statement of the claimant's position, no later than
ninety (90) days following the receipt of the initial notification of the denied
claim. The Employer shall schedule a full and fair hearing on the issue within
thirty (30) days following the receipt of such request. The Employer's decision
shall be made within thirty (30) days following such hearing and shall be
communicated to the claimant in writing.
SECTION 21. CAPTIONS
21.1 CAPTIONS. The captions of the various Sections are for convenience only and
are not a part of the Plan, and do not in any way limit or amplify the terms and
provisions of the Plan.
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<PAGE> 46
SECTION 22. TOP-HEAVY PLAN RULES
22.1 TOP-HEAVY PLAN RULES.
(a) GENERAL RULE. If, for any Fiscal Year beginning after December 31,
1983, the Plan is a top-heavy plan as determined under paragraph (b),
then the requirements in paragraph (c) shall apply to the extent
indicated by that paragraph. For purposes of this Section, the term
"Employers" shall include any related Company for which years of
service credit is granted to Participants under this Plan for purposes
of vesting.
(b) TOP-HEAVY TEST. The Plan's status as a top-heavy plan for any Fiscal
Year shall be determined in accordance with the following five-step
procedure.
(1) REQUIRED PLAN AGGREGATION. First, there shall be aggregated with
this Plan (i) each plan of the Employers in which a Key Employee
is a Participant and (ii) each other plan of the Employers which
enables a plan described in (i) to meet the requirements of Code
Section 401(a)(4) or 410.
(2) KEY EMPLOYEE SUM. Second, there shall be computed, as of the
determination date, the sum of the account balances of all Key
Employees under all defined contribution plans, including this
Plan, required to be aggregated under (1), and the present
values of the cumulative accrued benefits of all Key Employees
under all defined benefit plans required to be aggregated under
(1). For purposes of this computation, account balance means the
account balance as of the most recent Valuation Date occurring
within a 12-month period ending on the determination date, plus
an adjustment for contributions due as of the determination
date. In the case of a profit sharing plan or other plan not
subject to the minimum funding requirements of Code Section 412,
the adjustment is the amount of any contributions actually made
after the Valuation Date but on or before the determination
date, except that in the first plan year, the adjustment shall
include any contributions made after the determination date that
are allocated as of a date within the first plan year. In the
case of a money purchase pension plan or other plan subject to
the minimum funding requirements of Code Section 412, the
adjustment is the amount of any contributions that would be
allocated as of a date not later than the determination date,
even though such amount is not yet required to be contributed,
plus the amount of any contribution actually made (or due to be
made) after the Valuation Date but before the expiration of the
extended payment period under Code Section 412(c)(10). Also for
purposes of this computation, the present value of a cumulative
accrued benefit shall be determined as of the most recent
Valuation Date occurring within a 12-month period ending on the
determination date with the accrued benefit for a current
Participant determined as if the individual had terminated
employment as of such Valuation Date, except that in the first
plan year of a defined benefit plan, the accrued benefit of a
current Participant must be determined as if the individual had
terminated employment as of the last day of the plan year.
Finally, for purposes of this computation: (i) there shall be
included in the sum any distributions (other than rollover
amounts or plan-to-plan transfers not initiated by the Employee
or made to another plan maintained by the Employers) made to an
Employee from this Plan, or from another plan required to be
aggregated under (1), within the five-year (5-year) period
ending on the determination date, except that for plan years
beginning after December 31, 1984, if any individual has not
performed service for any employer
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<PAGE> 47
maintaining the plan (other than benefits under the plan) at any
time during the five-year period ending on the determination
date, any accrued benefit for such individual (and the account
of such individual) shall not be taken into account; (ii) there
shall be excluded from the sum any rollover contribution and any
plan-to-plan transfer initiated by the Employee and accepted
after December 31, 1983 by this Plan, or by any other plan
required to be aggregated under (1), from a plan other than one
maintained by the Employers; (iii) there shall be excluded from
the sum the account balance and present value of the accrued
benefit of any Employee who formerly was a Key Employee but who
is not a Key Employee for the year ending on the determination
date; and (iv) there shall be excluded from the sum any amounts
attributable to tax-deductible Employee contributions.
