-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AIHdrjGsuuLkn2b+BhDfN+oHS7eoD5FpwiwYQW8CfcysQDa5xdZnfwhW4xlZL0Yy U1zRPLlXPf1PYAsvAXldFA== 0000201533-96-000167.txt : 19961202 0000201533-96-000167.hdr.sgml : 19961202 ACCESSION NUMBER: 0000201533-96-000167 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19961126 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CMS ENERGY CORP CENTRAL INDEX KEY: 0000811156 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 382726431 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-16793 FILM NUMBER: 96672386 BUSINESS ADDRESS: STREET 1: FAIRLANE PLZ SOUTH STE 1100 STREET 2: 330 TOWN CENTER DR CITY: DEARBORN STATE: MI ZIP: 48126 BUSINESS PHONE: 313-436-9200 MAIL ADDRESS: STREET 1: FAIRLANE PLAZA SOUTH, SUITE 1100 STREET 2: 330 TOWN CENTER DRIVE CITY: DEARBORN STATE: MI ZIP: 48126 S-3 1 REGISTRATION STATEMENT ON FORM S-3 As filed with the Securities and Exchange Commission on November 26, 1996 Registration No. 333- ========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ------------------------ CMS ENERGY CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-2726431 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Fairlane Plaza South, Suite 1100 330 Town Center Drive Dearborn, Michigan 48126 (313) 436-9200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------------ Alan M. Wright Senior Vice President, Chief Financial Officer and Treasurer Fairlane Plaza South, Suite 1100 330 Town Center Drive Dearborn, Michigan 48126 313-436-9560 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------ It is respectfully requested that the Commission send copies of all notices, orders and communications to: Michael D. VanHemert, Esq. Catherine C. Hood, Esq. CMS Energy Corporation Reid & Priest LLP 330 Town Center Drive 40 West 57th Street Dearborn, MI 48126 New York, NY 10019 ------------------------ Approximate date of commencement of proposed sale to the public: From time to time after the effective date of the Registration Statement as determined by market conditions and other factors. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ____ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. X - ---- If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ____ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ____ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ____
CALCULATION OF REGISTRATION FEE ======================================================================================================================= Proposed maximum Proposed maximum Amount of Title of each class of Amount being offering price aggregate offering registration securities to be registered registered per unit(1) price(1) fee - ----------------------------------------------------------------------------------------------------------------------- General Term Notes (registered trademark), Series C . . . . . $150,000,000 100% $150,000,000 $45,454.55 =======================================================================================================================
[FN] (1) Estimated solely for the purpose of calculating the registration fee. The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ========================================================================== INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. Preliminary Prospectus Dated November __, 1996 (Subject to Completion) $150,000,000 CMS ENERGY CORPORATION GENERAL TERM NOTES (registered trademark), Series C ---------------- Due from 9 Months to 25 Years from date of issue ---------------- CMS Energy Corporation (the "Company" or "CMS Energy") may offer from time to time up to $150,000,000 aggregate principal amount of its General Term Notes (registered trademark), Series C (the "Notes"). Each Note will bear interest at a fixed rate payable monthly, quarterly or semi-annually and will mature on a date from 9 months to 25 years from the date of issue. The interest rate, issue price, stated maturity, interest payment dates and certain other terms (including a Survivor's Option, if applicable) with respect to each Note will be established at the time of issuance and set forth in a pricing supplement to this Prospectus (a "Pricing Supplement"). If provided in the applicable Pricing Supplement with respect to any Note, such Note will be subject to redemption prior to its stated maturity by the Company, in whole or in part, at redemption prices declining from a specified premium, if any, to par, together with accrued interest to the date of redemption. Notes will be issued only in denominations of $1,000 or any amount in excess thereof which is an integral multiple of $1,000. The Notes will be unsecured debt securities of the Company. See "Description of General Term Notes (registered trademark)." In the case of a Note that provides for monthly interest payments, interest will be payable, in arrears, on the fifteenth day of each calendar month; provided, however, that in the event such Note is issued between the first and fifteenth day of a calendar month, interest otherwise payable on the fifteenth day of such calendar month will be payable on the fifteenth day of the next succeeding calendar month. In the case of a Note that provides for quarterly or semi-annual interest payments, interest will be payable, in arrears, commencing on the day that is either three months or six months, as appropriate, from (i) the day on which such Note is issued, if such Note is issued on the fifteenth day of a calendar month, or (ii) the fifteenth day of the calendar month prior to the calendar month in which such Note is issued, if such Note is issued prior to the fifteenth day of a calendar month, or (iii) the fifteenth day of the calendar month in which such Note is issued, if such Note is issued after the fifteenth day of a calendar month. Each Note initially will be issued in book-entry form and will be represented only by a global certificate (a "Global Note") registered in the name of the nominee of The Depository Trust Company (as Depository). A beneficial interest in a Global Note will be shown on, and transfers thereof will be effected only through, records maintained by the Depository and its participants. A beneficial interest in a Global Note will not be represented by Notes in definitive form except under the limited circumstances described herein. See "Description of General Term Notes (registered trademark) -- Book-Entry System" and "-- Certificated Notes." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ======================================================================== Price to Agent's Discount Proceeds to Public (1) or Commission (2) Company (2) (3) - ------------------------------------------------------------------------ Per Note . . 100% Not to exceed 4% Not less than 96% - ------------------------------------------------------------------------ Total . . . . $150,000,000 Not to exceed Not less than $6,000,000 $144,000,000 ======================================================================== (1) Unless otherwise specified in the applicable Pricing Supplement, the price to the public for each Note will be equal to 100% of the principal amount thereof. See "Plan of Distribution." (2) The Company will pay J. W. Korth & Company (the "Agent") and such other agent(s) as the Company may select from time to time (collectively, the "Agents") an underwriting discount or commission, not to exceed 4% of the principal amount of any Note, which discount or commission will be disclosed in the applicable Pricing Supplement for the Note, depending upon the maturity of the Note. The names of any additional Agents will be disclosed in a supplement to this Prospectus. The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments that the Agents may be required to make in respect thereof. See "Plan of Distribution." (3) Before deducting expenses payable by the Company estimated at $187,350. ---------------- Offers to purchase the Notes are being solicited from time to time by the Agent on behalf of the Company. The Agent has agreed to use its reasonable best efforts to solicit purchases of the Notes. Following such solicitation, Notes will be sold through the Agent, acting as principal. The Notes are offered, subject to prior sale, when, as, and if issued to and accepted by the Agent, and subject to the right of the Company and the Agent to reject any order in whole or in part and to withdraw, cancel or modify the offer made hereby without notice. The Notes will not be listed on any securities exchange, and there can be no assurance that the Notes offered by this Prospectus will be sold or that there will be a secondary market for the Notes. See "Plan of Distribution." ---------------- J. W. Korth & Company ---------------- The date of this Prospectus is , 1996. - ---------------------- (registered trademark) Registered Servicemark of J. W. Korth & Company. IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE- COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. -------------------- No person is authorized in connection with the offering made hereby to give any information or to make any representation not contained or incorporated by reference in this Prospectus or any Pricing Supplement, and any information or representation not contained or incorporated herein must not be relied upon as having been authorized by CMS Energy or any underwriter, dealer or agent. This Prospectus and any Pricing Supplement do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities to which they relate or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Prospectus or any Pricing Supplement nor any sale made hereunder or thereunder shall, under any circumstances, create any implication that the information contained or incorporated herein or therein is correct as of any time subsequent to the date of such information. -------------------- AVAILABLE INFORMATION CMS Energy is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of such materials can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission also maintains a web site (http://www.sec.gov) that contains reports, proxy statements and other information regarding the Company. The outstanding Common Stock of CMS Energy is listed on the New York Stock Exchange and reports, proxy statements and other information concerning CMS Energy may also be inspected and copied at the offices of such exchange at 20 Broad Street, New York, New York 10005. -------------------- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by CMS Energy with the Commission (File No. 1-9513) pursuant to the Exchange Act are hereby incorporated by reference in this Prospectus and shall be deemed to be a part hereof: (1) CMS Energy's Annual Report on Form 10-K for the year ended December 31, 1995; and (2) CMS Energy's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996; and (3) CMS Energy's Current Reports on Forms 8-K dated February 23, 1996, April 23, 1996 and November 15, 1996. All documents subsequently filed by CMS Energy pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the termination of the offering made by this Prospectus shall be deemed to be incorporated by reference herein and shall be deemed to be a part hereof from the date of filing of such documents (such documents, and the documents enumerated above, being hereinafter referred to as "Incorporated Documents"). Any statement contained in an Incorporated Document shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed Incorporated Document modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. CMS Energy undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to CMS Energy Corporation at its principal executive offices located at Fairlane Plaza South, Suite 1100, 330 Town Center Drive, Dearborn, Michigan 48126, Attention: Office of the Secretary, telephone: (313) 436-9200. Certain information contained in this Prospectus summarizes, is based upon, or refers to information and financial statements contained in one or more Incorporated Documents; accordingly, such information contained herein is qualified in its entirety by reference to such documents and should be read in conjunction therewith. _________________________ TABLE OF CONTENTS Page Page Available Information . . . 2 Ratio Of Earnings to Incorporation of Certain Fixed Charges . . . . . . . . . 9 Documents by Reference. . 2 Description of General Term Prospectus Summary. . . . . 4 Notes (registered trademark). . 9 The Company . . . . . . . . 8 Plan of Distribution. . . . . . . 26 Use of Proceeds . . . . . . 8 Legal Opinions. . . . . . . . . . 27 Experts . . . . . . . . . . . . . 28 _________________________ PROSPECTUS SUMMARY The following summary information is qualified in its entirety by, and should be read in conjunction with, the information appearing elsewhere in this Prospectus and the Incorporated Documents. THE COMPANY CMS Energy, incorporated in 1987, is the parent holding company of Consumers Power Company ("Consumers") and CMS Enterprises Company ("Enterprises"). Consumers, a combination electric and gas utility company serving all of Michigan's Lower Peninsula, is the largest subsidiary of CMS Energy. Consumers' customer base includes a mix of residential, commercial and diversified industrial customers, the largest of which is the automotive industry. Enterprises is engaged in several energy-related businesses including: (i) oil and gas exploration and production, (ii) development and operation of independent power production facilities, (iii) marketing gas to utility, commercial and industrial customers and (iv) transmission, storage and processing of natural gas. CMS Energy conducts its principal operations through the following five business segments: (i) electric utility operations; (ii) gas utility operations; (iii) oil and gas exploration and production operations; (iv) independent power production; and (v) gas marketing, transmission, storage and processing. Consumers or Consumers' subsidiaries are engaged in two segments: electric operations and gas operations. Consumers' electric and gas businesses are principally regulated utility operations. CMS Energy and its subsidiaries routinely evaluate, invest in and acquire energy-related assets and/or companies both domestically and internationally. Consideration for such transactions may involve the delivery of cash or securities. THE OFFERING Securities Offered. . . . . . . . $150,000,000 aggregate principal amount of General Term Notes (registered trademark), Series C (the "Notes"). Maturity Date . . . . . . . . . . The Notes will be offered at varying maturities but in no event will any Note mature earlier than 9 months from its date of issue or later than 25 years from its date of issue. The stated maturity of each Note will be set forth in the applicable Pricing Supplement. Interest Rate . . . . . . . . . . The interest rate on each Note will be a fixed rate established at the time of issuance and set forth in the applicable Pricing Supplement. Issue Price . . . . . . . . . . . The Issue Price with respect to each Note will be 100% of the principal amount, unless otherwise set forth in the applicable Pricing Supplement. Interest Payment Dates. . . . . . The interest payment dates with respect to each Note will be set forth in the applicable Pricing Supplement. The Pricing Supplement also will state whether interest on the related Note will be payable monthly, quarterly or semi- annually. See "Description of General Term Notes (registered trademark) - Interest." Repayment Upon Death. . . . . . . If the Pricing Supplement relating to any Note provides that the holder of such Note will have the option (the "Survivor's Option") to elect repayment of such Note prior to its stated maturity in the event of the death of the beneficial owner of such Note, the Company will repay such Note (or portion thereof) properly tendered for repayment by or on behalf of the person that has authority to act on behalf of the deceased owner of the beneficial interest in such Note at a price equal to 100% of the principal amount of the beneficial interest of the deceased owner in such Note plus accrued interest to the date of such repayment, subject to an annual aggregate limitation and an individual holder limitation on the dollar amount of Notes that will be repaid in any year under the Survivor's Option. See "Description of General Term Notes (registered trademark) - Repayment Upon Death." Redemption at Company's Option. . . . . . . . . . . . . . If it is so provided in the Pricing Supplement, the Notes will be redeemable, in whole or in part in increments of $1,000, at the option of the Company, at any time after a specified initial redemption date, on notice given by the Company not more than 60 nor less than 30 days prior to the date of redemption, at redemption prices declining over a specified period from a specified premium, if any, to par, together with accrued interest to the date of redemption. See "Description of General Term Notes (registered trademark) - Redemption." Purchase at the Option of Holder after a Change in Control . . . . . . . . . . . . . On a date no earlier than 60 days nor later than 90 days (the "Change in Control Purchase Date") after the date on which the Company mails written notice to the Holders of the Notes of the occurrence of a Change in Control at any time while the Notes are outstanding, the Company will purchase any Note, at the option of its Holder, for a Change in Control Purchase Price equal to 101% of the aggregate outstanding principal amount of the Notes to be repurchased plus accrued interest thereon to the Change in Control Purchase Date. See "Description of General Term Notes (registered trademark) - Purchase of Notes Upon Change in Control" for a summary of these provisions and the definition of "Change in Control." Mandatory Sinking Fund. . . . . . None. Ranking . . . . . . . . . . . . . The Notes will be unsecured debt securities of the Company. The Notes will rank on a parity in right of payment with all other unsecured and unsubordinated indebtedness of the Company. As of September 30, 1996 the Company had no secured indebtedness outstanding. However, the Company has retained the right to pledge assets to secure indebtedness in the future, subject to certain limitations. See "Description of General Term Notes (registered trademark) - Certain Restrictive Covenants - Limitations on Certain Liens." Certain Covenants . . . . . . . . So long as any of the Notes are outstanding the Company has agreed to: (a) limitations on the issuance or incurrence of indebtedness by the Company and certain of its Subsidiaries (other than Consumers); (b) limitations on the declaration or payment of dividends on, or the redemption, retirement or other acquisition of, the capital stock of the Company; (c) limitations on the creation of liens or security interests upon the stock of Consumers and certain other Subsidiaries; (d) limitations on transactions between the Company and its affiliates; and (e) limitations on certain mergers, consolidations and sales of assets. See "Description of General Term Notes (registered trademark) - Certain Restrictive Covenants." Use of Proceeds . . . . . . . . . Unless otherwise provided in a Pricing Supplement, the net proceeds of the sale of the Notes will be used by the Company for its general corporate purposes. See "Use of Proceeds." Liquidity . . . . . . . . . . . . There is no active public trading market for the Notes. Any Agent may make a market in the Notes, but no Agent is obligated to do so and any such market making so undertaken may be discontinued without notice at any time. There can be no assurance as to the liquidity of any market that may develop for the Notes, the ability of the Holders to sell their Notes, or the price at which Holders would be able to sell their Notes. If a trading market is not developed or is not maintained, Holders of the Notes may experience difficulty in reselling them or may be unable to sell them at all. If a market for the Notes develops, they may trade at a discount from their Issue Price. Future trading prices of the Notes will depend on many factors, including prevailing interest rates, the Company's operating results, and the market for similar securities. The Company does not intend to apply for listing of the Notes on any securities exchange. Historically, and particularly in recent periods, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities. There can be no assurance that the market for the Notes, if any, will not be subject to similar disruptions. THE COMPANY CMS Energy, incorporated in 1987, is the parent holding company of Consumers and Enterprises. Consumers, a combination electric and gas utility company serving all of Michigan's Lower Peninsula, is the largest subsidiary of CMS Energy. Consumers' customer base includes a mix of residential, commercial and diversified industrial customers, the largest of which is the automotive industry. Enterprises is engaged in several energy related businesses including: (i) oil and gas exploration and production, (ii) development and operation of independent power production facilities, (iii) marketing gas to utility, commercial and industrial customers and (iv) transmission, storage and processing of natural gas. CMS Energy conducts its principal operations through the following five business segments: (i) electric utility operations; (ii) gas utility operations; (iii) oil and gas exploration and production operations; (iv) independent power production; and (v) gas marketing, transmission, storage and processing. Consumers or Consumers' subsidiaries are engaged in two segments: electric operations and gas operations. Consumers' electric and gas businesses are principally regulated utility operations. CMS Energy and its subsidiaries routinely evaluate, invest in and acquire energy-related assets and/or companies both domestically and internationally. Consideration for such transactions may involve the delivery of cash or securities. CMS Energy's 1995 consolidated operating revenue was $3,890 million. This consolidated operating revenue was derived from its electric utility operations (approximately 59% or $2,277 million), its gas utility operations (approximately 31% or $1,195 million), gas transmission, storage and marketing (approximately 5% or $196 million), oil and gas exploration and production activities (approximately 3% or $108 million) and independent power production and other non-utility activities (approximately 2% or $96 million). Consumers' consolidated operations in the electric and gas utility businesses account for the major share of CMS Energy's total assets, revenue and income. The unconsolidated share of non-utility electric generation and gas transmission and storage revenue for 1995 was $523 million. Consumers is a public utility serving gas or electricity to almost six million of Michigan's nine million residents in all of the 68 counties in Michigan's Lower Peninsula. Industries in Consumers' service area include automotive, metal, chemical, food and wood products and a diversified group of other industries. Consumers' 1995 consolidated operating revenue of $3,511 million was derived approximately 65% ($2,277 million) from its electric utility business and approximately 34% ($1,195 million) from its gas utility business. Consumers' rates and certain other aspects of its business are subject to the jurisdiction of the Michigan Public Service Commission and the Federal Energy Regulatory Commission. The foregoing information concerning CMS Energy and its subsidiaries does not purport to be comprehensive. For additional information concerning CMS Energy and its subsidiaries' business and affairs, including their capital requirements and external financing plans, pending legal and regulatory proceedings and descriptions of certain laws and regulations to which those companies are subject, prospective purchasers should refer to the Incorporated Documents. See "Incorporation of Certain Documents by Reference" and "Available Information" above. The address of the principal executive officers of CMS Energy is 330 Town Center Drive, Suite 1100, Dearborn, Michigan 48126. Its telephone number is (313) 436-9200. USE OF PROCEEDS Unless otherwise provided in a Pricing Supplement, the net proceeds from the sale of the Notes will be used by the Company for its general corporate purposes. RATIO OF EARNINGS TO FIXED CHARGES The ratios of earnings to fixed charges for the nine months ended September 30, 1996 and for each of the years ended December 31, 1991 through 1995 are as follows: Nine Months Ended September 30, 1996 Year Ended December 31 ------------------ ------------------------------- 1995 1994 1993 1992 1991 ------------------------------- (1) (2)(3) Ratio of earnings to fixed charges. . . . . 