(3) ALL EMPLOYEE SUM. Third, under the same procedures as set forth
in (2) above, including the special rules in (i), (ii), (iii)
and (iv), there shall be computed the sum of account balances
and present values of accrued benefits for all Employees.
(4) TOP-HEAVY TEST FRACTION. Fourth, the sum computed in (2) shall
be divided by the sum computed in (3), and if the resulting
fraction is 0.60 or less, neither the Plan nor any plan required
to be aggregated under (1) is a top-heavy plan for the Fiscal
Year. If the fraction is greater than 0.60, both the Plan and
any plan required to be aggregated under (1) are top-heavy plans
for the Fiscal Year, unless after the permissive plan
aggregation described in (5) below, the recomputed fraction is
0.60 or less.
(5) PERMISSIVE PLAN AGGREGATION. At the election of the Plan
administrator, plans of the Employers, other than those required
to be aggregated under (1), but which provide contributions or
benefits comparable to this Plan may be aggregated with this
Plan and the plans required to be aggregated under (1), provided
that such aggregated group would meet the requirements of Code
Sections 401(a)(4) and 410. Steps (2) to (4) above may then be
repeated, based on this permissively aggregated group, and if
the top-heavy test fraction computed in step (4) is 0.60
or less for this group, then neither the Plan nor any plan
required to be aggregated under (1) is a top-heavy plan for the
Fiscal Year; however, if the top-heavy test fraction computed in
step (4) is still greater than 0.60, both the Plan and any plan
required to be aggregated under (1) will be top-heavy plans for
the Fiscal Year, but no plan which is permissively aggregated
under this step (5) will be deemed top-heavy for such reason.
(c) SUPERSEDING RULES. For each Fiscal Year that the Plan is a top-heavy
plan, the requirements in (1), (2), (3), and (4) shall supersede any
other provisions of the Plan which otherwise would apply for that
Fiscal Year. For any Fiscal Year that the Plan is a top-heavy plan, the
vesting schedule in (5) shall supersede the Plan's regular vesting
schedule, but only to the extent it provides a greater vested
percentage for any level of Years of Service than the Plan's regular
vesting schedule, and only with respect to Employees who have at least
one Hour of Service after the Plan becomes top-heavy; if and when the
Plan ceases to be a top-heavy plan, the Plan's regular vesting schedule
shall again apply (without regard to the schedule in (5)) as of the
first day of the Fiscal Year after the last Fiscal Year for which the
Plan is a top-heavy plan, but subject to all Plan rules that apply in
the case of amendments to the vesting schedule.
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<PAGE> 48
(1) COMPENSATION LIMIT. Annual Compensation of any Employee from the
Employers shall be disregarded for all purposes under the Plan
to the extent such Compensation exceeds $150,000 (or such other
cost-of-living adjusted amount as determined by the Secretary of
the Treasury), except that any benefits which were accrued by an
Employee during a period when the Plan was not top-heavy and
which are based on Compensation in excess of $150,000 shall in
no event be reduced.
(2) ADJUSTED CODE SECTION 415 LIMITATIONS. In order to reduce the
overall limitations on combined plan contributions and benefits
under Code Section 415, the number 0.8 shall be substituted for
1.0 in the definitions of defined contribution fraction and
defined benefit fraction provided for in Code Section 415;
provided, however, that the foregoing sentence shall not apply
if (i) the top-heavy test fraction in paragraph (b)(4) or
recomputed fraction after applying paragraph (b)(5) is 0.90 or
less and (ii) each non-Key Employee receives an additional
minimum contribution or benefit under a plan of the Employers.
In the case of a non-Key Employee participating only in a
defined benefit plan, the additional minimum benefit for each
Year of Service counted is one percentage point, up to a maximum
of ten percentage points, of the Employee's average Compensation
for the five consecutive years when the Employee had the highest
aggregate Compensation from the Employers, computed as described
in (3) below. In the case of a non-Key Employee participating
only in this or another defined contribution plan, the
additional minimum contribution is one percent (1%) of the
Employee's Compensation. In the case of a non-Key Employee
participating both in a defined benefit plan and this or another
defined contribution plan, there is no additional minimum
benefit, but the additional minimum contribution shall be two
and one-half percent (2-1/2%) of the Employee's Compensation.
(3) MINIMUM CONTRIBUTIONS OR BENEFITS FOR NON-KEY EMPLOYEES.
Employers' contributions and forfeitures for the Fiscal Year
beginning after December 31, 1983 allocated on behalf of each
non-Key Employee Participant (A) who has not separated from
employment with the Employers at the end of the Fiscal Year, (B)
who is eligible for an allocation of Employers' contributions
under the Plan (without regard to any requirements for a minimum
number of Hours of Service during the Fiscal Year, mandatory
contributions, or Compensation for the Fiscal Year in excess of
a stated amount), and (C) who does not participate in a defined
benefit plan of the Employers, shall be equal to at least (i)
three percent (3%) or, if less, the maximum percentage of
Employers' contributions and forfeitures (as a percentage of
Compensation not in excess of $150,000) allocated on behalf of
any Key Employee Participant for the Fiscal Year, multiplied by
(ii) the non-Key Employee Participant's Compensation for the
Fiscal Year. For purposes of this rule, Employers' contributions
and forfeitures allocated under any other defined contribution
plan of the Employers, in which any Key Employee participates or
which enables another defined contribution plan to meet the
requirements of Code Section 401(a)(4) or 410, shall be
considered contributions and forfeitures allocated under this
Plan. In the case of any non-Key Employee Participant who is
also a participant in any defined benefit plan of the Employers,
the foregoing provisions of this part (3) shall be
applied, but with five percent (5%) substituted for three
percent (3%); alternatively at the option of the Employers, but
uniformly applied to all non-Key Employees who participate in
both this Plan and a defined benefit plan of the Employers, the
foregoing provisions of this part (3) shall be
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<PAGE> 49
inapplicable, provided that each non-Key Employee eligible to
participate in this Plan has, at any time, a minimum accrued
benefit under the defined benefit plan, expressed as a life
annuity commencing at Normal Retirement age, equal to at least
the product of (i) the Employee's average Compensation for the
five consecutive years when the Employee had the highest
aggregate Compensation from the Employers and (ii) the lesser of
two percent (2%) per Year of Service or twenty percent (20%).
For purposes of computing the product in the foregoing sentence,
Compensation in years before January 1, 1984 and in years after
the close of the last Fiscal Year in which the Plan is top-heavy
shall be disregarded, and similarly, Years of Service shall
exclude Years of Service when the Plan was not top-heavy (for
any Fiscal Year ending during such Year of Service) and Years of
Service completed in a Fiscal Year beginning before January 1,
1984. Although accruals of Employers' derived benefits, whether
or not attributable to years for which the Plan is top-heavy,
may be used to satisfy the defined benefit plan minimum, all
accrued benefits attributable to Employee contributions shall be
ignored.
(4) DISTRIBUTIONS ON BEHALF OF KEY EMPLOYEES. Subject to any
designation made before January 1, 1984 pursuant to Section
242(b)(2) of the Tax Equity and Fiscal Responsibility Act of
1982, distribution of each Key Employee Participant's account
balance shall commence or be made no later than the taxable year
(of the Participant) in which he attains age 70-1/2, without
regard to whether the Participant has retired by such time.
Furthermore, any distribution made to a Participant prior to his
attainment of age 59-1/2 shall be subject to the ten percent
(10%) penalty tax of Code Section 72(m)(5) if the Participant is
or once was a Key Employee and the distribution occurs for any
reason other than the Participant's disability within the
meaning of Code Section 72(m)(7), but only to the extent that
the distributed amount is attributable to contributions paid on
the Participant's behalf while he was a Key Employee and while
the Plan was top heavy.
(5) ACCELERATED VESTING. A Participant's vested percentage for
purposes of Section 8.3 shall be determined in accordance with
the following vesting schedule:
<TABLE>
<CAPTION>
VESTED
YEARS OF SERVICE PERCENTAGE
<S> <C>
Less than 2 years 0
At least 2 years but less than 3 years 20
At least 3 years but less than 4 years 40
At least 4 years but less than 5 years 60
At least 5 years but less than 6 years 80
6 or more years 100
</TABLE>
(d) SPECIAL DEFINITIONS. For purposes of this Section 22, the following
terms shall have the meanings indicated:
44
<PAGE> 50
(1) "COMPENSATION" means Compensation as defined in Section 2.1
within the limitations on annual additions as set forth in
Section 5.13.