2.23 2.00 2.12 1.92 -- -- ___________________ (1) For the year ended December 31, 1992, fixed charges exceeded earnings by $441 million. Earnings as defined include a $520 million pre-tax loss on the settlement of MCV Power Purchases, $(15) million for potential customer refunds and other reserves related to 1992 but recorded in 1991, and $6 million relating to CMS Generation Company's reduction in its investment in The Oxford Energy Company. The ratio of earnings to fixed charges would have been 1.34 excluding these amounts. (2) Excludes an extraordinary after-tax loss of $14 million. (3) For the year ended December 31, 1991, fixed charges exceeded earnings by $356 million. Earnings as defined include pre-tax losses of $398 million for write-downs and reserve amounts related to Consumers' abandonment of the Midland nuclear plant, $76 million for potential customer refunds and other reserves, and $51 million relating to CMS Generation Company's reduction in its investment in The Oxford Energy Company. The ratio of earnings to fixed charges would have been 1.48 excluding these amounts. For the purpose of computing the ratio of earnings to fixed charges, earnings represent net income before income taxes, net interest charges and the estimated interest portion of lease rentals. DESCRIPTION OF GENERAL TERM NOTES (registered trademark) The Notes will be issued as a series of debt securities under an Indenture, dated as of January 15, 1994 (such Indenture as amended or supplemented from time to time by one or more supplemental indentures thereto, including a supplemental indenture relating to the Notes, being referred to herein as the "Indenture" and all debt securities hereafter issued under such Indenture being collectively referred to herein as "Securities"), between the Company and The Chase Manhattan Bank, a New York banking corporation, as trustee (the "Trustee"). The Company is not limited by the Indenture as to the aggregate principal amount of Securities it may issue. The descriptions of the Notes and the Indenture in this Prospectus are brief summaries of the provisions contained in such documents and do not purport to be complete. The form of the Indenture is filed as an exhibit to the Registration Statement of which this Prospectus is a part, and reference is made thereto for the definitive provisions of such Indenture. The descriptions herein are qualified in their entirety by such reference. Certain capitalized terms used herein without definition shall have the meanings respectively set forth in the Indenture. General The Notes will be offered pursuant to this Prospectus on a continuing basis. Each Note will mature from 9 months to 25 years from its date of issue. The Notes will be issued without coupons in registered form only and in denominations of $1,000 or any amount in excess thereof which is an integral multiple of $1,000. CMS Energy is a holding company and its assets consist primarily of investment in its subsidiaries. The Securities (including the Notes) will be obligations exclusively of the Company. The Company's ability to service its indebtedness, including the Securities, is dependent primarily upon the earnings of its subsidiaries and the distribution or other payment of such earnings to the Company in the form of dividends, loans or advances, and repayment of loans and advances from the Company. The subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Securities or to make any funds available therefor, whether by dividends, loans or other payments. A substantial portion of the consolidated liabilities of the Company have been incurred by its subsidiaries. Therefore, the Company's rights and the rights of its creditors, including holders of Securities, to participate in the distribution of assets of any subsidiary upon the latter's liquidation or reorganization will be subject to prior claims of the subsidiary's creditors, including trade creditors, except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary (in which case the claims of the Company would still be subject to the prior claims of any secured creditor of such subsidiary and of any holder of indebtedness of such subsidiary that is senior to that held by CMS Energy). As of September 30, 1996, the Company's subsidiaries had total indebtedness for borrowed money (excluding intercompany indebtedness) of approximately $2,210 million. The Notes rank on a parity with all other unsecured and unsubordinated indebtedness of the Company. As of September 30, 1996, the Company had no secured indebtedness outstanding. However, the Company has retained the right to secure indebtedness, subject to certain limitations. See "Certain Restrictive Covenants -- Limitations on Certain Liens." Notes will be represented by a Global Note registered in the name of the nominee of the Depository, except under the limited circumstances described below under "Certificated Notes." A single Global Note will represent all Notes issued on the same day and having the same terms, including, but not limited to, the same Interest Payment Dates, rate of interest, stated maturity and repurchase and redemption provisions (if any). A beneficial interest in a Global Note will be shown on, and transfers thereof will be effected only through, records maintained by the Depository (with respect to interests of its participants) and its participants (with respect to interests of persons other than its participants). Unless the applicable Pricing Supplement provides otherwise, the price at which each Note will be issued (the "Issue Price") will be 100% of the principal amount of the Note. Notes will not be issued as discounted securities, at prices below stated principal amounts, or having an original issue discount for U.S. federal income tax purposes, unless the applicable Pricing Supplement so provides and, if applicable, describes potential U.S. federal income tax consequences. The Pricing Supplement relating to a Note will set forth, among other things, the following terms: (i) the date on which such Note will be issued; (ii) the Issue Price; (iii) the stated maturity date of such Note; (iv) the rate per annum at which such Note will bear interest; (v) the Interest Payment Dates for such Note; (vi) whether the holder of such Note will have the Survivor's Option; (vii) whether and the terms on which such Note will be subject to redemption by the Company prior to its stated maturity; and (viii) any other terms not inconsistent with the provisions of the Indenture. Interest Each Note will bear interest from the date of issue at the fixed rate per annum specified therein and in the applicable Pricing Supplement until the principal thereof is paid or made available for payment. Interest will be payable either monthly, quarterly or semi-annually on each Interest Payment Date and at Maturity. Interest will be payable to the person in whose name a Note is registered at the close of business on the Regular Record Date next preceding each Interest Payment Date; provided, however, interest payable at Maturity will be payable to the person to whom principal shall be payable. Unless otherwise indicated in the applicable Pricing Supplement, interest will be paid in arrears and shall be the amount of interest accrued to, but excluding, the Interest Payment Date. Interest on the Notes will be computed on the basis of a 360-day year of twelve 30-day months. The Interest Payment Dates for a Note that provides for monthly interest payments shall be the fifteenth day of each calendar month; provided, however, that in the case of a Note issued between the first and fifteenth day of a calendar month, interest otherwise payable on the fifteenth day of such calendar month will be payable on the fifteenth day of the next succeeding calendar month. In the case of a Note that provides for quarterly interest payments, the Interest Payment Dates shall be the fifteenth day of each of the months specified in the Pricing Supplement, commencing on the day that is three months from (i) the day on which such Note is issued, if such Note is issued on the fifteenth day of a calendar month, or (ii) the fifteenth day of the calendar month immediately preceding the calendar month in which such Note is issued, if such Note is issued prior to the fifteenth day of a calendar month, or (iii) the fifteenth day of the calendar month in which such Note is issued, if such Note is issued after the fifteenth day of a calendar month. In the case of a Note that provides for semi-annual interest payments, the Interest Payment Dates shall be the fifteenth day of each of the months specified in the Pricing Supplement, commencing on the day that is six months from (i) the day on which such Note is issued, if such Note is issued on the fifteenth day of a calendar month, (ii) the fifteenth day of the calendar month immediately preceding the calendar month in which such Note is issued, if such Note is issued prior to the fifteenth day of a calendar month, or (iii) the fifteenth day of the calendar month in which such Note is issued, if such Note is issued after the fifteenth day of a calendar month. The Regular Record Date with respect to any Interest Payment Date (other than at Maturity) shall be the first day (whether or not a Business Day) of the calendar month in which such Interest Payment Date occurs, and, in the case of interest payable at Maturity, the Regular Record Date shall be the date of Maturity. Interest on the Notes that is not punctually paid or duly provided for on any Interest Payment Date ("defaulted interest") shall cease to be payable to the Holder thereof on the relevant Regular Record Date and may be paid by the Company to Holders of Notes (i) at the close of business on a Special Record Date for the payment of such defaulted interest fixed by the Trustee and not more than 15 nor less than 10 days prior to the date of the proposed payment, provided that the Company shall have notified the Trustee in writing of the amount of such defaulted interest, deposited with the Trustee funds equal to the amount of the proposed payment or made arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, or (ii) in such other lawful manner which is not inconsistent with the requirements of any securities exchange on which the Notes are listed for trading. Redemption A Note is not subject to redemption at the option of the Company prior to the date, if any, fixed at the time of sale and designated as the "Initial Redemption Date" on the face of such Note and in the applicable Pricing Supplement hereto. If no Initial Redemption Date is indicated with respect to a Note, such Note is not subject to redemption at the option of the Company prior to Stated Maturity. If so specified in the applicable Pricing Supplement, on and after the Initial Redemption Date, the related Note will be redeemable in whole or in part in increments of $1,000, at the option of the Company, at redemption prices declining from a specified premium, if any, to par, together with accrued interest to the date of redemption, on notice given by the Company not more than 60 nor less than 30 days prior to the date of redemption. If less than all of the Notes of like tenor and terms are to be redeemed, the Notes to be redeemed will be selected by the Trustee by such method as the Trustee shall deem fair and appropriate. Notwithstanding the foregoing however, the Company may at any time purchase Notes at any price in the open market or otherwise. Notes so purchased by the Company may, at the discretion of the Company, be held or resold or surrendered to the Trustee for cancellation. The Notes will not have a sinking fund. See "Purchase of Notes Upon Change in Control" and "Repayment Upon Death." With respect to Notes redeemable at the option of the Company, the applicable Pricing Supplement will specify if the Company would be prohibited from redeeming such Note as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an effective interest cost to the Company of less than the effective interest cost to the Company of such Note. Purchase of Notes Upon Change in Control In the event of any Change in Control (as defined below) each Holder of a Note will have the right, at such Holder's option, subject to the terms and conditions of the Indenture, to require the Company to repurchase all or any part of such Holder's Note on a date selected by the Company that is no earlier than 60 days nor later than 90 days (the "Change in Control Purchase Date") after the mailing of written notice by the Company of the occurrence of such Change in Control at a repurchase price payable in cash equal to 101% of the principal amount of such Notes plus accrued interest to the Change in Control Purchase Date (the "Change in Control Purchase Price"). Within 30 days after the Change in Control, the Company is obligated to mail to each Holder of a Note a notice regarding the Change in Control, which notice shall state, among other things: (i) that a Change in Control has occurred and that each such Holder has the right to require the Company to repurchase all or any part of such Holder's Notes at the Change in Control Purchase Price; (ii) the Change in Control Purchase Price; (iii) the Change in Control Purchase Date, (iv) the name and address of the Paying Agent and (v) the procedures that Holders must follow to cause the Notes to be repurchased. To exercise this right, a Holder must deliver a Change in Control Purchase Notice to the Paying Agent at its office in The City of New York, or any other office of the Paying Agent maintained for such purposes, not later than 30 days prior to the Change in Control Purchase Date. The Change in Control Purchase Notice shall state (i) the portion of the principal amount of any Notes to be repurchased, which must be $1,000 or an integral multiple thereof, (ii) that such Notes are to be repurchased by the Company pursuant to the applicable change-in-control provisions of the Indenture, and (iii) unless the Notes are represented by one or more Global Notes, the certificate numbers of the Notes to be repurchased. Any Change in Control Purchase Notice may be withdrawn by the Holder by a written notice of withdrawal delivered to the Paying Agent not later than three Business Days prior to the Change in Control Purchase Date. The notice of withdrawal shall state the principal amount and, if applicable, the certificate numbers of the Notes as to which the withdrawal notice relates and the principal amount, if any, which remains subject to a Change in Control Purchase Notice. If a Note is represented by a Global Note, the Depository or its nominee will be the holder of such Note and therefore will be the only entity that can require the Company to repurchase Notes upon a Change in Control. To obtain repayment with respect to such Note upon a Change in Control, the beneficial owner of such Note must provide to the broker or other entity through which it holds the beneficial interest in such Note (i) a Change in Control Purchase Notice signed by such beneficial owner, and such signature must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. ("NASD") or a commercial bank or trust company having an office or correspondent in the United States and (ii) instructions to such broker or other entity to notify the Depository of such beneficial owner's desire to cause the Company to repurchase such Notes. Such broker or other entity will provide to the Paying Agent (i) a Change in Control Purchase Notice received from such beneficial owner and (ii) a certificate satisfactory to the Paying Agent from such broker or other entity that it represents such beneficial owner. Such broker or other entity will be responsible for disbursing any payments it receives upon the repurchase of such Notes by the Company. Payment of the Change in Control Purchase Price for a Note in certificated form (a "Certificated Note") for which a Change in Control Purchase Notice has been delivered and not withdrawn is conditioned upon delivery of such Note (together with necessary endorsements) to the Paying Agent at its office in The City of New York, or any other office of the Paying Agent maintained for such purpose, at any time (whether prior to, on or after the Change in Control Purchase Date) after the delivery of such Change in Control Purchase Notice. Payment of the Change in Control Purchase Price for such Note will be made promptly following the later of the Change in Control Purchase Date or the time of delivery of such Note. If the Paying Agent holds, in accordance with the terms of the Indenture, money sufficient to pay the Change in Control Purchase Price of a Note on the Business Day following the Change in Control Purchase Date for such Note, then, on and after such date, interest on such Note will cease to accrue, whether or not such Note is delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Change in Control Purchase Price upon delivery of the Note). Under the Indenture, a "Change in Control" means an event or series of events by which (i) CMS Energy ceases to beneficially own, directly or indirectly, at least 80% of the total voting power of all classes of Capital Stock then outstanding of Consumers (whether arising from issuance of securities of the Company or Consumers, any direct or indirect transfer of securities by CMS Energy or Consumers, any merger, consolidation, liquidation or dissolution of CMS Energy or Consumers or otherwise); or (ii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have "beneficial ownership" of all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 30% of the Voting Stock of CMS Energy; or (iii) CMS Energy consolidates with or merges into another corporation or directly or indirectly conveys, transfers or leases all or substantially all of its assets to any person, or any corporation consolidates with or merges into CMS Energy, in either event pursuant to a transaction in which the outstanding Voting Stock of CMS Energy is changed into or exchanged for cash, securities, or other property, other than any such transaction where (A) the outstanding Voting Stock of CMS Energy is changed into or exchanged for Voting Stock of the surviving corporation and (B) the holders of the Voting Stock of CMS Energy immediately prior to such transaction retain, directly or indirectly, substantially proportionate ownership of the Voting Stock of the surviving corporation immediately after such transaction. The Indenture requires CMS Energy to comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act which may then be applicable and file Schedule 13E-4 or any other schedule required thereunder in connection with any offer by CMS Energy to purchase Notes at the option of Holders upon a Change in Control. The Change in Control purchase feature of the Notes may in certain circumstances make more difficult or discourage a takeover of CMS Energy and, thus, the removal of incumbent management. The Change in Control purchase feature, however, is not the result of management's knowledge of any specific effort to accumulate shares of its common stock or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of anti-takeover provisions. Instead, the Change in Control purchase feature is a customary term contained in similar debt offerings and the terms of such feature result from negotiations between CMS Energy and the Agents. Management has no present intention to propose any anti-takeover measures although it is possible that CMS Energy could decide to do so in the future. No Note may be repurchased by the Company as a result of a Change of Control if there has occurred and is continuing an Event of Default described under "Events of Default" below (other than a default in the payment of the Change in Control Purchase Price with respect to the Notes). In addition, the Company's ability to purchase Notes may be limited by its financial resources and its inability to raise the required funds because of restrictions on issuance of securities contained in other contractual arrangements. Repayment Upon Death The Pricing Supplement relating to any Note will indicate whether the holder of such Note will have the Survivor's Option. SEE THE PRICING SUPPLEMENT TO DETERMINE WHETHER THE SURVIVOR'S OPTION APPLIES TO ANY PARTICULAR NOTE. Pursuant to exercise of the Survivor's Option, if applicable, the Company will repay any Note (or portion thereof) properly tendered for repayment by or on behalf of the person (the "Representative") that has authority to act on behalf of the deceased owner of the beneficial interest in such Note under the laws of the appropriate jurisdiction (including, without limitation, the personal representative, executor, surviving joint tenant or surviving tenant by the entirety of such deceased beneficial owner) at a price equal to 100% of the principal amount of the beneficial interest of the deceased owner in such Note plus accrued interest to the date of such repayment, subject to the following limitations. The Company may, in its sole discretion, limit the aggregate principal amount of Notes as to which exercises of the Survivor's Option will be accepted in any calendar year (the "Annual Put Limitation") to one percent (1%) of the outstanding principal amount of the Notes as of the end of the most recent fiscal year, but not less than $500,000 in any such calendar year, or such greater amount as the Company in its sole discretion may determine for any calendar year, and may limit to $100,000, or such greater amount as the Company in its sole discretion may determine for any calendar year, the aggregate principal amount of Notes (or portions thereof) as to which exercise of the Survivor's Option will be accepted in such calendar year with respect to any individual deceased owner of beneficial interests in such Notes (the "Individual Put Limitation"). Moreover, the Company will not make principal repayments pursuant to exercise of the Survivor's Option in amounts that are less than $1,000, and, in the event that the limitations described in the preceding sentence would result in the partial repayment of any Note, the principal amount of such Note remaining outstanding after repayment must be at least $1,000 (the minimum authorized denomination of the Notes). Any Note (or portion thereof) tendered pursuant to exercise of the Survivor's Option may be withdrawn by a written request by the Representative of the deceased owner received by the Trustee prior to its repayment. Each Note (or portion thereof) that is tendered pursuant to valid exercise of the Survivor's Option will be accepted promptly in the order all such Notes are tendered, except for any Note (or portion thereof) the acceptance of which would contravene (i) the Annual Put Limitation, if applied, or (ii) the Individual Put Limitation, if applied, with respect to the relevant individual deceased owner of beneficial interests therein. If, as of the end of any calendar year, the aggregate principal amount of Notes (or portions thereof) that have been accepted pursuant to exercise of the Survivor's Option for such year, has not exceeded the Annual Put Limitation, if applied, for such year, any exercise(s) of the Survivor's Option with respect to Notes (or portions thereof) not accepted during such calendar year because such acceptance would have contravened the Individual Put Limitation, if applied, with respect to an individual deceased owner of beneficial interests therein will be accepted in the order all such Notes (or portions thereof) were tendered, to the extent that any such exercise would not exceed the Annual Put Limitation for such calendar year. Any Note (or portion thereof) accepted for repayment pursuant to exercise of the Survivor's Option will be repaid no later than the first Interest Payment Date that occurs 20 or more calendar days after the date of such acceptance. Each Note (or any portion thereof) tendered for repayment that is not accepted in any calendar year due to the application of the Annual Put Limitation will be deemed to be tendered in the following calendar year in the order in which all such Notes (or portions thereof) were originally tendered, unless any such Note (or portion thereof) is withdrawn by the Representative for the deceased owner prior to its repayment. In the event that a Note (or any portion thereof) tendered for repayment pursuant to valid exercise of the Survivor's Option is not accepted, the Trustee will deliver a notice by first-class mail to the registered Holder thereof at its last known address as indicated in the Security Register that states the reasons such Note (or portion thereof) has not been accepted for repayment. Subject to the foregoing, in order for a Survivor's Option to be validly exercised with respect to any Note (or portion thereof), the Trustee must receive from the Representative of the deceased owner (i) a written request for repayment signed by the Representative, and such signature must be guaranteed by a member firm of a registered national securities exchange or of the NASD or a commercial bank or trust company having an office or correspondent in the United States, (ii) if such Note is not represented by a Global Note as described below, tender of the Note (or portion thereof) to be repaid, (iii) appropriate evidence satisfactory to the Company and the Trustee that (A) the Representative has authority to act on behalf of the deceased beneficial owner, (B) the death of such beneficial owner has occurred and (C) the deceased was the owner of a beneficial interest in such Note at the time of death, (iv) if applicable, a properly executed assignment or endorsement, and (v) if the beneficial interest in such Note is held by a nominee of the deceased beneficial owner, a certificate satisfactory to the Trustee from such nominee attesting to the deceased's ownership of a beneficial interest in such Note. All questions as to the eligibility or validity of any exercise of the Survivor's Option will be determined by the Company, in its sole discretion, which determinations will be final and binding on all parties. If a Note is represented by a Global Note, the Depository or its nominee will be the Holder of such Note and therefore will be the only entity that can exercise the Survivor's Option for such Note. To obtain repayment pursuant to exercise of the Survivor's Option with respect to such Note, the Representative must provide to the broker or other entity through which the beneficial interest in such Note is held by the deceased owner (i) the documents described in clauses (i) and (iii) of the preceding paragraph and (ii) instructions to such broker or other entity to notify the Depository of such Representative's desire to obtain repayment pursuant to exercise of the Survivor's Option. Such broker or other entity will provide to the Trustee (i) the documents received from the Representative referred to in clause (i) of the preceding sentence and (ii) a certificate satisfactory to the Trustee from such broker or other entity stating that it represents the deceased beneficial owner. Such broker or other entity will be responsible for disbursing any payments it receives pursuant to exercise of the Survivor's Option to the appropriate Representative. See "Book-Entry System." A REPRESENTATIVE MAY OBTAIN THE FORMS USED TO EXERCISE THE SURVIVOR'S OPTION FROM THE CHASE MANHATTAN BANK, THE TRUSTEE, AT 450 WEST 33RD STREET, 15TH FLOOR, NEW YORK, NEW YORK 10001-2697, ATTENTION: GLOBAL TRUST SERVICES, DURING NORMAL BUSINESS HOURS. Payment and Paying Agents Payments of principal, premium, if any, and interest on Notes represented by a Global Note will be made to the Depository through such Paying Agent or Paying Agents in The City of New York as the Company may designate from time to time or by wire transfer to the Depository. See "Book-Entry System." Payments of principal, premium, if any, and interest on Certificated Notes will be made upon surrender of such Notes at the office of such Paying Agent or Paying Agents in The City of New York as the Company may designate from time to time, except that at the option of the Company, payment of any interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. The principal corporate trust office of The Chase Manhattan Bank, located at 450 West 33rd Street, 15th Floor, New York, New York 10001- 2697, has been designated as the Company's sole Paying Agent for payments with respect to the Notes. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that the Company will be required to maintain a Paying Agent in each Place of Payment for the Notes. Book-Entry System The Notes will be issued initially in the form of one or more Global Notes that will be deposited with, or on behalf of, The Depository Trust Company, New York, New York ("DTC"), which will act as securities depository for the Notes. The Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). DTC and any other depository which may replace DTC as depository for the Notes are sometimes referred to herein as the "Depository." Upon issuance, all Notes having the same issue date, interest rate, redemption provisions, provisions for repurchase at the option of the Holder, stated maturity and other provisions will be represented by one or more Global Notes. Except under the limited circumstances described below, Notes represented by Global Notes will not be exchangeable for Certificated Notes. So long as the Depository, or its nominee, is the registered owner of a Global Note, such Depository or such nominee, as the case may be, will be considered the sole registered holder of the individual Notes represented by such Global Note for all purposes under the Indenture. Payments of principal of and premium, if any, and any interest on individual Notes represented by a Global Note will be made to the Depository or its nominee, as the case may be, as the registered holder of such Global Note. Except as set forth below, owners of beneficial interests in a Global Note will not be entitled to have any of the individual Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of any such Note and will not be considered the registered holder thereof under the Indenture, including, without limitation, for purposes of consenting to any amendment thereof or supplement thereto as described in this Prospectus. The following is based upon information furnished by DTC: DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants ("Direct Participants") include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the NASD. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Purchases of Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC's records. The ownership interest of each actual purchaser of each Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Notes, except in the event that use of the book-entry system for one or more Notes is discontinued. To facilitate subsequent transfers, all Global Notes deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Global Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If less than all of the Notes are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. will consent or vote with respect to Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the Company as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Notes will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name" and will be the responsibility of such Participant and not of DTC, any Agents, or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Company, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Notes at any time by giving 90 days' notice to the Company or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Certificated Notes are required to be printed and delivered in exchange for the Notes represented by the Global Notes held by the DTC. See "Certificated Notes." In addition, the Company may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Certificated Notes will be printed and delivered in exchange for the Notes represented by the Global Notes held by DTC. See "Certificated Notes." The information in this section concerning DTC and DTC's book-entry system has been obtained from DTC. The Company believes such information to be reliable, but the Company takes no responsibility for the accuracy thereof. None of the Company, the Agents, the Trustee, any paying agent or the registrar for the Notes will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Certificated Notes If the Depository is at any time unwilling or unable to continue as depository and a successor depository is not appointed by the Company by the earlier of (i) 90 days from the date the Company receives notice to the effect that the Depository is unwilling or unable to act, or the Company determines that the Depository is unable to act or (ii) the effectiveness of the Depository's resignation or failure to fulfill its duties as Depository, the Company will issue Certificated Notes in exchange for the Notes represented by the Global Notes held by the Depository. In addition, the Company may at any time and in its sole discretion determine not to have Notes represented by a Global Note and, in such event, will issue individual Certificated Notes in exchange for the Notes represented by the Global Note. In either instance, the owner of a beneficial interest in a Note represented by a Global Note will be entitled to have such Note registered in its name and will be entitled to physical delivery of such Note in certificated form. Individual Certificated Notes so issued will be issued in fully registered form, without coupons, in one or more authorized denominations as described above under "General." Certificated Notes will be exchangeable for other Certificated Notes of any authorized denominations and of a like aggregate principal amount and tenor. Certificated Notes may be presented for exchange as provided above, and may be presented for registration of transfer (duly endorsed, or accompanied by a duly executed written instrument of transfer), at the office of The Chase Manhattan Bank, the Trustee, in The City of New York, (the "Security Registrar") or at the office of any other transfer agent designated by the Company for such purpose with respect to the Notes and referred to in the applicable Pricing Supplement, without service charge and upon payment of any taxes and other governmental charges as described in the Indenture. Such transfer or exchange will be effected upon the Security Registrar or such other transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. If a Pricing Supplement refers to any transfer agents (in addition to the Security Registrar) designated by the Company with respect to the Notes, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for the Notes. The Company may at any time designate additional transfer agents with respect to the Notes. The Company will not be required to (i) issue, register the transfer of or exchange Certificated Notes during a period beginning at the opening of business 15 days before the selection of Notes to be redeemed and ending at the close of business on the day of mailing of the relevant notice of redemption; or (ii) register the transfer of or exchange any Certificated Note, or portion thereof, called for redemption, except the unredeemed portion of any Certificated Note being redeemed in part. If a Certificated Note is mutilated, destroyed, lost or stolen, it may be replaced at the corporate trust office or agency of the Trustee in The City of New York upon payment by the Holder of such expenses as may be incurred by the Company and the Trustee in connection therewith and the furnishing of such evidence and indemnity as the Company and the Trustee may require. Mutilated Notes must be surrendered before new Notes will be issued. Certain Restrictive Covenants The Indenture contains, among others, the covenants described below. Certain capitalized terms used below are defined herein under the heading "Certain Definitions." Limitation on Consolidated Indebtedness. The Indenture provides that so long as any of the Notes are Outstanding, the Company shall not, and shall not permit any Restricted Subsidiary to, issue, create, assume, guarantee, incur or otherwise become liable for (collectively, "issue"), directly or indirectly, any Indebtedness unless (a) the Consolidated Coverage Ratio of the Company and its Consolidated Subsidiaries for the four consecutive fiscal quarters immediately preceding the issuance of such Indebtedness (as shown by a pro forma consolidated income statement of the Company and its Consolidated Subsidiaries for the four most recent fiscal quarters ending at least 30 days prior to the issuance of such Indebtedness after giving effect to (i) the issuance of such Indebtedness and (if applicable) the application of the net proceeds thereof to refinance other Indebtedness as if such Indebtedness was issued at the beginning of the period, (ii) the issuance and retirement of any other Indebtedness since the first day of the period as if such Indebtedness was issued or retired at the beginning of the period and (iii) the acquisition of any company or business acquired by the Company or any Subsidiary of the Company since the first day of the period (including giving effect to the pro forma historical earnings of such company or business), including any acquisition which will be consummated contemporaneously with the issuance of such Indebtedness, as if in each case such acquisition occurred at the beginning of the period) exceeds a ratio of 1.6 to 1.0 and (b) immediately after giving effect to the issuance of such Indebtedness and (if applicable) the application of the net proceeds thereof to refinance other Indebtedness, the Consolidated Leverage Ratio shall not exceed a ratio of 0.75 to 1.0. The foregoing limitation is subject to exceptions for certain revolving Indebtedness to banks provided that the aggregate outstanding principal amount of such revolving Indebtedness shall not exceed $450,000,000, Indebtedness outstanding on the date of the original Indenture, certain refinancings and Indebtedness of the Company to a Subsidiary or by a Subsidiary to the Company. Limitation upon Restricted Payments. The Indenture provides that, so long as any of the Notes are Outstanding and are rated below BBB- by Standard & Poor's or by Duff & Phelps, the Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to, (i) declare or pay any dividend or make any distribution on the Capital Stock of the Company to the direct or indirect holders of the Company's Capital Stock (except dividends or distributions payable solely in Non- Convertible Capital Stock of the Company or in options, warrants or other rights to purchase such Non-Convertible Capital Stock and except dividends or distributions payable to the Company or a Subsidiary) or (ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company (any such dividend, distribution, purchase, redemption, repurchase, other acquisition or retirement, being hereinafter referred to as a "Restricted Payment") if at any time the Company or such Subsidiary makes such Restricted Payment: (1) an Event of Default, or an event that with the lapse of time or the giving of notice or both would constitute an Event of Default, shall have occurred and be continuing (or would result therefrom); or (2) the aggregate amount of such Restricted Payment and all other Restricted Payments made since September 30, 1993, would exceed the sum of: (a) $120,000,000 plus 100% of Consolidated Net Income from September 30, 1993 to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or, in case such sum shall be a deficit, minus 100% of the deficit) and (b) the aggregate Net Proceeds received by the Company from the issue or sale of or contribution with respect to its Capital Stock after September 30, 1993. The foregoing provisions will not prohibit: (i) dividends or other distributions paid in respect of any class of Capital Stock issued by the Company in connection with the acquisition of any business or assets by the Company or a Restricted Subsidiary where the dividends or other distributions with respect to such Capital Stock are payable solely from the net earnings of such business or assets; (ii) any purchase or redemption of Capital Stock of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Redeemable Stock or Exchangeable Stock); (iii) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividends would have complied with this covenant; or (iv) payments pursuant to the Tax Sharing Agreement. Limitations on Certain Liens. The Indenture provides that so long as any of the Notes are outstanding, the Company shall not create, incur, assume or suffer to exist any lien, mortgage, pledge, security interest, conditional sale, title retention agreement or other charge or encumbrance of any kind intended to or having the effect of conferring upon a creditor of the Company or any Subsidiary of the Company a preferential interest upon or with respect to the Capital Stock of Consumers, Enterprises or CMS NOMECO Oil & Gas Co. ("NOMECO") without making effective provision whereby the Notes shall be (so long as such creditor shall be so secured) equally and ratably secured. The foregoing does not apply to (a) Liens securing Indebtedness of the Company, provided that on the date such Liens are created, and after giving effect to such Indebtedness, the aggregate principal amount at maturity of all of the secured Indebtedness of the Company shall not exceed 10% of Consolidated Assets on such date or (b) certain liens for taxes, pledges to secure workman's compensation, other statutory obligations and certain support obligations not to exceed $30 million at any one time outstanding, certain materialmen's, mechanic's and similar liens and certain purchase money liens. The foregoing limitations regarding Consolidated Indebtedness, Restricted Payments and Liens do not apply to Consumers, the Company's largest Subsidiary. In addition, they do not currently limit transactions by any of the Company's other Subsidiaries because none of such Subsidiaries would currently fall under the definition of Restricted Subsidiaries. Limitation on Transactions with Affiliates. The Indenture provides that so long as any of the Notes are Outstanding, the Company may not, directly or indirectly, conduct any business or enter into any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with an Affiliate unless the terms of such business, transaction or series of transactions are as favorable to the Company as terms that could be obtainable at the time for a comparable transaction or series of related transactions in arm's-length dealings with an unrelated third person. This covenant shall not apply to (i) any compensation paid to officers and directors of the Company which has been approved by the Board of Directors of the Company or (ii) loans to the Company or an Affiliate pursuant to a global cash management program, which loans mature within one year from the date thereof. Limitation on Consolidation, Merger, Sale or Conveyance. The Indenture provides that so long as any of the Notes are Outstanding the Company shall not consolidate with or merge into any other person or sell, lease or convey its property as an entirety or substantially as an entirety unless, upon any such consolidation, merger, sale, lease or conveyance, and after giving effect thereto, (i) the person formed by such consolidation or into which the Company shall have been merged or which shall have acquired such property (the "Continuing Entity") shall be a corporation and shall have expressly assumed all of the Company's obligations under the Notes and the Indenture, (ii) no Event of Default, or an event that, with the lapse of time or the giving of notice or both, would become an Event of Default under the Indenture shall have happened and be continuing, (iii) the Consolidated Net Worth of the Continuing Entity shall be at least equal to the Consolidated Net Worth of the Company immediately prior to the transaction and (iv) the Continuing Entity would be entitled to incur at least $1 of additional Indebtedness (other than revolving Indebtedness to banks) without violating the restriction set forth in "-- Limitations on Consolidated Indebtedness" above. Certain Definitions Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made thereto for the full definition of all such terms, as well as any other terms used herein for which no definition is provided. "Affiliate" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Amortization Expense" means, for any period, amounts recognized during such period as amortization of capital leases, depletion, nuclear fuel, goodwill and assets classified as intangible assets in accordance with generally accepted accounting principles. "Capital Lease Obligations" of a person means any obligation that is required to be classified and accounted for as a capital lease on the face of a balance sheet of such person prepared in accordance with generally accepted accounting principles; the amount of such obligation shall be the capitalized amount thereof, determined in accordance with generally accepted accounting principles; the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty; and such obligation shall be deemed secured by a Lien on any property or assets to which such lease relates. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interest in (however designated) corporate stock, including any Preferred Stock or Letter Stock. "Consolidated Assets" means, at any date of determination, the aggregate assets of the Company and its Consolidated Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles. "Consolidated Capital" means, at any date of determination, the sum of (a) Consolidated Indebtedness, (b) consolidated equity of the common stockholders of the Company and the Consolidated Subsidiaries, (c) consolidated equity of the preference stockholders of the Company and the Consolidated Subsidiaries and (d) consolidated equity of the preferred stockholders of the Company and the Consolidated Subsidiaries, in each case, determined at such date in accordance with generally accepted accounting principles. "Consolidated Coverage Ratio" with respect to any period means the ratio of (i) the aggregate amount of Operating Cash Flow for such period to (ii) the aggregate amount of Consolidated Interest Expense for such period. "Consolidated Indebtedness" means, without duplication, at any date of determination, the sum of the aggregate Indebtedness of the Company plus the aggregate debt (as such term is construed in accordance with generally accepted accounting principles) of the Consolidated Subsidiaries. "Consolidated Interest Expense" means, for any period, the total interest expense in respect of Indebtedness of the Company and its Consolidated Subsidiaries, including, without duplication, (i) interest expense attributable to capital leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv) cash and noncash interest payments, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs under Interest Rate Protection Agreements (including amortization of discount) and (vii) interest expense in respect of obligations of other persons deemed to be Indebtedness of the Company or any Consolidated Subsidiaries under clause (v) or (vi) of the definition of Indebtedness, provided, however, that Consolidated Interest Expense shall exclude any costs otherwise included in interest expense recognized on early retirement of debt. "Consolidated Leverage Ratio" means, at any date of determination, the ratio of Consolidated Indebtedness to Consolidated Capital. "Consolidated Net Income" means, for any period, the net income of the Company and its Consolidated Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income of any person if such person is not a Subsidiary, except that (A) the Company's equity in the net income of any such person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such person during such period to the Company or a Consolidated Subsidiary as a dividend or other distribution and (B) the Company's equity in a net loss of any such person for such period shall be included in determining such Consolidated Net Income; (ii) any net income of any person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; and (iii) any gain or loss realized upon the sale or other disposition of any property, plant or equipment of the Company or its Consolidated Subsidiaries which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any person. "Consolidated Net Worth" of any person means the total of the amounts shown on the consolidated balance sheet of such person and its consolidated subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principles, as of any date selected by such person not more than 90 days prior to the taking of any action for the purpose of which the determination is being made (and adjusted for any material events since such date), as (i) the par or state value of all outstanding Capital Stock plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit, (B) any amounts attributable to Redeemable Stock and (C) any amounts attributable to Exchangeable Stock. "Consolidated Subsidiary" means, any Subsidiary whose accounts are or are required to be consolidated with the accounts of the Company in accordance with generally accepted accounting principles. "Exchangeable Stock" means any Capital Stock of a corporation that is exchangeable or convertible into another security (other than Capital Stock of such corporation that is neither Exchangeable Stock nor Redeemable Stock). "Indebtedness" of any person means, without duplication, (i) the principal of and premium (if any) in respect of (A) indebtedness of such person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such person is responsible or liable; (ii) all Capital Lease Obligations of such person; (iii) all obligations of such person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of such person for the reimbursement of any obligor or any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (i) through (iii) above) entered into in the ordinary course of business of such person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such person of a demand for reimbursement following payment on the letter of credit); (v) all obligations of the type referred to in clauses (i) through (iv) of other persons and all dividends of other persons for the payment of which, in either case, such person is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) of the other persons secured by any Lien on any property or asset of such person (whether or not such obligation is assumed by such person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. "Interest Rate Protection Agreement" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Company or any Subsidiary against fluctuations in interest rates. "Letter Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is intended to reflect the separate performance of certain of the businesses or operations conducted by such corporation or any of its subsidiaries. "Lien" means any lien, mortgage, pledge, security interest, conditional sale, title retention agreement or other charge or encumbrance of any kind. "Net Proceeds" means, with respect to any issuance or sale or contribution in respect of Capital Stock, the aggregate proceeds of such issuance, sale or contribution, including the fair market value (as determined by the Board of Directors and net of any associated debt and of any consideration other than Capital Stock received in return) of property other than cash received by the Company, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof, provided, however, that if such fair market value as determined by the Board of Directors of property other than cash is greater than $25 million, the value thereof shall be based upon an opinion from an independent nationally recognized firm experienced in the appraisal or similar review of similar types of transactions. "Non-Convertible Capital Stock" means, with respect to any corporation, any non-convertible Capital Stock of such corporation and any Capital Stock of such corporation convertible solely into non-convertible Capital Stock other than Preferred Stock of such corporation; provided, however, that Non-Convertible Capital Stock shall not include any Redeemable Stock or Exchangeable Stock. "Operating Cash Flow" means for any period, with respect to the Company and its Consolidated Subsidiaries, the aggregate amount of Consolidated Net Income after adding thereto Consolidated Interest Expense (adjusted to include costs recognized on early retirement of debt), income taxes, depreciation expense, Amortization Expense, any noncash amortization of debt issuance costs, any nonrecurring, noncash charges to earnings and any negative accretion recognition. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Stock," as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "Redeemable Stock" means any Capital Stock that by its terms or otherwise is required to be redeemed prior to the first anniversary of the Maturity of any Outstanding Notes or is redeemable at the option of the holder thereof at any time prior to the first anniversary of the Maturity of any Outstanding Notes. "Restricted Subsidiary" means any Subsidiary (other than Consumers and its subsidiaries) of the Company which at the time of determination had assets which, as of the date of the Company's most recent quarterly consolidated balance sheet, constituted at least 10% of the total Consolidated Assets of the Company and its Consolidated Subsidiaries and any other Subsidiary which from time to time is designated a Restricted Subsidiary by the Board of Directors of the Company, provided that no Subsidiary may be designated a Restricted Subsidiary if, immediately after giving effect thereto, an Event of Default, or an event that, with the lapse of time or the giving of notice or both, would constitute an Event of Default, would exist or the Company and its Restricted Subsidiaries could not incur at least $1 of additional Indebtedness under the restriction set forth under "-- Limitations on Consolidated Indebtedness" above and (i) any such Subsidiary so designated as a Restricted Subsidiary must be organized under the laws of the United States or any state thereof; (ii) more than 80% of the Voting Stock of such Subsidiary must be owned of record and beneficially by the Company or a Restricted Subsidiary; (iii) such Restricted Subsidiary must be a Consolidated Subsidiary; and (iv) such Subsidiary must not therefore have been designated as a Restricted Subsidiary. "Subsidiary" means any corporation of which more than 50% of the outstanding Voting Stock is at the time directly or indirectly owned by the parent company and/or one or more companies which are themselves subsidiaries of such parent company. "Subsidiary" means a subsidiary of the Company. "Tax Sharing Agreement" means the Amended and Restated Agreement for the Allocation of Income Tax Liabilities and Benefits, dated as of January 1, 1994, as amended or supplemented from time to time, by and among the Company, each of the members of the Consolidated Group (as defined therein), and each of the corporations that become members of the Consolidated Group. "Voting Stock" means securities of any class or classes the holders of which are ordinarily, in the absence of contingencies, entitled to vote for corporate directors (or persons performing similar functions). Events of Default The following will be Events of Default under the Indenture with respect to the Notes: (a) default in the payment of interest upon any Note when such interest becomes due and payable and continuance of such default for 30 days; (b) default in the payment of all or any part of the principal of (or premium, if any, on) any Note when it becomes due and payable at its Maturity; (c) default in the performance of any covenants of the Company in the Indenture, continued for 60 days after written notice as provided in the Indenture; (d) a default or event of default in respect of any Indebtedness of the Company shall occur which results in the acceleration of $25,000,000 or more of the principal amount of such Indebtedness or Indebtedness of the Company in excess of $25,000,000 shall not be paid at maturity thereof, which default shall not have been waived by the holder or holders of such Indebtedness within 30 days of such default; (e) entry of final judgments against the Company aggregating in excess of $25,000,000 which remain undischarged or unbonded for a period (during which execution shall not be effectively stayed) of 60 days; (f) certain events in bankruptcy, insolvency or reorganization involving the Company. Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders of Notes, unless such Holders shall have offered to the Trustee reasonable indemnity. If an Event of Default with respect to the Notes shall occur and be continuing, (i) either the Trustee or the Holders of at least a majority in aggregate principal amount of the Outstanding Notes may accelerate the maturity of the Outstanding Notes and (ii) the Holders of not less than a majority of the aggregate outstanding principal amount of the Outstanding Notes, may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, however, that after any such acceleration, but before a judgment or decree for payment of the money due has been obtained, the Holders of not less than a majority in aggregate principal amount of Outstanding Notes may, under certain circumstances, rescind and annul such acceleration and its consequences if all Events of Default, other than the non-payment of accelerated principal, have been cured or waived as provided in the Indenture. For information as to waiver of defaults, see "Modification of the Indenture." No Holder of any Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default and unless also the holders of at least 25% in aggregate principal amount of the Outstanding Notes shall have made written request, and offered satisfactory indemnity, to the Trustee to institute such proceeding as trustee, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Outstanding Notes a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit instituted by a Holder of a Note for the enforcement of payment of the principal of or interest on such Note on or after the respective due dates expressed in such Note. The Company will be required to furnish to the Trustee annually a statement as to the performance by the Company of certain of its obligations under the Indenture and as to any default in such performance. Modification of the Indenture Modification and amendment of the Indenture may be made by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities affected thereby, provided that no such modification or amendment may, without the consent of the Holder of each Outstanding Security affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal or interest on, any Outstanding Security, or reduce the principal amount thereof or rate of interest thereon, or change the Redemption Price applicable to any Security; (b) change the place or currency of payment of principal of or premium, if any, or interest on any Security; (c) impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity (or in the case of redemption or repayment at the option of the Holder, on or after the Redemption Date or Repayment Date) thereof; (d) reduce the above-stated percentage of Outstanding Securities necessary to modify or amend the Indenture or the consent of whose Holders is required for any waiver or reduce the percentage required for quorum or voting; or (e) modify the foregoing requirements. The Holders of at least a majority in aggregate principal amount of the Outstanding Securities of a series may waive past defaults with respect to such series except payment defaults and the Holders of at least a majority in aggregate principal amount of all Outstanding Securities may waive compliance by the Company with certain covenants. Modification and amendment of the Indenture may be made by the Company and the Trustee without the consent of any Holder, for any of the following purposes: (a) to evidence the succession of another corporation to the Company; (b) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities; (c) to add additional Events of Default for the benefit of the Holders of all or any series of Securities; (d) to change any provision of the Indenture to facilitate the issuance of Securities in bearer form; (e) to change or eliminate any provision of the Indenture, provided no Security Outstanding of any series is entitled to the benefit of such provision; (f) to secure the Securities; (g) to establish the form or terms of Securities; (h) to provide for the acceptance of appointment by a successor Trustee; (i) to cure any ambiguity, defect or inconsistency in the Indenture provided such action does not materially adversely affect the interests of Holders of Securities or (j) to supplement provisions of the Indenture to permit or facilitate the defeasance or discharge of a series of Securities provided that such action shall not materially adversely affect the interests of Holders of Securities of such Series. Defeasance, Covenant Defeasance and Discharge The Indenture provides that the Company may elect (A) to defease and be discharged from all of its obligations with respect to the Securities or any series thereof (except for the obligations to register the transfer or exchange of such Securities, to replace temporary or mutilated, destroyed, lost or stolen Securities, to maintain an office or agency in respect of such Securities, to hold monies for repayment in trust and certain other obligations), and that the provisions of the Indenture will no longer be in effect with respect to such Securities (except as aforesaid) ("defeasance") or (B) to be released from its covenants set forth in the Indenture with respect to, among other things, limitation on Consolidated Indebtedness, limitation on Restricted Payments, limitation on transactions with Affiliates, limitation on Liens, limitation on consolidation, merger, sale or conveyance, repurchase obligations on Change in Control, ("covenant defeasance") with respect to such Securities, upon in the case of (A) or (B) the deposit with the Trustee (or other qualifying trustee), in trust for such purpose, of money and/or U.S. Government Obligations which, without any reinvestment, but through the scheduled payment of principal and interest in accordance with their terms, will provide money in an amount sufficient to pay the principal of (and premium, if any) and interest on the Notes on the scheduled due dates therefor. Such a trust may only be established, if, among other things, (x) such defeasance or covenant defeasance will not result (whether immediately or with notice or lapse of time or both) in a breach or violation of, or constitute a default under, any material agreement to which the Company is party or by which it is bound and (y) the Company has delivered to the Trustee an Opinion of Counsel (as specified in the Indenture) to the effect that the Holders of such Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred. Such Opinion of Counsel, in the case of defeasance under clause (A) above, must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable federal income tax law occurring after the date of the Indenture. In the event the Company exercises its option to effect a covenant defeasance with respect to the Securities of any series as described in the preceding paragraph and such Securities of such series are declared due and payable because of the occurrence of any Event of Default (other than an Event of Default caused by failure to comply with the covenants that are defeased), and the amount of money and U.S. Government Obligations on deposit with the Trustee would be insufficient to pay amounts due on the Securities of such series at the time of the acceleration resulting from such Event of Default, the Company will remain liable for such payments. The Company may obtain a discharge of the Indenture with respect to all Securities then Outstanding (except for certain obligations to register the transfer or exchange of such Securities, to replace temporary or mutilated, destroyed, lost or stolen Securities, to maintain an office or agency in respect of such Securities, to hold monies for repayment in trust and certain other obligations) when all Securities theretofore authenticated and delivered have, with certain exceptions, been delivered to the Trustee for cancellation or by irrevocably depositing in trust with the Trustee money, and/or U.S. Government Obligations which, without any reinvestment but through the scheduled payment of principal and interest in accordance with their terms, will provide money in an amount sufficient to pay all the principal of (and premium, if any) and interest on the Securities on the Stated Maturities or redemption dates thereof, provided that such Securities are by their terms due and payable, or are to be called for redemption, within one year and the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize income, gain or loss for federal income tax purposes as a result of such discharge and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such discharge had not occurred. The Trustee Under the Indenture The Chase Manhattan Bank is the Trustee under the Indenture. The Company maintains banking and borrowing relations with The Chase Manhattan Bank. PLAN OF DISTRIBUTION The Agents will be J. W. Korth & Company and such other agents as the Company may designate from time to time. The names of any additional Agents will be disclosed in a supplement to this Prospectus. Subject to the terms and conditions set forth in a distribution agreement (the "Distribution Agreement") among the Company and the Agents, offers to purchase the Notes will be solicited from time to time by the Agents on behalf of the Company, and the Notes may be offered on a continuous basis by the Company through the Agents. Each Agent will agree to use its reasonable best efforts to solicit purchases of the Notes. Following such solicitation, the Agents, severally and not jointly, may purchase Notes from the Company, for their own account, from time to time. Notes acquired by any Agent will be offered either directly to the public or to certain dealers that will then reoffer the Notes to the public. Sales by an Agent to any dealer will be made pursuant to an agreement between such Agent and dealer (each a "Dealer Agreement"). A Pricing Supplement with respect to each offering of Notes by the Company will set forth, among other things, the name of each Agent participating in the distribution of such Notes, the price to public of such Notes and the proceeds to the Company from such sale, any underwriting discounts or commissions and other items constituting Agent's compensation, and any discounts or concessions allowed, reallowed or paid to dealers. After any initial public offering of Notes pursuant to a Pricing Supplement, the price to the public of such Notes, and the related underwriting discount and selling concession, may be changed. The Agent has advised the Company that all initial offers by any Agents and by any dealers, unless otherwise set forth in the applicable Pricing Supplement, are proposed to be made at prices equal to 100% of the principal amount of the Notes being sold, less, in the case of an offer by an Agent to a dealer, a price concession not in excess of the amount set forth in the applicable Pricing Supplement. Offers and sales by Agents or dealers subsequent to the initial offering may be at varying prices determined at the time of sale. The Notes will not be listed on any securities exchange and will not be traded, when issued, on any other established trading market. Any Agent may make a market in the Notes, but no Agent is obligated to do so. Any market-making so undertaken may be discontinued at any time without notice. There can thus be no assurance that a secondary market for the Notes will exist or as to the liquidity or continuation of any such market. Moreover, the Company reserves the right to withdraw, cancel or modify the offer made hereby at any time without notice, and any such withdrawal, cancellation or modification also may adversely affect the liquidity of the Notes. The Distribution Agreement provides, and the terms of each Dealer Agreement will provide, that the obligations of any Agent or dealer to purchase Notes will be subject to certain conditions precedent. The nature of the Agent's obligations under the Distribution Agreement is such that an Agent will be obligated to purchase all of the Notes offered by any Pricing Supplement naming such Agent if any of such Notes are purchased. The Company, or any Agent with respect to itself, may terminate the Distribution Agreement at any time upon written notice. The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"), or to contribute to payments that the Agents may be required to make in respect thereof. LEGAL OPINIONS Opinions as to the legality of the Notes will be rendered for CMS Energy by Michael D. VanHemert, Assistant General Counsel for CMS Energy. Certain legal matters with respect to the Notes will be passed upon by Reid & Priest LLP, New York, N.Y., counsel for the Agents. Reid & Priest LLP provides legal services to an affiliate of CMS Energy and has, from time to time, provided legal services to CMS Energy. EXPERTS The consolidated financial statements and schedules of CMS Energy as of December 31, 1995 and 1994, and for each of the three years in the period ended December 31, 1995 incorporated by reference in this Prospectus, have been audited by Arthur Andersen LLP (formerly Arthur Andersen & Co.), independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. With respect to the unaudited interim consolidated financial information for the periods ended March 31, June 30, and September 30, 1995 and 1996, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of such information. However, their separate reports thereon state that they did not audit and they did not express an opinion on that interim consolidated financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act, for their reports on the unaudited interim consolidated financial information because those reports are not a "report" or "part" of the registration statement prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. Future consolidated financial statements of CMS Energy and the reports thereon of Arthur Andersen LLP also will be incorporated by reference in this Prospectus in reliance upon the authority of that firm as experts in giving those reports to the extent that said firm has audited said consolidated financial statements and consented to the use of their reports thereon. - ----------------------------------------- ------------------------- - ----------------------------------------- ------------------------- No dealer, salesperson or other individual has been authorized to give any information or to make any representations other than those contained in this Prospectus or any Pricing Supplement in connection with $150,000,000 the offerings covered by this Prospectus and any Pricing Supplement and, if given or made, such information or CMS ENERGY representations must not be relied upon CORPORATION as having been authorized by the Company or any Agent. Neither this Prospectus GENERAL TERM NOTES nor any Pricing Supplement constitutes (registered trademark), an offer to sell, or a solicitation of an offer to buy, the securities to which SERIES C this Prospectus and any Pricing Supplement relate in any jurisdiction where or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus or any Pricing Supplement nor any sale made hereunder shall under any circumstances create an implication that there has not been any change in the facts set forth in this Prospectus or in the affairs of the Company since the date hereof. ------------------ ------------------ PROSPECTUS TABLE OF CONTENTS ________________, 1996 Page ----------------- Available Information . . . . . . . 2 Incorporation of Certain Documents by Reference . . . . . . . . . . 2 Prospectus Summary . . . . . . . . 4 The Company . . . . . . . . . . . . 8 Use of Proceeds . . . . . . . . . . 8 J.W. Korth & Company Ratio of Earnings to Fixed Charges. 9 Description of General Term Notes (registered trademark) . . . . . . 9 Plan of Distribution . . . . . . . 26 Legal Opinions . . . . . . . . . . 27 Experts . . . . . . . . . . . . . . 28 - ----------------------------------------- ------------------------- - ----------------------------------------- ------------------------- PART II. INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. Estimated Amount --------- Filing fee - Securities and Exchange Commission . . $ 45,454 Services of Trustee (including counsel). . . . . . . 15,000 Printing . . . . . . . . . . . . . . . . . . . . . . 15,000 Rating Agency fee . . . . . . . . . . . . . . . . . 40,000 Services of counsel . . . . . . . . . . . . . . . . 40,000 Services of independent public accountants, Arthur Andersen LLP. . . . . . . . . . . . . . . . 10,000 Blue Sky fees and expenses . . . . . . . . . . . . . 6,500 Miscellaneous . . . . . . . . . . . . . . . . . . . 15,396 -------- Total: $187,350 ======== Item 15. Indemnification of Directors and Officers. The following resolution was adopted by the Board of Directors of CMS Energy on May 6, 1987: RESOLVED: That effective March 1, 1987 the Corporation shall indemnify to the full extent permitted by law every person (including the estate, heirs and legal representatives of such person in the event of the decease, incompetency, insolvency or bankruptcy of such person) who is or was a director, officer, partner, trustee, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against all liability, costs, expenses, including attorneys' fees, judgments, penalties, fines and amounts paid in settlement, incurred by or imposed upon the person in connection with or resulting from any claim or any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative, investigative or of whatever nature, arising from the person's service or capacity as, or by reason of the fact that the person is or was, a director, officer, partner, trustee, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Such right of indemnification shall not be deemed exclusive of any other rights to which the person may be entitled under statute, bylaw, agreement, vote of shareholders or otherwise. CMS Energy's Bylaws provide: The Corporation may purchase and maintain liability insurance, to the full extent permitted by law, on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity. Article VIII of the Articles of Incorporation reads: A director shall not be personally liable to the Corporation or its shareholders for monetary damages for breach of duty as a director except (i) for a breach of the director's duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for a violation of Section 551(l) of the Michigan Business Corporation Act, and (iv) any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article VIII, and no modification to its provisions by law, shall apply to, or have any effect upon, the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal or modification. Article IX of the Articles of Incorporation reads: Each director and each officer of the Corporation shall be indemnified by the Corporation to the fullest extent permitted by law against expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the defense of any proceeding in which he or she was or is a party or is threatened to be made a party by reason of being or having been a director or an officer of the Corporation. Such right of indemnification is not exclusive of any other rights to which such director or officer may be entitled under any now or hereafter existing statute, any other provision of these Articles, bylaw, agreement, vote of shareholders or otherwise. If the Business Corporation Act of the State of Michigan is amended after approval by the shareholders of this Article IX to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Business Corporation Act of the State of Michigan, as so amended. Any repeal or modification of this Article IX by the shareholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. Sections 561 through 571 of the Michigan Business Corporation Act 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 16. Exhibits. Exhibit No. (1)(a) - Form of Distribution Agreement. (4)(a)(i) - Indenture dated as of January 15, 1994 between CMS Energy and The Chase Manhattan Bank, as Trustee, relating to the Notes. (Designated in CMS Energy's Form 8-K dated March 29, 1994, File No. 1-9513, as Exhibit (4)(a).) (4)(a)(ii) - First Supplemental Indenture dated as of January 20, 1994 between CMS Energy and The Chase Manhattan Bank, as Trustee. (Designated in CMS Energy's Form 8-K dated March 29, 1994, File No. 1-9513, as Exhibit (4)(b).) (4)(a)(iii) - Second Supplemental Indenture dated as of March 19, 1996 between CMS Energy and The Chase Manhattan Bank, as Trustee. (Designated in CMS Energy's Form 10-Q for the quarter ended March 31, 1996, File No. 9-9513, as Exhibit (4).) (4)(a)(iv) - Form of Third Supplemental Indenture. (5) - Opinion of Counsel. (12) - Statement regarding computation of ratio of earnings to fixed charges. (15) - Letter regarding unaudited interim financial information. (23)(a) - Consent of Counsel is contained in Exhibit 5 hereto. (23)(b) - Consent of Arthur Andersen LLP. (24) - Powers of Attorney. (25) - Form T-1, Statement of Eligibility of Trustee. Exhibits listed above which have been filed with the Securities and Exchange Commission are incorporated herein by reference with the same effect as if filed with this registration statement. Item 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that (i) and (ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. _____________________ SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dearborn, and State of Michigan, on the 25th day of November, 1996. CMS ENERGY CORPORATION By /s/ A M Wright -------------------------- Alan M. Wright Senior Vice President, Chief Financial Officer and Treasurer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities on the 25th day of November, 1996. Name (i) Principal executive officer: Chairman of the Board Chief Executive Officer and Director /s/ William T. McCormick, Jr. - ---------------------------------- (William T. McCormick, Jr.) (ii) Principal financial officer: Senior Vice President, Chief Financial Officer and Treasurer /s/ A M Wright - ---------------------------------- (Alan M. Wright) (iii) Controller or principal accounting officer: Senior Vice President, Controller and Chief Accounting Officer /s/ P.D. Hopper - ---------------------------------- (Preston D. Hopper) * Director - ------------------------ (Victor J. Fryling) * Director - ------------------------ (James J. Duderstadt) * Director - ------------------------ (Kathleen R. Flaherty) * Director - ------------------------ (Earl D. Holton) * Director - ------------------------ (Lois A. Lund) * Director - ------------------------ (Frank H. Merlotti) * Director - ------------------------ (Michael G. Morris) * Director - ------------------------ (William U. Parfet) * Director - ------------------------ (Percy A. Pierre) * Director - ------------------------ (Kenneth Whipple) * Director - ------------------------ (John B. Yasinsky) *By /s/ A M Wright - ------------------------ Alan M. Wright Attorney-in-fact EX-1 2 EXHIBIT 1(A) - FORM OF DISTRIBUTION AGREEMENT EXHIBIT 1(a) CMS Energy Corporation $150,000,000 General Term Notes (registered trademark), Series C Due From Nine Months to Twenty-Five Years from Date of Issue DISTRIBUTION AGREEMENT November __, 1996 J. W. KORTH & COMPANY 32841 Middlebelt Road, Suite 400 Farmington Hills, Michigan 48334 Dear Sirs: CMS Energy Corporation, a Michigan corporation (the "Company"), confirms its agreement with you (the "Agent", and together with such additional agents as may be named from time to time, the "Agents") with respect to the issue and sale by the Company of up to $150,000,000 aggregate principal amount of its General Term Notes, Series C (the "Notes"). The Notes are to be issued under an Indenture, dated as of January 15, 1994 as supplemented by a First Supplemental Indenture dated as of January 20, 1994, a Second Supplemental Indenture dated as of March 19, 1996 and a Third Supplemental Indenture dated as of November __, 1996 (such Indenture, as so supplemented, the "Indenture"), between the Company and The Chase Manhattan Bank (National Association), as trustee (the "Trustee"). The Notes will have the maturities, annual interest rates, redemption provisions, if any, and other terms specified in a pricing supplement to the Prospectus referred to below. _______________________ (registered trademark) Registered servicemark of J. W. Korth & Company Subject to the terms and conditions stated herein, the Company hereby (i) appoints J. W. Korth & Company as the agent of the Company for the purpose of soliciting and receiving offers to purchase the Notes, (ii) reserves the right, from time to time, to appoint additional agents for the purpose of soliciting and receiving offers to purchase the Notes, provided that (a) the Company shall furnish the Agents with reasonable advance notification of the addition of any such agent, (b) such additional agent shall be acceptable to J. W. Korth & Company and (c) each such additional agent shall be required to become a party to this agreement and undertake the obligations of an Agent hereunder pursuant to an Additional Agent Appointment Agreement substantially in the form of Exhibit E hereto, and (iii) agrees that, whenever the Company determines to sell Notes pursuant to this Agreement, such Notes shall be sold pursuant to a supplemental agreement between the Company and J. W. Korth & Company (the "Purchasing Agent") with the Purchasing Agent purchasing such Notes as principal; the supplemental agreement will also specify the amount of Notes being sold which have been solicited by each Agent. Each such supplemental agreement (which shall be either oral, to be confirmed in writing, or written, and in either case the written confirmation of an oral agreement or the written supplemental agreement shall be substantially in the form of Exhibit B hereto and may take the form of an exchange of any standard form of written telecommunication between the Purchasing Agent and the Company) is herein referred to as a "Terms Agreement". Any such Terms Agreement may be signed on behalf of the Company by such persons as are authorized from time to time by the Board of Directors of the Company to bind the Company in this regard. Under no circumstances will any Agent be obligated to purchase, or the Company be obligated to sell, any Notes, unless a Terms Agreement has been entered into between the Company and the Purchasing Agent with respect to such Notes. 