(2) "DETERMINATION DATE" means, with respect to any Fiscal Year, the
last day of the preceding Fiscal Year, except that in the case
of the first Fiscal Year, the Determination Date shall be the
last day of that Fiscal Year. Where one or more plans are
required or permitted to be aggregated with this Plan, and where
all plan years do not coincide, the Key Employee and all
Employee sums in paragraph (b) each shall be determined
separately for each plan on the respective Determination Dates,
and the results shall then be combined for the Determination
Dates falling within the same calendar year.
(3) "EMPLOYEE" means (i) a common-law Employee of the Employers who
is or once was a Participant, or would have been a Participant
but for his failure to complete 1,000 or more Hours of Service
in any Fiscal Year (after meeting the Plan's initial eligibility
requirements), to make mandatory Employee contributions, if
required, or to receive Compensation in excess of a stated
amount, and (ii) any beneficiary, but in each case excluding any
individual who is a member of a unit of Employees covered by a
collective bargaining agreement under which retirement benefits
were the subject of good faith bargaining with the Employers,
unless a member of the bargaining unit is a Key Employee, in
which case the foregoing exclusion shall not apply.
(4) "KEY EMPLOYEE" means each Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the
determination period which is the Fiscal Year containing the
Determination Date or any of the four preceding Fiscal Years)
was an officer of the Employer if such individual's annual
Compensation exceeds fifty percent (50%) of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner (or
considered an owner under Section 318 of the Code) of one of the
ten largest interests in the Employer if such individual's
Compensation exceeds 100 percent (100%) of the dollar limitation
under Section 415(c)(1)(A) of the Code, a five percent (5%)
owner of the Employer, or a one percent (1%) owner of the
Employer who has an annual Compensation of more than $150,000.
Annual Compensation means Compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Section 125,
Section 402(a)(8), Section 402(h), or Section 403(b) of the
Code. The determination period is the plan year containing the
Determination Date and the four (4) preceding plan years.
(5) "VALUATION DATE" means the last day of the Fiscal Year in the
case of any defined contribution Plan, including this Plan, and
the date used for computing plan costs for minimum funding in
the case of any defined benefit plan.
(e) ADJUSTMENT TO DOLLAR AMOUNT. The $150,000 limit on Compensation in
paragraphs (c)(1) and (c)(3) shall be adjusted automatically, without
the need of specific Plan amendment, whenever the corresponding amount
from the Code is adjusted by the Secretary of the Treasury for cost of
living changes.
45
<PAGE> 51
(f) ANTI-CUTBACK RULE. Notwithstanding the foregoing rules of this
Section, in no event shall any changes in the Plan's benefit
structure, including its vesting provisions, that result from a change
in the Plan's top-heavy status, cause the account balance or accrued
benefit of any Participant to be reduced in violation of Code Section
411. In addition, in the case of any changes in the vesting provisions
of the Plan, each Participant (i) who has completed at least five (5)
Years of Service and (ii) whose non- forfeitable rights are adversely
affected by the change, may elect, during the election period, to have
his nonforfeitable rights determined without regard to such change.
The election period shall begin on the date the change is adopted or
becomes effective, whichever is earlier, and end on the latest of (1)
the date which is 60 days after the day the change is adopted, (2) the
date which is 60 days after the day the change becomes effective, or
(3) the date which is 60 days after the day the Participant is issued
written notice of the change.
SECTION 23. EXCESS CONTRIBUTIONS
23.1 RECHARACTERIZATION. The Employer may treat a Participant's Excess
Contributions as an amount distributed to the Participant and then contributed
by the Participant to the Plan as Participant Contributions under Section 5.1 or
Voluntary Contributions under Section 5.3 as the Plan administrator may deem
appropriate. (Recharacterized amounts will remain nonforfeitable and subject to
the same distribution requirements as Elective Employer Contributions.) Amounts
may not be recharacterized for a highly compensated Employee to the extent that
such amount, in combination with other Employee contributions made by that
Employee, would exceed any stated limit under the Plan on Employee
contributions.