1. Solicitations by the Agents of Offers To Purchase; Purchases by the Purchasing Agent of Notes as Principal. Following the Commencement Date (defined below), the Company shall notify the Agents from time to time as to the commencement of a period during which the Notes may be offered and sold by the Agents. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Agents will use their respective reasonable best efforts to solicit offers to purchase the Notes upon the terms and conditions set forth in the Prospectus as then amended and supplemented and as contemplated by the Note Administrative Procedures attached hereto as Exhibit A ("the Procedures"). The Agents are authorized to solicit orders for the Notes only in denominations of $1,000 or any amount in excess thereof which is a multiple of $1,000 and, unless otherwise agreed to by the Company, at a purchase price equal to 100% of their principal amount. In soliciting offers to purchase the Notes hereunder, the Agents are acting solely as agents for the Company, and not as principals. Each Agent shall communicate to the Company, orally or in writing, each reasonable offer or indication of interest received by it to purchase Notes. Each Agent shall have the right to reject, in its discretion reasonably exercised, any offer received by it to purchase the Notes, in whole or in part, and any such rejection shall not be deemed a breach of its agreements contained herein. The Company shall have the right to accept offers to purchase the Notes and may reject any such offer in whole or in part. The obligations of the Agents under this Agreement shall be several and not joint. Each acceptance by the Company of an offer to purchase Notes shall be in accordance with the terms of this Agreement and a Terms Agreement which will provide for the sale of such Notes to, and the purchase and reoffering thereof by, the Purchasing Agent as principal. The commitment of the Purchasing Agent to purchase Notes pursuant to any Terms Agreement (and any contemporaneous purchase of Notes by an Agent from the Purchasing Agent) shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall describe the Notes to be purchased pursuant thereto by the Purchasing Agent as principal, specify the principal amount of such Notes, the price to be paid to the Company for such Notes, the rate at which interest will be paid on the Notes, the date and time of delivery of payment for such Notes (the "Settlement Date"), whether the Notes provide for a survivor's option or for optional redemption by the Company and on what terms and conditions, the place of delivery of the Notes and payment therefor, the method of payment and any requirements for the delivery of the opinions of counsel, the certificates from the Company, and the letter from Arthur Andersen LLP, pursuant to Section 6(B)(b). The Agents may reallow any portion of the commission payable pursuant hereto to dealers or purchasers in connection with the offer and sale of any Notes. The Company agrees to pay to the Purchasing Agent, as consideration for soliciting the sale of the Notes pursuant to a Terms Agreement, a commission in the form of a discount equal to a percentage not greater than 4%, which percentage shall be set forth in the applicable Terms Agreement, of the principal amount of each Note sold by the Company; the Purchasing Agent and the other Agents will share such commission in such proportion as they may agree. Delivery of the certificates for Notes pursuant to any Terms Agreement shall be made as agreed to between the Company and the Purchasing Agent as specified in the Terms Agreement, not later than the Settlement Date set forth in such Terms Agreement, against payment of funds to the Company in the net amount due to the Company for such Notes by the method and in the form specified in the Terms Agreement. The Agents and the Company agree to perform the respective duties and obligations specifically provided to be performed by them in the Procedures. The Procedures may be amended only by written agreement of the Company and the Agents. The documents required to be delivered by Section 6 of this Agreement shall be delivered at the office of Reid & Priest LLP, counsel for the Agents, 40 West 57th Street, New York, New York 10019, on such date as may be agreed to by the Company and the Agents (the "Commencement Date"). 2. Other Activities of Agents. The Company acknowledges that nothing in this Agreement shall prohibit any Agent from (i) acting as broker for the sale of Notes by customers other than the Company, (ii) soliciting the sale of Notes through such Agent as broker for a seller, soliciting the sale of Notes to such Agent as principal and soliciting offers to buy Notes, (iii) purchasing Notes in the secondary market, and (iv) offering and selling as principal for its own account Notes which such Agent has purchased. 3. Representations and Warranties. The Company represents and warrants to, and agrees with, the Agents as of the date hereof, as of the Commencement Date and as of the times referred to in Section 4(g) hereof (the Commencement Date and each such time hereinafter sometimes referred to as a "Representation Date"), that: (a) A registration statement (File No. 333-_____) in respect of $150,000,000 aggregate principal amount of debt securities of the Company, including the Notes, has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any posteffective amendment thereto, each in the form heretofore delivered or to be delivered to the Agents, including all documents incorporated by reference in the prospectus contained therein, have been declared effective by the Commission in such form, and no other document with respect to such registration statement or other document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission; and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or, to the Company's knowledge, threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), being hereinafter called a "Preliminary Prospectus"); such registration statement, as amended at the time it became effective, including all exhibits thereto and the documents incorporated by reference therein at the time such registration statement became effective, being hereinafter called the "Registration Statement"; the prospectus, including any prospectus supplement relating to the Notes, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus, including any supplement to the Prospectus that sets forth only the terms of a particular issue of the Notes and the manner of distribution thereof (a "Pricing Supplement"), shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to and include the Prospectus as amended or supplemented (including the applicable Pricing Supplement) in relation to the Notes sold pursuant to this Agreement, in the form in which it is filed, or transmitted for filing, with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 4(a)(ii) hereof, including any documents incorporated by reference therein as of the date of such filing or transmission); (b) The documents incorporated by reference in the Prospectus, when they were filed with the Commission (or, if an amendment with respect to any such document was filed, when such amendment was filed), conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents, when they were filed, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Agent expressly for use in the Prospectus as amended or supplemented; (c) The Registration Statement and the Prospectus conform, and any amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder, and the Registration Statement, as of its effective date, and the Prospectus, as of its filing date, do not, and any amendments or supplements to the Registration Statement or the Prospectus, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Agent expressly for use in the Registration Statement or the Prospectus as amended or supplemented or any such statements in or omissions from that part of the Registration Statement that constitutes the Statement of Eligibility on Form T-1 of the Trustee under the Trust Indenture Act; (d) Since the date of the latest audited financial statements included or incorporated by reference in the Prospectus there has not been any material adverse change in the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Prospectus, as amended or supplemented; (e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Michigan, with corporate power and corporate authority to own or lease its properties and conduct its business as described in the Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business, in which the failure to so qualify and be in good standing would materially and adversely affect the business, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole. (f) The filing of the Registration Statement with respect to the Notes has, and the issuance and sale of the Notes pursuant to this Agreement and any Terms Agreement have, been duly authorized by the Company, and, when Notes are authenticated and issued pursuant to the Indenture and delivered against payment of the consideration as specified in this Agreement and any applicable Terms Agreement, such Notes will have been duly executed, issued and delivered by the Company and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles and will be entitled to the benefits provided by the Indenture; the Indenture has been duly authorized, executed and delivered by the Company and is duly qualified under the Trust Indenture Act and the Indenture constitutes a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture conforms, and the Notes will conform, in all material respects, to the descriptions thereof contained in the Prospectus as amended or supplemented to relate to each issuance of Notes; (g) The issue and sale of the Notes and the compliance by the Company with all of the provisions of the Notes, the Indenture, this Agreement and any Terms Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its significant subsidiaries (as defined in Rule 405 as promulgated by the Commission under the Act) is a party or by which the Company or any of its significant subsidiaries is bound, or to which any of the property or assets of the Company or any of its significant subsidiaries is subject, that is material to the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole, nor will such action result in any violation of the provisions of the Articles of Incorporation, as amended, or the By-laws of the Company or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its significant subsidiaries or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Notes or the consummation by the Company of the other transactions contemplated by this Agreement or any Terms Agreement or the Indenture, except such as have been, or will have been prior to the Commencement Date, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or blue sky laws in connection with the solicitation by any Agent of offers to purchase Notes and with purchases of Notes by such Agent as principal; (h) Other than as set forth or contemplated in the Prospectus, as amended or supplemented, there are no legal or governmental proceedings pending to which the Company or any of its significant subsidiaries is a party or of which any property of the Company or any of its significant subsidiaries is the subject with respect to which there is a reasonable likelihood of one or more determinations which would individually or in the aggregate have a material adverse effect on the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole; and, to the best of the Company's knowledge, no such proceedings are threatened by governmental authorities or others; (i) The Company is not subject to regulation under the Investment Company Act of 1940, as amended; (j) The Company will apply the net proceeds from the sale of Notes for the purpose set forth in the Prospectus under the caption "Use of Proceeds"; (k) To the best of the Company's knowledge, Arthur Andersen LLP, who have audited certain financial statements of the Company incorporated by reference in the Registration Statement and the Prospectus, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (l) Immediately after the sale of Notes by the Company hereunder and under any Terms Agreement, the aggregate amount of Notes which shall have been issued and sold by the Company hereunder and under any Terms Agreement and of any debt securities of the Company (other than such Notes) that shall have been issued and sold pursuant to the Registration Statement will not exceed the amount of debt securities registered under the Registration Statement; (m) Other than as set forth or contemplated in the Prospectus, as amended or supplemented, the Company owns or possesses all permits, licenses and other authorizations necessary to own, lease or use its properties and assets and to conduct its business in the manner described in the Prospectus, except to the extent that the failure to own or possess any such permit, license or other authorization would not have a material adverse effect on the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole, and the Company has not received any notice of proceedings relating to the revocation or modification of any such permit, license or other authorization which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, might reasonably be expected to have a material adverse effect upon the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole; (n) Other than as set forth in the Prospectus as amended or supplemented, no event or condition exists that constitutes, or with the giving of notice or lapse of time or both would constitute, a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any of its significant subsidiaries or under any indenture, mortgage, loan agreement or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any of its significant subsidiaries, if such default would result in such indebtedness in an aggregate principal amount exceeding $25,000,000 becoming or being declared due and payable prior to the date on which it would otherwise become due and payable. 4. Covenants of the Company. The Company agrees with each of the Agents: (a) (i) To make no amendment or supplement to the Registration Statement or the Prospectus after the date of any Terms Agreement by the Purchasing Agent to purchase Notes as principal and prior to the related Settlement Date prior to having afforded each Agent a reasonable opportunity to review and comment on it and having reasonably considered any such comments; provided however, that, if any amendment or supplement to the Registration Statement or the Prospectus shall be transmitted for filing or filed after the date of any Terms Agreement between the Company and the Purchasing Agent for the purchase of Notes and prior to the related Settlement Date, the Purchasing Agent may unilaterally terminate such Terms Agreement and upon any such termination no Agent shall have any further obligation under such Terms Agreement; (ii) to prepare, with respect to any Notes to be sold through or to such Agent pursuant to this Agreement, a Pricing Supplement with respect to such Notes in a form previously approved by such Agent and to file such Pricing Supplement pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by such Rule; (iii) to make no amendment or supplement to the Registration Statement or Prospectus, other than any Pricing Supplement, at any time prior to having afforded each Agent a reasonable opportunity to review and promptly comment on it and having reasonably considered any such comments; (iv) to file timely all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (all such reports and proxy or information statements which are so filed and which have not been subsequently superseded shall be referred to as the "Incorporated Documents") for so long as the delivery of a prospectus is required in connection with the offering or sale of the Notes, and during such period to advise such Agent, promptly after the Company receives notice thereof, of the time when any amendment to the Registration Statement has been filed or has become effective or any amendment or supplement to the Prospectus (other than any Pricing Supplement that relates to Notes not purchased through or by such Agent) has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Notes, of the suspension of the qualification of the Notes for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amendment or supplement of the Registration Statement or Prospectus or for additional information; and (v) in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus or suspending any such qualification, promptly to use reasonable efforts to obtain its withdrawal; (b) Promptly from time to time to take such action as the Agents may reasonably request to qualify such Notes for offering and sale under the securities laws of such jurisdictions in the United States as the Agents may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Notes, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation, to file a general consent to service of process in any jurisdiction, take any action which would subject it to general service of process in any jurisdiction where it is not now subject or file annual reports with such jurisdictions or comply with any other requirements deemed by the Company in its reasonable judgment expressed in writing to the Purchasing Agent to be unduly burdensome; and to inform the Agents promptly of any notices it may receive from any state securities agency which limits or will limit any such qualification or exemption; (c) To furnish the Agents with copies of the Prospectus as amended or supplemented, in the form in which it is filed with the Commission pursuant to Rule 424(b) of the Act, in such quantities as the Agents may from time to time reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of any Notes and if at such time any event shall have occurred as a result of which it is necessary to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or, if for any other reason during such period it is necessary to further amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify each Agent and request the Agents, in their capacity as agents of the Company, to suspend solicitation of offers to purchase Notes from the Company (and, if so notified, each Agent shall cease such solicitations as soon as possible, but in any event not later than one business day later); and if the Company shall decide to amend or supplement the Registration Statement or the Prospectus as then amended or supplemented, to so advise the Agents by telephone (with confirmation in writing) and to prepare and cause to be filed as soon as practicable with the Commission an amendment or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement or omission or effect such compliance; provided, however, that if during such period an Agent continues to own Notes purchased from the Company by such Agent as principal or an Agent is otherwise required to deliver a prospectus in respect of transactions in the Notes, the Company shall promptly prepare and file with the Commission such an amendment or supplement; (d) To make generally available to its security holders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) of the Act), an earnings statement of the Company and its consolidated subsidiaries (which need not be audited) covering a period of at least 12 months beginning after the later of (i) the effective date of the Registration Statement, (ii) the effective date of each post- effective amendment to the Registration Statement, and (iii) the date of each filing by the Company with the Commission of an Annual Report on Form 10-K that is incorporated by reference in the Registration Statement, which earning statements shall comply with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158 of the Act); (e) So long as any Notes are outstanding, to furnish to such Agent, without charge, copies of its Annual Report on Form 10-K and other financial reports of the Company furnished or made available to the public generally, and deliver to such Agent, (i) as soon as they are available, copies of any Incorporated Documents; and (ii) such additional publicly available information concerning the business and financial condition of the Company as such Agent may from time to time reasonably request; (f) That, from the date of any Terms Agreement with the Purchasing Agent and continuing to and including the related Settlement Date, the Company will not, without the prior written consent of each Agent, which consent shall not be unreasonably withheld, issue or announce the proposed issuance of, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company which both mature more than 9 months after such Settlement Date and are substantially similar to the Notes and which are expected to be distributed on a retail basis in a manner comparable to that set forth in Exhibit A; (g) That each execution and delivery by the Company of a Terms Agreement with the Purchasing Agent shall be deemed to be an affirmation to each Agent that the representations and warranties of the Company contained in this Agreement are true and correct as of the date of such Terms Agreement, as though made at and as of such date, and an undertaking that such representations and warranties will be true and correct as of the Settlement Date for the Notes relating to such sale, as though made at and as of such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus, as amended and supplemented, relating to such Notes); (h) That each time the Registration Statement or the Prospectus shall be amended or supplemented (other than by a Pricing Supplement), each time a document filed under the Act or the Exchange Act is incorporated by reference into the Prospectus (other than (A) a Current Report pursuant to Section 13 or 15(d) of the Exchange Act on Form 8-K relating exclusively to the previous issuance of Notes under the Registration Statement or (B) a Quarterly Report on Form 10-Q under the Exchange Act, unless, in the case of clause (B), the Agents shall otherwise request), and each time the Company sells Notes to the Purchasing Agent as principal and the applicable Terms Agreement specifies the delivery of an opinion or opinions by Reid & Priest LLP, counsel to the Agent, as a condition to the purchase of Notes pursuant to such Terms Agreement, at the request of such Agent, Reid & Priest LLP shall furnish to such Agent its written opinion, dated the date of such amendment, supplement, incorporation or Settlement Date relating to such sale, as the case may be, in form reasonably satisfactory to such Agent to the effect that such Agent may rely on the opinion of such counsel as to the matters referred to in Section 6(A)(c), which was last furnished to such Agent to the same extent as though it was dated the date of such letter authorizing reliance (except that the statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such date or, in lieu of such opinion, an opinion of the same tenor as the opinion of such counsel as to the matters referred to in Section 6(A)(c), but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to such date), and reasonably in advance of the time that any such opinion is to be delivered the Company shall furnish to such counsel such papers and information as they may reasonably request to enable them to pass on such matters; (i) That each time the Registration Statement or the Prospectus shall be amended or supplemented (other than by a Pricing Supplement), each time a document filed under the Act or the Exchange Act is incorporated by reference into the Prospectus (other than (A) a Current Report pursuant to Section 13 or 15(d) of the Exchange Act on Form 8-K relating exclusively to the previous issuance of Notes under the Registration Statement or (B) a Quarterly Report on Form 10-Q under the Exchange Act, unless, in the case of clause (B), the Agents shall otherwise request), and each time the Company sells Notes to the Purchasing Agent as principal and the applicable Terms Agreement specifies the delivery of an opinion under this Section 4(i) as a condition to the purchase of Notes pursuant to such Terms Agreement, the Company shall furnish or cause to be furnished forthwith to such Agent the written opinion or opinions of counsel to the Company or such other counsel for the Company reasonably satisfactory to such Agent, dated the date of such amendment, supplement, incorporation or Settlement Date relating to such sale, as the case may be, in form reasonably satisfactory to such Agent to the effect that such Agent may rely on the opinion of such counsel as to the matters referred to in Exhibit C hereof, which was last furnished to such Agent to the same extent as though it was dated the date of such letter authorizing reliance (except that the statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such date or, in lieu of such opinion, an opinion of the same tenor as the opinion of such counsel as to the matters referred to in Exhibit C hereof but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to such date); (j) That each time the Registration Statement or the Prospectus shall be amended