Recharacterization must occur no later than two and one-half (2-1/2) months
after the last day of the Plan Year in which such Excess Contributions arose and
is deemed to occur no earlier than the date the last highly compensated Employee
is informed in writing of the amount recharacterized and the consequences
thereof. Recharacterized amounts will be taxable to the Participant for the
Participant's tax year in which the Participant would have received them in
cash.
"EXCESS CONTRIBUTIONS" shall mean, with respect to any Plan Year, the excess of:
(a) The aggregate amount of Employer contributions actually taken
into account in computing the Average Deferral Percentage (ADP)
of highly compensated Employees for such Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of
highly compensated Employees in order of the ADPs, beginning
with the highest of such percentages).
The Average Contribution Percentage (ACP) for Participants who are highly
compensated Employees (as defined in Section 414(g) of the Internal Revenue Code
of 1986) for each Plan Year and the ACP for Participants who are not highly
compensated Employees for the same Plan Year must satisfy one of the following
tests:
(a) The ACP for Participants who are highly compensated Employees
for each Plan Year and the ACP for Participants who are
non-highly compensated Employees for the same Plan Year
multiplied by 1.25; or,
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<PAGE> 52
(b) The ACP for Participants who are highly compensated Employees
for the Plan Year shall not exceed the ACP for Participants who
are non-highly compensated Employees for the same Plan Year
multiplied by two (2), provided that the ACP for Participants
who are highly compensated Employees does not exceed the ACP for
Participants who are non-highly compensated Employees by more
than two (2) percentage points.
(A) Special rules for purposes of this Section 23:
(1) Multiple Use: If one or more highly compensated Employees
participate in both a cash or deferred arrangement and a plan
subject to the ACP test maintained by the Employer and the sum
of the ADP and ACP of those highly compensated Employees subject
to either or both tests exceeds the Aggregate Limit, then the
ACP of those highly compensated Employees who also participate
in a cash or deferred arrangement will be reduced (beginning
with such highly compensated Employee whose ACP is the highest)
so that the limit is not exceeded. The amount by which each
highly compensated Employee's Contribution Percentage Amount is
reduced shall be treated as an Excess Aggregate Contribution.
The ADP and ACP of the highly compensated Employees are
determined after any corrections required to meet the ADP and
ACP tests. Multiple use does not occur if either the ADP or ACP
of the highly compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the non-highly compensated
Employees.
(2) For purposes of this Section, the Contribution Percentage for
any Participant who is a highly compensated Employee and who is
eligible to have Contribution Percentage Amounts allocated to
his account under two (2) or more plans described in Section
401(a) of the Code, or arrangements described in Section 401(k)
of the Code that are maintained by the Employer, shall be
determined as if the total of such Contribution Percentage
Amounts were made under each plan. If a highly compensated
Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar
year shall be treated as a single arrangement.
(3) In the event that this Plan satisfies the requirements of
Section 401(m), 401(a)(4), or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only
if aggregated with this Plan, then this Section shall be applied
by determining the Contribution Percentage of Employees as if
all such plans were a single plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated in order to
satisfy Section 401(m) of the Code only if they have the same
Plan Year.
(4) For purposes of determining the Contribution Percentage of a
Participant who is a five percent (5%) owner or one of the ten
(10) most highly paid, highly compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage Amounts
and Compensation for the Plan Year of Family Members (as defined
in Section 414(g)(6) of the Code). Family Members, with respect
to highly compensated Employees, shall be disregarded as
separate Employees in determining the Contribution Percentage
both for Participants who are non-highly
47
<PAGE> 53
compensated Employees and for Participants who are highly
compensated Employees.
(5) For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the
Plan Year in which they were contributed to the trust. Matching
Contributions and Qualified Non-Elective Contributions will be
considered made for a Plan Year if made no later than the end of
the twelve-month (12-month) period beginning on the day after
the close of the Plan Year.
(6) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Non-Elective Contributions or Qualified Matching Contributions,
or both, used in such test.
(7) The determination and treatment of the Contribution Percentage
of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
(B) Definitions:
(1) "AGGREGATE LIMIT" shall mean the sum of (i) 125 percent (125%)
of the greater of the ADP of the non-highly compensated
Employees for the Plan Year, or the ACP of non-highly
compensated Employees under the Plan subject to Code Section
401(m) for the Plan Year beginning with or within the Plan Year
of the cash or deferral arrangement; and (ii) the lesser of 200
percent (200%) or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in (i) above, and
"greater" is substituted for "lesser" after "two plus the..." in
(ii) if it would result in a larger Aggregate Limit.
(2) "AVERAGE CONTRIBUTION PERCENTAGE" shall mean the average of the
Contribution Percentages of the Eligible Participants in a
group.
(3) "CONTRIBUTION PERCENTAGE" shall mean the ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts
to the Participant's Compensation for the Plan Year (whether or
not the Employee was a Participant
for the entire Plan Year).
(4) "CONTRIBUTION PERCENTAGE AMOUNTS" shall mean the sum of the
Employee Contributions, Matching Contributions, and Qualified
Matching Contributions (to the extent not taken into account for
purposes of the ADP test) made under the Plan on behalf of the
Participant for the Plan Year. Such Contribution Percentage
Amounts shall include forfeitures of Excess Aggregate
Contributions or Matching Contributions allocated to the
Participant's account which shall be taken into account in the
year in which such forfeiture is allocated. The Employer may
elect to use Elective Deferrals in the Contribution Percentage
Amounts so long as the ADP test is met before the Elective
Deferrals are used in the ACP test and continues to be met
following the exclusion of those Elective Deferrals that are
used to meet the ACP test.
(5) "ELIGIBLE PARTICIPANT" shall mean any Employee who is eligible
to make an Employee Contribution or an Elective Deferral (if the
Employer takes such
48
<PAGE> 54
contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution
(including forfeitures) or a Qualified Matching Contribution. If
an Employee Contribution is required as a condition of
participation in the Plan, any Employee who would be a
Participant in the Plan if such Employee made such a
contribution shall be treated as an Eligible Participant on
behalf of whom no Employee Contributions are made.
(6) "EMPLOYEE CONTRIBUTION" shall mean any contribution made to the
Plan by or on behalf of a Participant that is included in the
Participant's gross income in the year in which made and that is
maintained under a separate account to which earnings and losses
are allocated.
(7) "EXCESS AGGREGATE CONTRIBUTIONS" shall mean, with respect to any
Plan Year, the excess of:
(a) The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of highly compensated
Employees for such Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on
behalf of highly compensated Employees in order of their
Contribution Percentages beginning with the highest such
percentages). Such determinations shall be made after first
determining Excess Elective Deferrals and then determining
Excess Contributions.
(8) "MATCHING CONTRIBUTION" shall be as described in Section 5.10.
(c) Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if forfeitable, or if not forfeitable, distributed
no later than the last day of each Plan Year to Participants to whose
accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions shall be allocated
to Participants who are subject to the Family Member aggregation rules
of Section 414(g)(6) of the Code in the manner prescribed by the
regulations. If such Excess Aggregate Contributions are distributed
more than two and one-half (2-1/2) months after the last day of the
Plan Year in which such excess amounts arose, a ten percent (10%)
excise tax will be imposed on the Employer maintaining the Plan with
respect to those amounts. Excess Aggregate Contributions shall be
treated as annual additions under the Plan.
Determination of Income or Loss: Excess Aggregate Contributions shall
be adjusted for any income or loss up to the date of distribution. The
income or loss allocable to Excess Aggregate Contributions is the sum
of: (1) income or loss allocable to the Participant's Elective
Employer Contribution account, Matching Contribution account (if any,
and if all amounts therein are not used in the ADP test) and, if
applicable, Qualified Non-Elective Contribution account for the Plan
Year multiplied by a fraction, the numerator of which is such
Participant's Excess Aggregate Contribution for the year and the
denominator is the Participant's account balance(s) attributable to
Contribution Percentage Amounts without regard to any income or loss
occurring during such Plan Year; and (2) ten percent (10%) of the
amount determined under (1)
49
<PAGE> 55
above, multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting the month
of distribution if distribution occurs after the 15th of such month.