or supplemented (other than by a Pricing Supplement) and each time that a document filed under the Act or the Exchange Act is incorporated by reference into the Prospectus (other than (A) a Current Report pursuant to Section 13 or 15(d) of the Exchange Act on Form 8-K relating exclusively to the previous issuance of Notes under the Registration Statement or (B) a Quarterly Report on Form 10-Q under the Exchange Act, unless, in the case of clause (B), the Agents shall otherwise request), in either case to set forth financial information included in or derived from the Company's consolidated financial statements or accounting records, and each time the Company sells Notes to the Purchasing Agent as principal and the applicable Terms Agreement specifies the delivery of a letter under this Section 4(j) as a condition to the purchase of Notes pursuant to such Terms Agreement, the Company shall cause Arthur Andersen LLP forthwith to furnish such Agent a letter, dated the date of such amendment, supplement, incorporation or Settlement Date relating to such sale, as the case may be, in form reasonably satisfactory to such Agent, of the same tenor as the letter referred to in Exhibit D hereof but modified to relate to the Registration Statement and the Prospectus as amended or supplemented to the date of such letter, with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Company, to the extent such financial statements and other information are available as of a date not more than five business days prior to the date of such letter; provided, however, that, with respect to any financial information or other matter, such letter may reconfirm as true and correct at such date as though made at and as of such date, rather than repeat, statements with respect to such financial information or other matter made in the letter referred to in Exhibit D hereof which was last furnished to such Agent; and (k) That each time the Registration Statement or the Prospectus shall be amended or supplemented (other than by a Pricing Supplement), each time a document filed under the Act or the Exchange Act is incorporated by reference into the Prospectus (other than a Current Report pursuant to Section 13 or 15(d) of the Exchange Act on Form 8-K relating exclusively to the previous issuance of Notes under the Registration Statement), and each time the Company sells Notes to the Purchasing Agent as principal and the applicable Terms Agreement specifies the delivery of a certificate under this Section 4(k) as a condition to the purchase of Notes pursuant to such Terms Agreement, the Company shall furnish or cause to be furnished forthwith to such Agent a certificate, dated the date of such supplement, amendment, incorporation or Settlement Date, as the case may be, in such form and executed by such officers of the Company as shall be reasonably satisfactory to such Agent (or, in the case of certificates delivered pursuant to Section 6(B)(b) hereof, by such other employees authorized by the Board of Directors of the Company to execute and deliver such certificates), to the effect that the statements contained in the certificate referred to in Section 6 hereof which was last furnished to such Agent are true and correct at such date as though made at and as of such date (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such date) or, in lieu of such certificate, certificates of the same tenor as the certificates referred to in said Section 6 but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to such date. 5. Payment of Expenses. The Company covenants and agrees with each Agent that the Company will pay or reimburse all expenses incident to this Agreement, including the following: (i) the reasonable fees and expenses of one counsel for the Agents in connection with the establishment of the program contemplated hereby, the preparation of a blue sky survey of qualifications and exemptions to offer and sell notes in the various states in the United States, the District of Colombia, Puerto Rico and Guam, and any opinions to be rendered by such counsel hereunder and in connection with the transactions contemplated hereunder; (ii) to the extent the Company has agreed to print any of the following, the cost of printing any Terms Agreement, any Indenture, any blue sky survey and any other documents in connection with the offering, purchase, sale and delivery of the Notes; (iii) all expenses in connection with the qualification of the Notes for offering and sale under state securities laws as provided in Section 4(b) hereof, including reasonable fees and disbursements of one counsel for the Agents in connection with such qualification and in connection with the blue sky survey, provided that the Company shall not be obligated to reimburse the Agents for any legal fees referred to in this clause (iii) in excess of $6,500 for services rendered in connection with the initial survey preparation and qualifications; (iv) any fees charged by securities rating services for rating the Notes; (v) any filing fees incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Notes; (vi) the cost of preparing the Notes; (vii) the fees and expenses of any Trustee and any agent of any Trustee and any transfer or paying agent of the Company and the fees and disbursements of counsel for any Trustee or such agent in connection with any Indenture and the Notes; and (viii) taxes (other than transfer taxes on sales by the Agents or Dealers) in connection with the issuance and delivery of the Notes; provided that the Company shall not be obligated to reimburse any Agent for any expenses referred to in this sentence incurred after the initial offering of Notes except as may be negotiated from time to time by the Company and the Agents. Except as provided in this Section, Section 7 and Section 8 hereof, each Agent shall pay all other costs and expenses it incurs. 6. Conditions to the Obligations of the Agents. (A) The obligations of each Agent to solicit offers to purchase the Notes pursuant to Section 1 hereof will, unless waived by such Agent expressly in writing, be subject to the accuracy of the representations and warranties on the part of the Company made herein as of the date hereof and as of the Commencement Date, to the accuracy of the statements of the Company's officers made in each certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements herein contained on its part to be performed and observed and to the following additional conditions precedent: (a) (i) The Prospectus as amended or supplemented (including the Pricing Supplement) with respect to such Notes shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 4(a) hereof; (ii) no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and (iii) all requests for additional information on the part of the Commission shall have been complied with. (b) The Company shall have furnished to such Agent an opinion or opinions of the counsel to the Company, dated the Commencement Date, substantially to the effect set forth in Exhibit C hereto. Any of the opinions set forth therein may be delivered by another counsel for the Company who is reasonably satisfactory to the Agents. (c) Such Agent shall have received from Reid & Priest LLP, counsel for the Agent, an opinion, dated the Commencement Date, with respect to the issuance and sale of the Notes, the Indenture, the Registration Statement, as amended as of the Commencement Date, the Prospectus, as amended and supplemented as of the Commencement Date, and other related matters as such Agent may reasonably require; and the Company shall have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass on such matters. (d) The Company shall have furnished to such Agent a certificate of the Company, signed by any of the Chairman of the Board, the President or the Chief Financial Officer, dated the Commencement Date, to the effect that to the best of such person's knowledge after reasonable investigation: (i) this Agreement is substantially in the form presented to and approved by the Board of Directors of the Company; (ii) The representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the date of such certificate with the same effect as if made on the date of such certificate, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied as a condition to the obligations of such Agent under this Agreement; (iii) since the date of the most recent financial statements included or incorporated by reference in the Prospectus, as amended and supplemented, there has been no material adverse change in the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole, other than those changes reflected in or contemplated by the Prospectus, as amended and supplemented as of the date of the certificate; (iv) no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purposes are pending before or threatened by the Commission; and (v) since the date of the Prospectus, as amended and supplemented, no downgrading shall have occurred in the rating accorded the Company's debt securities by Standard & Poor's Corporation ("S&P"), Moody's Investors Service, Inc. ("Moody's") or Duff & Phelps Credit Rating Co. ("Duff & Phelps") and none of S&P, Moody's or Duff & Phelps has placed on "credit watch" or "credit review" with negative implications the Company's debt securities. (e) Arthur Andersen LLP shall have furnished to such Agent a letter or letters, dated the Commencement Date, in form and substance satisfactory to such Agent, confirming that they are independent public accountants within the meaning of the Act and the Exchange Act and the respective applicable published rules and regulations thereunder. (f) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, as amended and supplemented, there shall not have been (i) any downgrade or placement on "credit watch" or "credit review" as described in the certificate referred to in paragraph (A)(d)(v) of this Section 6 or (ii) any material adverse change in the business, properties, financial condition or results of operations of the Company and its consolidated subsidiaries, taken as a whole, the effect of which, in the reasonable judgment of such Agent after reasonable inquiry, is to impair the marketability of the Notes. (g) There shall not have occurred: (i)(A) a suspension or material limitation in trading in securities generally on the New York Stock Exchange, (B) a suspension in trading in any securities of the Company on any exchange or over- the-counter market, or (C) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities, if the effect of any such occurrence is such as to impair, in the reasonable judgment of such Agent, after reasonable inquiry, the marketability of the Notes; or (ii) the outbreak or material escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such occurrence on the financial markets of the United States is such as to impair, in the reasonable judgment of such Agent, after reasonable inquiry, the marketability of the Notes. (h) The Company shall have furnished to such Agent such further information, certificates and documents as such Agent may reasonably request from time to time. Any certificate signed by any officer of the Company and delivered to such Agent or its counsel and delivered explicitly pursuant to the terms of this Agreement shall be deemed a representation and a warranty by the Company to such Agent as to matters covered thereby, as if set forth herein. (B) The obligations of the Purchasing Agent to purchase Notes pursuant to any Terms Agreement entered into by it pursuant to Section 1 hereof will be subject to the accuracy of the representations and warranties on the part of the Company herein as of the date of such Terms Agreement and as of the Settlement Date thereunder, to the accuracy of the statements of the Company's officers made in each certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements contained herein and in such Terms Agreement on its part to be performed and observed and to the following additional conditions precedent (which cannot be waived by the Purchasing Agent in any respect without the consent of each other Agent): (a) (i) The Prospectus as amended or supplemented (including the Pricing Supplement) with respect to such Notes shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 4(a) hereof; (ii) no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and (iii) all requests for additional information on the part of the Commission shall have been complied with. (b) Upon the request of any Agent, such Agent shall have received, appropriately updated and modified, (i) a certificate of the Company, dated as of the Settlement Date, to the effect set forth in Section 6(A)(d), (ii) the opinion or opinions of the counsel to the Company or such other counsel satisfactory to such Agent, dated as of the Settlement Date, to the effect set forth in Section 6(A)(b), (iii) the opinion of Reid & Priest LLP, counsel for the Agent, dated as of the Settlement Date, to the effect set forth in Section 6(A)(c) and/or (iv) the letter or letters of Arthur Andersen LLP, dated as of the Settlement Date, to the effect set forth in Section 6(A)(e). (c) The conditions set forth in Sections 6(A)(f) and 6(A)(g) shall have been satisfied. (d) Prior to the Settlement Date, the Company shall have furnished to any Agent such further information, certificates and documents as such Agent may reasonably request. If any of the conditions specified in this Section 6(B) shall not have been fulfilled in all material respects when and as provided in this Agreement and in such Terms Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement and in such Terms Agreement shall not be in all material respects reasonably satisfactory in form and substance to such Agent and its counsel, such Terms Agreement and all obligations of any Agent thereunder may be cancelled at, or at any time prior to, the Settlement Date by such Agent. Notice of such cancellation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. 7. Indemnification and Contribution. (a) The Company will indemnify and hold harmless each Agent against any losses, claims, damages or liabilities, joint or several, to which such Agent may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement, the Prospectus or any amendment or supplement to any of the foregoing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Agent for any legal or other expenses reasonably incurred by such Agent in connection with investigating or defending any such action or claim; provided, however, that the Company shall not be liable to provide any indemnity hereunder in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement, the Prospectus, or any amendment or supplement to any of the foregoing in reliance upon and in conformity with written information furnished to the Company by any Agent expressly for use in any Preliminary Prospectus, the Registration Statement, the Prospectus or any amendment or supplement to any of the foregoing and provided further that the Company will not be liable to provide any indemnity hereunder to any Agent with respect to any loss, claim, damage or liability arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission to state a material fact in any Preliminary Prospectus which had been corrected in the Prospectus as amended or supplemented if the person asserting any such loss, claim, liability, charge or damage purchased Notes from an Agent but was not sent or given a copy of the Prospectus as so amended or supplemented at or prior to the written confirmation of the sale of such Notes to such person. (b) Each Agent, severally and not jointly, will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement, the Prospectus, or any amendment or supplement to any of the foregoing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, the Registration Statement, the Prospectus, or any such amendment or supplement to any of the foregoing in reliance upon and in conformity with written information furnished to the Company by such Agent expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof, enclosing a copy of all papers served; but the omission to so notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall assume the defense of any such litigation or proceeding, including the employment of counsel and the payment of all expenses. Such counsel shall be designated in writing by such Agent in the case of parties indemnified pursuant to Section 7(b) and by the Company in the case of parties indemnified pursuant to Section 7(a). Any indemnified party shall have the right to participate in such litigation or proceeding and to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include (x) the indemnifying party and (y) the indemnified party and, in the written opinion of counsel to such indemnified party, representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, in either of which cases the reasonable fees and expenses of counsel (including disbursements) for such indemnified party shall be reimbursed by the indemnifying party to the indemnified party. If there is a conflict as described in clause (ii) above, and the indemnified parties have participated in the litigation or proceeding utilizing separate counsel whose fees and expenses have been reimbursed by the indemnifying party and the indemnified parties, or any of them, are found to be solely liable, such indemnified parties shall repay to the indemnifying party such fees and expenses of such separate counsel as the indemnifying party shall have reimbursed. It is understood that the indemnifying party shall not, in connection with any litigation or proceeding or related litigation or proceedings in the same jurisdiction as to which the indemnified parties are entitled to such separate representation, be liable under this Agreement for the reasonable fees and out-of-pocket expenses of more than one separate firm (together with not more than one appropriate local counsel) for all such indemnified parties. Subject to the next paragraph, all such fees and expenses shall be reimbursed by payment to the indemnified parties of such reasonable fees and expenses of counsel promptly after payment thereof by the indemnified parties. An indemnifying party will not be liable for any settlement or any action or claim effected without its written consent (which consent will not be unreasonably withheld). In furtherance of the requirement above that fees and expenses of any separate counsel for the indemnified parties shall be reasonable, each Agent and the Company agree that the indemnifying party's obligations to pay such fees and expenses shall be conditioned upon the following: (1) in case separate counsel is proposed to be retained by the indemnified parties pursuant to clause (ii) of the preceding paragraph, the indemnified parties shall in good faith fully consult with the indemnifying party in advance as to the selection of such counsel; and (2) reimbursable fees and expenses of such separate counsel shall be detailed and supported in a manner reasonably acceptable to the indemnifying party (but nothing herein shall be deemed to require the furnishing to the indemnifying party of any information, including without limitation, computer print-outs of lawyers' daily time entries, to the extent that, in the judgment of such counsel, furnishing such information might reasonably be expected to result in a waiver of any attorney-client privilege); and (3) the Company and such Agent shall cooperate in monitoring and controlling the fees and expenses of separate counsel for indemnified parties for which the indemnifying party is liable hereunder, and the indemnified party shall use every reasonable effort to cause such separate counsel to minimize the duplication of activities as between themselves and counsel to the indemnifying party. (d) If the indemnification provided for in this Section 7 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and an Agent on the other from the offering of the Notes to which such loss, claim, damage or liability (or action in respect thereof) relates; if, and only if, contribution solely on the basis of relative benefits is found to be unavailable, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and such Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and such Agent on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by such Agent, in each case as set forth in the table on the cover page of the Prospectus as amended or supplemented to relate to a particular offering of Notes. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Agent on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each Agent agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Agents were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Notes underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Agents in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Notes and not joint. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 7(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 7(d). No party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld). (e) The obligations of the Company under this Section 7 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Agent within the meaning of the Act; and the obligations of each Agent under this Section 7 shall be in addition to any liability which such Agent may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act. 8. Termination. This Agreement may be terminated at any time either by the Company as to any of the Agents or by any of the Agents insofar as this Agreement relates to such Agent upon the giving of written notice of such termination to such Agent or Agents or to the Company, as the case may be; provided that Section 10 shall survive only for the term provided therein and only with respect to the parties covered thereby. In the event of termination of this Agreement (other than with respect to section 10), no terminating party or parties with respect to which this Agreement is terminated shall have any liability to the other parties hereto, except as follows: (a) as provided in the first sentence of the fourth paragraph of Section 1 and Sections 4(c), 5, 7, 9 and 11; (b) (i) if at the time of termination a Terms Agreement is in effect between the Purchasing Agent and the Company but the time of delivery to any Agent of the Note or Notes relating thereto has not occurred or (ii) if the Agent or Agents shall then own any Note or Notes purchased pursuant to a Terms Agreement, then the Company's representations and warranties stated in Section 3 and its obligations under the sixth paragraph of Section 1 and Sections 4(a), 4(b), 4(d), 4(e), 4(f), 4(i), 4(j) and 4(k), with respect to clause (i) above, shall remain in full force and effect and not be terminated and, with respect to clause (ii) above, shall remain in full force and effect and not be terminated until the earlier of the date on which such Notes are resold or the expiration of 90 days from such termination; provided, however that with respect to clause (ii) above, the Company may repurchase any such Notes from the Agents at the net price sold to the Agents on original issuance and thereby terminate its obligations hereunder; and (c) if the Company shall terminate this Agreement within six months of the date hereof, other than as a result of a breach hereof by an Agent, the Company shall be obligated, in addition to any matters covered by clauses (a) and (b) of this Section 8, to reimburse the Agents for the reasonable out-of-pocket expenses incurred by the Agents in connection with the execution of this Agreement and the offering and sale of Notes. 9. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Agents or the Company or any of the officers, directors or controlling persons referred to in section 7 hereof, and will survive delivery of and payment for the Notes, and the indemnity agreement contained in Section 7 hereof shall survive any termination of this Agreement. 