Forfeitures of Excess Aggregate Contributions: Forfeitures of Excess
Aggregate Contributions may either be reallocated to the accounts of
highly compensated Employees, or applied to reduce Employer
Contributions.
Accounting for Excess Aggregate Contributions: Excess Aggregate
Contributions shall be forfeited, if forfeitable, or distributed on a
pro rata basis from the Participant's Employee Contribution account,
Matching Contribution account, and Qualified Matching Contribution
account (and, if applicable, the Participant's Qualified Non-Elective
Contribution account or Elective Deferral account, or both).
23.2 SEPARATE APPLICATION. The provisions of Section 23.1 shall apply separately
to Participants covered by a collective bargaining agreement and to other
Participants, each as a distinct group.
IN WITNESS WHEREOF, execution is hereby effected as of January 1, 1997.
ATTEST: CONSUMERS ENERGY COMPANY
/s/ Thomas A. McNish /s/ William T. McCormick
------------------------ ------------------------
Vice President and Secretary Chairman
50
<PAGE> 56
EMPLOYEES' SAVINGS AND INCENTIVE PLAN
APPENDIX A
<TABLE>
<CAPTION>
NEAREST INSTALLMENT NEAREST INSTALLMENT
AGE YEARS AGE YEARS
<S> <C> <C> <C>
20 55 46 31
21 54 47 30
22 53 48 29
23 53 49 28
24 52 50 27
25 51 51 27
26 50 52 26
27 49 53 25
28 48 54 24
29 47 55 23
30 46 56 23
31 45 57 22
32 44 58 21
33 43 59 20
34 42 60 19
35 41 61 19
36 40 62 18
37 39 63 17
38 38 64 17
39 38 65 16
40 36 66 15
41 36 67 15
42 35 68 14
43 34 69 13
44 33 70 13
45 31 71 12
</TABLE>
51
<PAGE> 57
NOTES
52
<PAGE> 58
AMENDMENT
TO
EMPLOYEES SAVINGS AND INCENTIVE PLAN
The Employees Savings and Incentive Plan is hereby amended effective January 1,
1998 to modify a sentence in Section 8.1 as follows:
A distribution to a retired Member must begin no
later than April 1 of the year following the year in
which the Member attains age 70-1/2.
ATTEST: CONSUMERS ENERGY COMPANY
/s/ D.O. Forsblom /s/ Thomas A. McNish
----------------- ------------------------------
Vice President and Secretary
53
<PAGE> 1
EXHIBITS 5 and 23(a)
[CMS ENERGY CORPORATION LETTERHEAD]
MICHAEL D. VAN HEMERT, ESQ.
ASSISTANT GENERAL COUNSEL
April 15, 1999
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, MI 48126
Ladies and Gentlemen:
This opinion is given in connection with the Registration Statement on Form S-8
(the "Registration Statement") being filed by CMS Energy Corporation (the
"Corporation") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, (the "Securities Act"), relating to the registration of
Common Stock, $.01 par value, of the Corporation (the "Common Stock") which may
be issued upon a distribution or withdrawal of the value of units credited to
the employees' account in the Employees' Savings & Incentive Plan of Consumers
Energy Company.
I am of the opinion that when the applicable provisions of the Securities Act
are complied with, the Common Stock will be, as and when acquired in accordance
with the terms and conditions of the Plan, legally issued, fully paid and
nonassessable.
I do not find it necessary for the purposes of this opinion to cover, and
accordingly express no opinion as to, the application of the securities or Blue
Sky Laws of the various states to the sale of the Common Stock.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Michael D. Van Hemert
<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 reports dated
January 26, 1999 (except with respect to the matters disclosed in Note 3,
"Consumers' Electric Utility Rate Matters", and Note 19 as to which the date is
March 29, 1999) included or incorporated by reference in CMS Energy
Corporation's Form 10-K for the year ended December 31, 1998 and to all
references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Detroit, Michigan,
April 14, 1999.
<PAGE> 1
EXHIBIT 24
[CMS ENERGY CORPORATION LETTERHEAD]
July 24, 1998
Mr. Alan M. Wright and
Mr. Thomas A. McNish
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
330 Town Center Drive
Dearborn, MI 48126
CMS Energy Corporation (the "Corporation") proposes to file a registration
statement with the Securities and Exchange Commission with respect to the
issuance of 5,000,000 additional shares of the Corporation's Common Stock, $.01
par value, from time to time, pursuant to the provisions of the Employees'
Savings and Incentive Plan of Consumers Energy Company.
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
a registration statement and/or any appropriate amendment or amendments thereto,
and other necessary documents required to be filed with the Securities and
Exchange Commission.
Very truly yours,
<TABLE>
<S> <C>
/s/ William T. McCormick, Jr. /s/ Victor J. Fryling
- ----------------------------------- ---------------------------
William T. McCormick, Jr. Victor J. Fryling
/s/ John Deutch /s/ W. U. Parfet
- ----------------------------------- ---------------------------
John M. Deutch William U. Parfet
/s/ James J. Duderstadt /s/ Percy A. Pierre
- ----------------------------------- ---------------------------
James J. Duderstadt Percy A. Pierre
/s/ K. R. Flaherty /s/ K. L. Way
- ----------------------------------- ---------------------------
Kathleen R. Flaherty Kenneth L. Way
/s/ Earl D. Holton /s/ K. Whipple
- ----------------------------------- ---------------------------
Earl D. Holton Kenneth Whipple
/s/ John B. Yasinsky
-----------------------------
John B. Yasinsky
</TABLE>
<PAGE> 2
Extract from the minutes of a meeting of the Board of Directors of CMS Energy
Corporation (the "Corporation") held on July 24, 1998.
- - - - - - - -
Proposed Issue and Sale of Commn Stock for
Employees' Savings and Incentive Plan of
Consumers Energy Company
In order to provide for the distribution and/or sale of
additional shares of common stock of the Corporation pursuant to the provisions
of the Employees' Savings and Incentive Plan of Consumers Energy Company (the
"Plan"), it is appropriate to file a registration statement with the Securities
and Exchange Commission and list such additional shares on The New York Stock
Exchange. Such registration statement will register Interests in the Plan and
5,000,000 additional shares of Common Stock, $.01 par value, as provided in the
Plan.
Upon motion duly made and seconded, the following resolutions were
thereupon unanimously adopted:
RESOLVED: That the Board hereby approves and authorizes the issue
and sale, from time to time, of not more than 5,000,000 additional shares of
Common Stock, $.01 par value, ("Common Stock") of the Corporation for
purposes of the Employees' Savings and Incentive Plan of Consumers Energy
Company (the "Plan"), as the officers of the Corporation deem appropriate
and as counsel may advise; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized to execute and file a registration statement with
the Securities and Exchange Commission with respect to Interests in the Plan
and the sale of not more than 5,000,000 shares of Common Stock of the
Corporation pursuant to provisions of the Plan, and to do all other things
necessary to make such Registration Statement effective, including the
execution and filing of any necessary or appropriate amendments; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized to cause the Corporation to make application to The
New York Stock Exchange (the "Exchange") for the listing on such Exchange,
upon notice of issuance, of not more than 5,000,000 additional shares of
Common Stock of the Corporation; that Messrs. Alan M. Wright and Thomas A.
McNish are, and each of them is, designated to represent the Corporation in
connection with the application for listing and to appear on behalf of the
Corporation before such official or body of said Exchange as may be
appropriate, with authority to make such changes, upon the advice of
counsel, in said application or in any agreements or other papers relating
thereto as may be
<PAGE> 3
necessary or appropriate to conform with the requirements for listing; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized to have issued and to deliver, at one time or from time
to time, not more than 5,000,000 additional shares of the Common Stock of the
Corporation for purposes of the Plan and certificates representing not more than
5,000,000 shares of the Common Stock of the Corporation; and
RESOLVED FURTHER: That the officers of the Corporation, and each
of them, are authorized and empowered, in the name and on behalf of the
Corporation, to sign, seal and deliver such documents, papers and instruments,
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 of the
foregoing resolutions.
- - - - - - - -