10. Grant of License. (a) Grant of Non-Exclusive License. Upon the terms and conditions hereinafter set forth, the Purchasing Agent hereby grants to the Company and to each other Agent (for purposes of this Section 10, each such party is referred to as a "Licensee") and each Licensee hereby accepts a non-exclusive, non-transferable (except as provided under paragraph (f) hereunder) license to use the service marks owned by the Purchasing Agent in respect of the names "General Term Notes" and "GTN" that it has used in connection with its business activities, and in which the Purchasing Agent asserts common law interests (hereinafter referred to collectively as "Marks") in connection with such Licensee's furtherance of this Agreement, including use of such Marks as part of such Licensee's marketing materials or other similar uses. No Licensee shall have any interest in or right to use the Marks except as set forth herein. (b) Non-Exclusivity of License. Nothing in this Section 10 shall prevent the Purchasing Agent from granting any other license for the use of the Marks or from utilizing the Marks or permitting the Marks to be utilized by others in any manner whatsoever. (c) Term. The term of this license shall continue in force as to the Purchasing Agent and (without regard to any other Licensee) (i) with respect to the Company, for so long as the Notes shall be outstanding and (ii) with respect to each other Agent, for as long as this Agreement or that Co-Agent Agreement between the Purchasing Agent and such Agent with respect to the Notes issued under this Agreement shall be in effect, in each case subject to earlier termination in accordance with the provisions of either this Agreement or any such Co-Agent Agreement, as the case may be. (d) Ownership of Marks. Each Licensee specifically acknowledges the Purchasing Agent's ownership rights in the Marks. In connection with the use of the Marks, no Licensee shall in any manner represent that it has any ownership in the Marks or any registrations thereof and agrees that nothing in this Agreement shall give such Licensee any ownership interest in any of the Marks other than the right to use the Marks in accordance with this Section 10. No Licensee will, during the term of this Section 10 or at any time thereafter, attack the validity of any of the Marks or the Purchasing Agent's interests therein, nor will any Licensee attack any application for registration of any of the Marks, or take any position contrary to that of the Purchasing Agent in any proceedings pertaining to registration of any of the Marks. Each Licensee shall, whether during or after the term of this Agreement, execute and deliver to the Purchasing Agent such documents as the Purchasing Agent may reasonably request to establish or confirm the Purchasing Agent's ownership interest in the Marks. (e) Quality Control and Regulatory Compliance. Each Licensee agrees that it will make no use of the Marks that would tend to reflect adversely upon the Purchasing Agent, its business reputation, the GTN business and/or market, or would violate or reflect adversely upon the Purchasing Agent with regard to the Commission, the National Association of Securities Dealers, Inc., or any other governmental authority or securities association or other regulatory matters. The common law understanding of the reasonable man standard, given the facts and circumstances then facing such Licensee, its agents and employees, shall apply when making a determination pursuant to this paragraph (e). Any proposed use of the Marks outside of the terms contemplated by this Paragraph shall be submitted to the Purchasing Agent for its written approval prior to said proposed use. (f) Assignment of Sublicense by Licensee. This Section 10 and all rights and duties in and with respect to the Marks hereunder are personal to each Licensee and shall not, without the prior written consent of the Purchasing Agent, which consent may not be unreasonably withheld, be assigned, mortgaged, sublicensed or otherwise encumbered or transferred by such Licensee, except by operation of law. The Purchasing Agent may assign its rights under this Section 10 to any person or entity without the consent of any Licensee and upon such assignment the Purchasing Agent shall be relieved from any further liability under this Agreement. The Purchasing Agent shall furnish prior written notice of any such assignment to each Licensee. (g) Unauthorized Use. Each Licensee will notify the Purchasing Agent in writing of any unauthorized use of any of the Marks which come to such Licensee's attention. (h) Indemnification; Infringement. (I) The Purchasing Agent hereby indemnifies each Licensee and holds it harmless from and against any loss, liability, penalty, deficiency, damage or out-of-pocket expense (including, without limitation, reasonable legal fees and expenses) which such Licensee may suffer, sustain or become subject to resulting from, arising out of or caused by any suit, action or proceeding brought by a third party claiming or alleging in any manner that the use of any of the Marks by such Licensee has infringed upon the rights of others; provided, however, that the Purchasing Agent shall not be liable or responsible to indemnify a Licensee if the claimed or alleged infringement results from such Licensee's violation of this Section 10 or bad faith, willful misfeasance or gross negligence. (II) Each Licensee will notify the Purchasing Agent promptly in writing of any claim that the use of any of the Marks infringes the rights of others, or of the institution of any legal actions or suits predicated upon such claimed infringement, and any such suit or action will be diligently defended at the sole expense of and under the sole control of the Purchasing Agent. (i) Termination. (I) This Section 10 shall remain in effect throughout the term stated in paragraph (c) above until and unless it is earlier terminated pursuant to the terms of paragraph (i)(II) below. (II) This Section 10 may be terminated as to the Purchasing Agent and any Licensee (without regard to another Licensee) as follows: A. By the Purchasing Agent in the event that such Licensee shall fail to perform any obligation imposed upon such Licensee by this Section 10 or violate any terms of this Section 10. The Purchasing Agent will give such Licensee written notice setting forth the particulars of any such breach and, unless such Licensee has cured such breach or is in the process of curing such breach, this Section 10 will terminate ten (10) days after receipt by such Licensee of such written notice. With respect to the Company, nothing in this paragraph shall be construed to require such Licensee to retire, redeem or repurchase any Notes issued by it pursuant to this Distribution Agreement, or successor Distribution Agreements, otherwise left outstanding in the event of termination hereunder. B. With respect to each other Agent (and not as to the Company), in the event that any Co-Agent Agreement between the Purchasing Agent and such Agent/Licensee terminates for any reason, or in the event of its expiration, this Section 10 shall immediately and automatically terminate. (j) Effect of Termination or Expiration. On termination or expiration of this Section 10 all rights and licenses granted to each Licensee hereunder shall immediately and automatically terminate. In such event, each Licensee agrees to discontinue all uses of the Marks and any words confusingly similar thereto within ten (10) days of such termination or expiration. After such termination, no Licensee nor any affiliate of Licensee shall allude in any public statement or advertisement to the Marks. Each Licensee agrees that it will at no future time adopt or use, without the Purchasing Agent's prior written consent, a word or mark which is reasonably likely to be similar to or confused with any of the Marks. The Purchasing Agent shall retain sole authority and control over all of the Marks, and all rights in the Marks shall remain the property of the Purchasing Agent. (k) Royalty. The license granted herein shall be royalty- free. (l) Reservation of Rights in the Marks. Rights in the Marks, other than those specifically granted herein, are reserved by the Purchasing Agent for its own use. Upon the termination of this Section 10 for any reason whatsoever, all rights to the Marks shall revert to the Purchasing Agent without the necessity of any act on its part. (m) Unenforceable Provisions. If any provision or part of this Section 10 is declared unenforceable by a court of competent jurisdiction, each and every other provision, or part hereof, shall continue in full force and effect. (n) Waiver. The failure or delay of the Purchasing Agent or any Licensee to insist upon the performance of any of the terms and conditions of this Section 10 or to exercise or enforce any right or obligation herein conferred, shall not be construed to be a waiver of any such terms, conditions, rights or obligations and either party may, within the time provided by applicable law, take measures to enforce any or all such rights and obligations. (o) Remedies. In the event of the breach or default in the terms of this Section 10 by the Purchasing Agent or any Licensee, the non-breaching or non-defaulting party shall be entitled to all legal and equitable remedies provided by law. The Purchasing Agent and each Licensee agree that damages may be insufficient to compensate Purchasing Agent in the event that any of the terms of this Section 10 are not complied with, and therefore, agree that in such event, Purchasing Agent may seek injunctive relief and specific performance of the terms hereof, in addition to all other rights or remedies, and that to obtain such an injunction Purchasing Agent shall not be required to show any actual damage or to post any bond or other security. 11. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Company, will be mailed or delivered or sent by facsimile transmission or telegraph and confirmed to it at CMS Energy, attention of Alan M. Wright, Senior Vice President, Chief Financial Officer and Treasurer, facsimile transmission number (313) 436-9258, and if sent to any of the Agents, will be mailed or delivered or sent by facsimile transmission or telegraph and confirmed to them at their respective addresses and facsimile transmission numbers, as follows: if to J. W. Korth & Company, to it at 32841 Middlebelt Road, Suite 400, Farmington Hills, Michigan 48334, attention: Robert W. Haun, facsimile transmission number (810) 855-0805. Any party hereto may change its address or facsimile number set out in this Section 11 by a notice given to the other parties in accordance herewith. 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 hereof, and no other person will have any right or obligation hereunder. The term "successors" as used in this Agreement shall not include a purchaser, as such purchaser, of Notes from any Agent or from any selected dealer acting through such Agent. 13. Applicable Law. This Agreement and each Terms Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed wholly within such jurisdiction, except that Section 10 of this Agreement will be governed by and construed in accordance with the laws of the State of Michigan. 14. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company and you. Very truly yours, CMS Energy Corporation By: _________________________ Title: Senior Vice President, Chief Financial Officer and Treasurer The foregoing Agreement is hereby confirmed and accepted as of the date first above written. J. W. KORTH & COMPANY By: __________________________ Title: _____________________ EX-4 3 EXHIBIT 4(A)(IV) - FORM OF 3RD SUPPL. INDENTURE EXHIBIT 4(a)(iv) THIRD SUPPLEMENTAL INDENTURE dated as of ____________ , 1996 ____________________ This Third Supplemental Indenture, dated as of the __th day of _____, 199_ between CMS Energy Corporation, a corporation duly organized and existing under the laws of the State of Michigan (hereinafter called the "Company") and having its principal office at Fairlane Plaza South, Suite 1100, 330 Town Center Drive, Dearborn, Michigan 48126, and The Chase Manhattan Bank, a New York banking corporation (hereinafter called the "Trustee") and having its principal Corporate Trust Office at 450 West 33rd Street, 15th Floor, New York, New York 10001. WITNESSETH: WHEREAS, the Company and the Trustee entered into an Indenture, dated as of January 15, 1994 (the "Original Indenture"), pursuant to which one or more series of debt securities of the Company (the "Securities") may be issued from time to time; and WHEREAS, Section 301 of the Original Indenture permits the terms of any series of Securities to be established in an indenture supplemental to the Original Indenture; and WHEREAS, Section 901(7) of the Original Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee without the consent of any Holders of the Securities to establish the form and terms of the Securities of any series; and WHEREAS, the Company has requested the Trustee to join with it in the execution and delivery of this Third Supplemental Indenture in order to supplement and amend the Original Indenture by, among other things, establishing the form and terms of a series of Securities to be known as the Company's "General Term Notes" (registered trademark), Series C (the "General Term Notes"), providing for the issuance of the General Term Notes and amending and adding certain provisions thereof for the benefit of the Holders of the General Term Notes; and WHEREAS, the Company and the Trustee desire to enter into this Third Supplemental Indenture for the purposes set forth in Sections 301 and 901(7) of the Original Indenture as referred to above; and WHEREAS, all things necessary to make this Third Supplemental Indenture a valid agreement of the Company and the Trustee and a valid supplement to the Original Indenture have been done, ___________________________ (registered trademark) Registered servicemark of J. W. Korth & Company NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the General Term Notes to be issued hereunder by holders thereof, the Company and the Trustee mutually covenant and agree, for the equal and proportionate benefit of the respective holders from time to time of the General Term Notes, as follows: ARTICLE I STANDARD PROVISIONS; DEFINITIONS SECTION 101. Standard Provisions. The Original Indenture together with this Third Supplemental Indenture and all indentures supplemental thereto entered into pursuant to the applicable terms thereof are hereinafter sometimes collectively referred to as the "Indenture." All of the terms, conditions, covenants and provisions contained in the Original Indenture as heretofore supplemented are incorporated herein by reference in their entirety and, except as specifically noted herein or unless the context otherwise requires, shall be deemed to be a part hereof to the same extent as if such provisions had been set forth in full herein. All capitalized terms which are used herein and not otherwise defined herein are defined in the Indenture and are used herein with the same meanings as in the Indenture. SECTION 102. Definitions. Section 101 of the Indenture is amended to insert the new definitions applicable to the General Term Notes, in the appropriate alphabetical sequence, as follows: "Amortization Expense" means, for any period, amounts recognized during such period as amortization of capital leases, depletion, nuclear fuel, goodwill and assets classified as intangible assets in accordance with generally accepted accounting principles. "Average Life" means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing (i) the sum of the products of (x) the number of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness and (y) the amount of such principal payment by (ii) the sum of all such principal payments. "Capital Lease Obligation" of a Person means any obligation that is required to be classified and accounted for as a capital lease on the face of a balance sheet of such Person prepared in accordance with generally accepted accounting principles; the amount of such obligation shall be the capitalized amount thereof, determined in accordance with generally accepted accounting principles; the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty; and such obligation shall be deemed secured by a Lien on any property or assets to which such lease relates. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock, including any Preferred Stock or Letter Stock. "Change in Control" means an event or series of events by which (i) the Company ceases to own beneficially, directly or indirectly, at least 80% of the total voting power of all classes of Capital Stock then outstanding of Consumers (whether arising from issuance of securities of the Company or Consumers, any direct or indirect transfer of securities by the Company or Consumers, any merger, consolidation, liquidation or dissolution of the Company or Consumers or otherwise); (ii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have "beneficial ownership" of all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 30% of the Voting Stock of the Company; or (iii) the Company consolidates with or merges into another corporation or directly or indirectly conveys, transfers or leases all or substantially all of its assets to any Person, or any corporation consolidates with or merges into the Company, in either event pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities, or other property, other than any such transaction in which (A) the outstanding Voting Stock of the Company is changed into or exchanged for Voting Stock of the surviving corporation and (B) the holders of the Voting Stock of the Company immediately prior to such transaction retain, directly or indirectly, substantially proportionate ownership of the Voting Stock of the surviving corporation immediately after such transaction. "Consolidated Assets" means, at any date of determination, the aggregate assets of the Company and its Consolidated Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles. "Consolidated Capital" means, at any date of determination, the sum of (a) Consolidated Indebtedness, (b) consolidated equity of the common stockholders of the Company and the Consolidated Subsidiaries, (c) consolidated equity of the preference stockholders of the Company and the Consolidated Subsidiaries and (d) consolidated equity of the preferred stockholders of the Company and the Consolidated Subsidiaries, in each case determined at such date in accordance with generally accepted accounting principles. "Consolidated Coverage Ratio" with respect to any period means the ratio of (i) the aggregate amount of Operating Cash Flow for such period to (ii) the aggregate amount of Consolidated Interest Expense for such period. "Consolidated Indebtedness" means, at any date of determination, the aggregate Indebtedness of the Company and its Consolidated Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles. "Consolidated Interest Expense" means, for any period, the total interest expense in respect of Indebtedness of the Company and its Consolidated Subsidiaries, including, without duplication, (i) interest expense attributable to capital leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv) cash and noncash interest payments, (v) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vi) net costs under Interest Rate Protection Agreements (including amortization of discount) and (vii) interest expense in respect of obligations of other Persons deemed to be Indebtedness of the Company or any Consolidated Subsidiaries under clause (v) or (vi) of the definition of Indebtedness, provided, however, that Consolidated Interest Expense shall exclude any costs otherwise included in interest expense recognized on early retirement of debt. "Consolidated Leverage Ratio" means, at any date of determination, the ratio of Consolidated Indebtedness to Consolidated Capital. "Consolidated Net Income" means, for any period, the net income of the Company and its Consolidated Subsidiaries determined on a consolidated basis in accordance with generally accepted accounting principles; provided, however, that there shall not be included in such Consolidated Net Income: (i) any net income of any Person if such Person is not a Subsidiary, except that (A) the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Consolidated Subsidiary as a dividend or other distribution and (B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income; (ii) any net income of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition; and (iii) any gain or loss realized upon the sale or other disposition of any property, plant or equipment of the Company or its Consolidated Subsidiaries which is not sold or otherwise disposed of in the ordinary course of business and any gain or loss realized upon the sale or other disposition of any Capital Stock of any Person. "Consolidated Net Worth" of any Person means the total of the amounts shown on the consolidated balance sheet of such Person and its consolidated subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principles, as of any date selected by such Person not more than 90 days prior to the taking of any action for the purpose of which the determination is being made (and adjusted for any material events since such date), as (i) the par or stated value of all outstanding Capital Stock plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus (iii) any retained earnings or earned surplus less (A) any accumulated deficit, (B) any amounts attributable to Redeemable Stock and (C) any amounts attributable to Exchangeable Stock. "Consolidated Subsidiary" means, any Subsidiary whose accounts are or are required to be consolidated with the accounts of the Company in accordance with generally accepted accounting principles. "Consumers" means Consumers Power Company, a Michigan corporation, all of whose common stock is on the date hereof owned by the Company. "Credit Agreement" means the Credit Agreement dated as of November 21, 1995, as amended from time to time, among the Company, the banks named therein, Citibank, N.A., and Union Bank, as Co-Agents, Citibank, N.A., as Documentation Agent, and Union Bank, as Operational Agent. "Duff & Phelps" shall mean Duff & Phelps Credit Rating Co., and any successor thereto which is a nationally recognized statistical rating organization, or if such entity shall cease to rate the General Term Notes or shall cease to exist and there shall be no such successor thereto, any other nationally recognized statistical rating organization selected by the Company which is acceptable to the Trustee. "Enterprises" means CMS Enterprises Company, a Michigan corporation. "Event of Default" with respect to the General Term Notes has the meaning specified in Article VI of this Third Supplemental Indenture. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchangeable Stock" means any Capital Stock of a corporation that is exchangeable or convertible into another security (other than Capital Stock of such corporation that is neither Exchangeable Stock, or Redeemable Stock). "Indebtedness" of any Person means, without duplication, (i) the principal of and premium (if any) in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all Capital Lease Obligations of such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers' acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (v) all obligations of the type referred to in clauses (i) through (iv) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. "Interest Rate Protection Agreement" means any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement designed to protect the Company or any Subsidiary against fluctuations in interest rates. "Letter Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is intended to reflect the separate performance of certain of the businesses or operations conducted by such corporation or any of its subsidiaries. "Lien" means any lien, mortgage, pledge, security interest, conditional sale, title retention agreement or other charge or encumbrance of any kind. "Net Proceeds" means, with respect to any issuance or sale or contribution in respect of Capital Stock, the aggregate proceeds of such issuance, sale or contribution, including the fair market value (as determined by the Board of Directors and net of any associated debt and of any consideration other than Capital Stock received in return) of property other than cash, received by the Company, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts, or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof, provided, however, that if such fair market value as determined by the Board of Directors of property other than cash is greater than $25 million, the value thereof shall be based upon an opinion from an independent nationally recognized firm experienced in the appraisal or similar review of similar types of transactions. "NOMECO" means, CMS NOMECO Oil & Gas Co., a Michigan corporation and wholly-owned subsidiary of the Company. "Non-Convertible Capital Stock" means, with respect to any corporation, any non-convertible Capital Stock of such corporation and any Capital Stock of such corporation convertible solely into non-convertible Capital Stock other than Preferred Stock of such corporation; provided, however, that Non-Convertible Capital Stock shall not include any Redeemable Stock or Exchangeable Stock. "Operating Cash Flow" means, for any period, with respect to the Company and its Consolidated Subsidiaries, the aggregate amount of Consolidated Net Income after adding thereto Consolidated Interest Expense (adjusted to include costs recognized on early retirement of debt), income taxes, depreciation expense, Amortization Expense and any noncash amortization of debt issuance costs, any nonrecurring, noncash charges to earnings and any negative accretion recognition. "Preferred Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "Redeemable Stock" means any Capital Stock that by its terms or otherwise is required to be redeemed prior to the first anniversary of the Maturity of any Outstanding General Term Notes or is redeemable at the option of the holder thereof at any time prior to the first anniversary of the Maturity of any Outstanding General Term Notes. "Restricted Subsidiary" means any Subsidiary (other than Consumers and its subsidiaries) of the Company which, as of the date of the Company's most recent quarterly consolidated balance sheet, constituted at least 10% of the total Consolidated Assets of the Company and its Consolidated Subsidiaries and any other Subsidiary which from time to time is designated a Restricted Subsidiary by the Board of Directors provided that no Subsidiary may be designated a Restricted Subsidiary if, immediately after giving effect thereto, an Event of Default or event that, with the lapse of time or giving of notice or both, would constitute an Event of Default would exist or the Company and its Restricted Subsidiaries could not incur at least $1 of additional Indebtedness under Section 510, and (i) any such Subsidiary so designated as a Restricted Subsidiary must be organized under the laws of the United States or any State thereof, (ii) more than 80% of the Voting Stock of such Subsidiary must be owned of record and beneficially by the Company or a Restricted Subsidiary, (iii) such Restricted Subsidiary must be a Consolidated Subsidiary, and (iv) such Subsidiary must not theretofore have been designated as a Restricted Subsidiary. "Standard & Poor's" shall mean Standard & Poor's Corporation, and any successor thereto which is a nationally recognized statistical rating organization, or if such entity shall cease to rate the General Term Notes or shall cease to exist and there shall be no such successor thereto, any other nationally recognized statistical rating organization selected by the Company which is acceptable to the Trustee. "Support Obligations" means, for any person, without duplication, any financial obligation, contingent or otherwise, of such person guaranteeing or otherwise supporting any debt or other obligation of any other person in any manner, whether directly or indirectly, and including, without limitation, any obligation of such person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such debt, (ii) to purchase property, securities or services for the purpose of assuring the owner of such debt of the payment of such debt, (iii) to maintain working capital, equity capital, available cash or other financial statement condition of the primary obligor so as to enable the primary obligor to pay such debt, (iv) to provide equity capital under or in respect of equity subscription arrangements (to the extent that such obligation to provide equity capital does not otherwise constitute debt), or (v) to perform, or arrange for the performance of, any non-monetary obligations or non-funded debt payment obligations of the primary obligor. "Tax-Sharing Agreement" means the Amended and Restated Agreement for the Allocation of Income Tax Liabilities and Benefits, dated January 1, 1994, as amended or supplemented from time to time, by and among Company, each of the members of the Consolidated Group (as defined therein), and each of the corporations that become members of the Consolidated Group. Certain terms, used principally in Articles Three, Four and Seven of this Third Supplemental Indenture, are defined in those Articles. ARTICLE II DESIGNATION AND TERMS OF THE GENERAL TERM NOTES; FORMS SECTION 201. Establishment of Series. There is hereby created a series of Securities to be known and designated as the "General Term Notes (registered trademark), Series C" and limited in aggregate principal amount (except as contemplated in Section 301(2) of the Indenture) to $150,000,000. Each General Term Note will be dated and issued as of the date of its authentication by the Trustee. Each General Term Note shall also bear an Original Issue Date (as hereinafter defined) which, with respect to any General Term Note (or any portion thereof), shall mean the date of its original issue, as specified in such General Term Note (the "Original Issue Date"), and such Original Issue Date shall remain the same if such General Term Note is subsequently issued upon transfer, exchange, or substitution of such General Term Note regardless of its date of authentication. Principal on any General Term Note shall become due and payable from nine months to twenty-five years from the Original Issue Date of such General Term Note, as specified on such General Term Note. Each General Term Note will bear interest from the Original Issue Date, or from the most recent date to which interest has been paid or duly provided for, at the rate per annum stated therein until the principal thereof is paid or made available for payment. Interest will be payable either monthly, quarterly or semi-annually on each Interest Payment Date and at Maturity, as specified below and in each General Term Note. Interest will be payable to the person in whose name a General Term Note is registered at the close of business on the Regular Record Date next preceding each Interest Payment Date; provided, however, interest payable at Maturity will be payable to the person to whom principal shall be payable. Interest on the General Term Notes will be computed on the basis of a 360-day year of twelve 30-day months. The Interest Payment Dates for a General Term Note that provides for monthly interest payments shall be the fifteenth day of each calendar month; provided, however, that in the case of a General Term Note issued between the first and fifteenth day of a calendar month, interest otherwise payable on the fifteenth day of such calendar month will be payable on the fifteenth day of the next succeeding calendar month. In the case of a General Term Note that provides for quarterly interest payments, the Interest Payment Dates shall be the fifteenth day of each of the months specified in such General Term Note, commencing on the day that is three months from (i) the day on which such General Term Note is issued, if such General Term Note is issued on the fifteenth day of a calendar month, or (ii) the fifteenth day of the calendar month immediately preceding the calendar month in which such General Term Note is issued, if such General Term Note is issued prior to the fifteenth day of a calendar month, or (iii) the fifteenth day of the calendar month in which such General Term Note is issued, if such General Term Note is issued after the fifteenth day of a calendar month. In the case of a General Term Note that provides for semi-annual interest payments, the Interest Payment Dates shall be the fifteenth day of each of the months specified in such General Term Note, commencing on the day that is six months from (i) the day on which such General Term Note is issued, if such General Term Note is issued on the fifteenth day of a calendar month, or (ii) the fifteenth day of the calendar month immediately preceding the calendar month in which such General Term Note is issued, if such General Term Note is issued prior to the fifteenth day of a calendar month, or (iii) the fifteenth day of the calendar month in which such General Term Note is issued, if such General Term Note is issued after the fifteenth day of a calendar month. Payment of principal of the General Term Notes (and premium, if any) and, unless otherwise paid as hereinafter provided, any interest thereon will be made at the office or agency of the Company in New York, New York; provided, however, that payment of interest (other than interest at Maturity) may be made at the option of the Company by check or draft mailed to the Person entitled thereto at such Person's address appearing in the Security Register or by wire transfer to an account designated by such Person not later than ten days prior to the date of such payment. The Regular Record Date referred to in Section 301 of the Indenture for the payment of the interest on any General Term Note payable on any Interest Payment Date (other than at Maturity) shall be the first day (whether or not a Business Day) of the calendar month in which such Interest Payment Date occurs as is specified in such General Term Note, and, in the case of interest payable at Maturity, the Regular Record Date shall be the date of Maturity. Unless otherwise specified in such General Term Notes, the cities of New York, New York and Chicago, Illinois shall be the reference cities for determining a Business Day. The General Term Notes may be issued only as registered notes, without coupons, in denominations of $1,000 and any larger denomination which is in an integral multiple of $1,000. Upon the execution of this Third Supplemental Indenture, or from time to time thereafter, General Term Notes may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said General Term Notes in accordance with the procedures set forth in or upon a Company Order complying with Sections 301 and 303 of the Indenture. SECTION 202. Forms Generally. The General Term Notes shall be in substantially the form set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such General Term Notes, as evidenced by their execution thereof. The definitive General Term Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such General Term Notes, as evidenced by their execution thereof. SECTION 203. Form of Face of General Term Note. [Insert any legend required by the Internal Revenue Code and the regulations thereunder.] CMS ENERGY CORPORATION GENERAL TERM NOTE (registered trademark), SERIES C No. ________ $__________ [Initial Redemption Date] CMS Energy Corporation, a corporation duly organized and existing under the laws of the State of Michigan (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________________________, or registered assigns, the principal sum of ____________________ Dollars on __________________________ and to pay interest thereon from _____________ (the "Original Issue Date") or from the most recent Interest Payment Date to which interest has been paid or duly provided for, [choose one of the following -- monthly/quarterly/semi-annually [insert as applicable -- on ___________ [________, ____________] and _________ in each [year/month], commencing ______________, and at Maturity at the rate of ____% per annum, until the principal hereof is paid or made available for payment [if applicable, insert --, and at the rate of ___% per annum on any overdue principal and premium and on any overdue installment of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this General Term Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day of the calendar month in which such Interest Payment Date occurs (whether or not a Business Day) next preceding such Interest Payment Date except that the Regular Record Date for interest payable at Maturity shall be the date of Maturity. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this General Term Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of General Term Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the General Term Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. [If the General Term Note is not to bear interest prior to Maturity, insert -- The principal of this General Term Note shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this General Term Note shall bear interest at the rate of ___% per annum, which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of ____% per annum, which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.] Payment of the principal of (and premium, if any) and interest, if any, on this General Term Note will be made at the office or agency of the Company maintained for that purpose in New York, New York (the "Place of Payment"), in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest (other than interest payable at Maturity) may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or by wire transfer to an account designated by such Person not later than ten days prior to the date of such payment. Reference is hereby made to the further provisions of this General Term Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this General Term Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: CMS ENERGY CORPORATION By____________________________ Attest: _________________________ SECTION 204. Form of Reverse of General Term Note. This General Term Note (registered trademark), Series C is one of a duly authorized issue of securities of the Company (herein called the "General Term Notes"), issued and to be issued in one or more series under an Indenture, dated as of January 15, 1994, as supplemented by certain supplemental indentures, including the Third Supplemental Indenture, dated as of _____________, 1996 (herein collectively referred to as the "Indenture"), between the Company and The Chase Manhattan Bank, a New York banking corporation, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the Holders of the General Term Notes and of the terms upon which the General Term Notes are, and are to be, authenticated and delivered. This General Term Note is one of the series designated on the face hereof, limited in aggregate principal amount to $150,000,000. [If applicable, insert -- The General Term Notes of this series are subject to redemption upon not more than 60 nor less than 30 days' notice as provided in the Indenture, at any time [on or after __________, _____,] as a whole or in part from time to time, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before _____________, ___%, and if redeemed] during the 12-month period beginning ____________ of the years indicated, Redemption Redemption Year Price Year Price _______ ___________ ________ __________ and thereafter at a Redemption Price equal to ___% of the principal amount, together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such General Term Notes, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [Notwithstanding the foregoing, the Company may not, prior to __________, redeem this General Term Note as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an effective interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than the effective interest cost to the Company (similarly calculated) of this General Term Note.] [If the General Term Note is subject to redemption, insert -- In the event of redemption of this General Term Note in part only, a new General Term Note or Notes of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.] If a Change in Control occurs, the Company shall notify the Holder of this General Term Note of such occurrence and such Holder shall have the right to require the Company to make a Required Repurchase of all or any part of this General Term Note at a Change in Control Purchase Price equal to 101% of the principal amount of this General Term Note to be so purchased as more fully provided in the Indenture and subject to the terms and conditions set forth therein. In the event of a Required Repurchase of only a portion of this General Term Note, a new General Term Note or Notes for the unrepurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. [If this General Term Note is subject to redemption upon exercising a Survivor's Option, insert -- As more fully provided in the Indenture and subject to the terms and conditions set forth therein, the Company will repay this General Term Note (or portion thereof) properly tendered for repayment by or on behalf of the person (the "Representative") that has authority to act on behalf of a deceased owner of the beneficial interest in this General Term Note under the laws of the appropriate jurisdiction (including, without limitation, the personal representative, executor, surviving joint tenant or surviving tenant by the entirety of such deceased beneficial owner) at a price equal to 100% of the principal amount hereof plus accrued interest to the date of such repayment. The Company may, in its sole discretion, limit the aggregate principal amount of all outstanding General Term Notes as to which exercises of this option (the "Survivor's Option") will be accepted in any calendar year to one percent (1%) of the outstanding principal amount of all General Term Notes as of the end of the most recent fiscal year, but not less than $500,000 in any such calendar year, or such greater amount as the Company in its sole discretion may determine for any calendar year, and may limit to $100,000, or such greater amount as the Company in its sole discretion may determine for any calendar year, the aggregate principal amount of General Term Notes (or portions thereof) as to which exercise of the Survivor's Option will be accepted in such calendar year with respect to any individual deceased owner of beneficial interests in such General Term Notes. [If the General Term Note is not an Original Issue Discount Security, insert -- If an Event of Default with respect to this General Term Note shall occur and be continuing, the principal of this General Term Note may be declared due and payable in the manner and with the effect provided in the Indenture.] In any case where any Interest Payment Date, Redemption Date, Repayment Date, Stated Maturity or Maturity of any General Term Note shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of the Indenture or this General Term Note), payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date, Redemption Date or Repayment Date or at the Stated Maturity or Maturity; provided that no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date, Repayment Date, Stated Maturity or Maturity, as the case may be, to such Business Day. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of all Outstanding Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of all Outstanding Securities affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of all Outstanding Securities, on behalf of the Holders of all Outstanding Securities, to waive compliance by the Company with certain provisions of the Indenture. Any such consent or waiver by the Holder of this General Term Note shall be conclusive and binding upon such Holder and upon all future Holders of this General Term Note and of any General Term Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this General Term Note. The Indenture permits the Holders of not less than a majority in principal amount of all Outstanding Securities of any series thereunder to waive on behalf of the Holders of all Outstanding Securities of such series any past default by the Company, provided that no such waiver may be made with respect to a default in the payment of the principal of or premium, if any, or the interest on any Security of such series or the default by the Company in respect of certain covenants or provisions of the Indenture, the modification or amendment of which must be consented to by the Holder of each Outstanding Security of each series affected. As set forth in, and subject to, the provisions of the Indenture, no Holder of any General Term Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default, the Holders of not less than 25% in principal amount of the Outstanding General Term Notes shall have made written request, and offered satisfactory indemnity, to the Trustee to institute such proceeding as trustee, and the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding General Term Notes a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or any interest on this General Term Note on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this General Term Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this General Term Note at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this General Term Note is registerable in the Security Register, upon surrender of this General Term Note for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this General Term Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new General Term Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The General Term Notes of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, General Term Notes of this series are exchangeable for a like aggregate principal amount of General Term Notes of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. [If this General Term Note is redeemable at the option of the Company, insert -- The Company shall not be required (i) to issue, register the transfer of or exchange this General Term Note if this General Term Note may be among those selected for redemption during a period beginning at the opening of business 15 days before selection of the General Term Notes to be redeemed under Section 1103 of the Indenture and ending at the close of business on the day of the mailing of the relevant notice of redemption, (ii) to register the transfer of or exchange any General Term Note so selected for redemption in whole or in part, except, in the case of any General Term Note to be redeemed in part, the portion thereof not to be redeemed, or (iii) to issue, register the transfer of or exchange any General Term Note which has been surrendered for repayment at the option of the Holder, except the portion, if any, of such General Term Note not to be so repaid.] Prior to due presentment of this General Term Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this General Term Note is registered as the owner hereof for all purposes, whether or not this General Term Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this General Term Note without definition which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ______________________________ (registered trademark) Registered servicemark of J. W. Korth & Company ____________________________ SECTION 205. Form of Legend for Global Notes. Any Global Note (as defined in Article VII below) authenticated and delivered hereunder shall bear a legend in substantially the following form: "This Security is a Global Note within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This General Term Note is not exchangeable for General Term Notes registered in the name of a Person other than the Depositary or its nominee except in the limited circumstances described in the Indenture, and no transfer of this General Term Note (other than a transfer of this General Term Note as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in the limited circumstances described in the Indenture." SECTION 206. Form of Trustee's Certificate of Authentication. The Trustee's certificates of authentication shall be in substantially the following form: This is one of the General Term Notes of the series designated therein referred to in the within-mentioned Indenture. ________________________________________, as Trustee By______________________________________ Authorized Officer ARTICLE III REDEMPTION OF GENERAL TERM NOTES; CHANGE OF CONTROL SECTION 301. Redemption of General Term Notes. (a) Each General Term Note may be redeemed by the Company in whole or in part if so provided in, and in accordance with, the terms of such General Term Note issued by the Company. The Company may redeem any General Term Note which by its terms is redeemable prior to Stated Maturity without also redeeming any other General Term Note which is redeemable prior to Stated Maturity. (b) Change of Control. Upon the occurrence of a Change in Control (the effective date of such Change in Control being the "Change in Control Date"), each Holder of a General Term Note shall have the right to require that the Company repurchase (a "Required Repurchase") all or any part of such Holder's General Term Note at a repurchase price payable in cash equal to 101% of the principal amount of such General Term Note plus accrued interest to the Purchase Date (the "Change in Control Purchase Price"). (1) Within 30 days following the Change in Control Date, the Company shall mail a notice (the "Required Repurchase Notice") to each Holder with a copy to the Trustee stating: (i) that a Change in Control has occurred and that such Holder has the right to require the Company to repurchase all or any part of such Holder's General Term Notes at the Change of Control Purchase Price; (ii) the Change of Control Purchase Price; (iii) the date on which any Required Repurchase shall be made (which shall be no earlier than 60 days nor later than 90 days from the date such notice is mailed) (the "Purchase Date"); (iv) the name and address of the Paying Agent; and (v) the procedures that Holders must follow to cause the General Term Notes to be repurchased, which shall be consistent with this Section and the Indenture. (2) Holders electing to have a General Term Note repurchased must deliver a written notice (the "Change in Control Purchase Notice") to the Paying Agent (initially the Trustee) at its office in The City of New York, or any other office of the Paying Agent maintained for such purposes, not later than 30 days prior to the Purchase Date. The Change in Control Purchase Notice shall state: (i) the portion of the principal amount of any General Term Notes to be repurchased, which portion must be $1,000 or an integral multiple thereof; (ii) that such General Term Notes are to be repurchased by the Company pursuant to the change in control provisions of the Indenture; and (iii) unless the General Term Notes are represented by one or more Global Notes, the certificate numbers of the General Term Notes to be delivered by the Holder thereof for repurchase by the Company. Any Change in Control Purchase Notice may be withdrawn by the Holder by a written notice of withdrawal delivered to the Paying Agent not later than three Business Days prior to the Purchase Date. The notice of withdrawal shall state the principal amount and, if applicable, the certificate numbers of the General Term Notes as to which the withdrawal notice relates and the principal amount of such General Term Notes, if any, which remains subject to a Change in Control Purchase Notice. If a General Term Note is represented by a Global Note (as described in Article VII below), the Depositary or its nominee will be the Holder of such General Term Note and therefore will be the only entity that can elect a Required Repurchase of such General Term Note. To obtain repayment pursuant to this Section 301(b) with respect to such General Term Note, the beneficial owner of such General Term Note must provide to the broker or other entity through which it holds the beneficial interest in such General Term Note (i) the Change in Control Purchase Notice signed by such beneficial owner, and such signature must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, and (ii) instructions to such broker or other entity to notify the Depositary of such beneficial owner's desire to obtain repayment pursuant to this Section 301(b). Such broker or other entity will provide to the Paying Agent (i) the Change of Control Purchase Notice received from such beneficial owner and (ii) a certificate satisfactory to the Paying Agent from such broker or other entity stating that it represents such beneficial owner. Such broker or other entity will be responsible for disbursing any payments it receives pursuant to this Section 301(b) to such beneficial owner. (3) Payment of the Change of Control Purchase Price for a General Term Note for which a Change in Control Purchase Notice has been delivered and not withdrawn is conditioned (except in the case of a General Term Note represented by one or more Global Notes) upon delivery of such General Term Note (together with necessary endorsements) to the Paying Agent at its office in The City of New York, or any other office of the Paying Agent maintained for such purpose, at any time (whether prior to, on or after the Purchase Date) after the delivery of such Change in Control Purchase Notice. Payment of the Change of Control Purchase Price for such General Term Note will be made promptly following the later of the Purchase Date or the time of delivery of such General Term Note. If the Paying Agent holds, in accordance with the terms of the Indenture, money sufficient to pay the Change in Control Purchase Price of such General Term Note on the Business Day following the Purchase Date, then, on and after such date, interest will cease accruing, and, if applicable, amounts will no longer accrue on any such General Term Note that is an Original Issue Discount Security, whether or not such General Term Note is delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Change of Control Purchase Price upon delivery of the General Term Note). (4) The Company shall comply with the provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act, which may then be applicable and shall file Schedule 13E-4 or any other schedule required thereunder in connection with any offer by the Company to repurchase General Term Notes at the option of Holders upon a Change in Control. (5) No General Term Note may be repurchased by the Company as a result of a Change in Control if there has occurred and is continuing an Event of Default (other than a default in the Payment of the Change in Control Purchase Price with respect to the General Term Notes). ARTICLE IV REPAYMENT UPON DEATH If so specified in any General Term Note, the Holder of such General Term Note will have the option (the "Survivor's Option") to elect repayment of such General Term Note prior to its Stated Maturity in the event of the death of the beneficial owner of such General Term Note. Pursuant to exercise of the Survivor's Option, if applicable, the Company will repay any General Term Note (or portion thereof) properly tendered for repayment by or on behalf of the person (the "Representative") that has authority to act on behalf of the deceased beneficial owner of such General Term Note under the laws of the appropriate jurisdiction (including, without limitation, the personal representative, executor, surviving joint tenant or surviving tenant by the entirety of such deceased beneficial owner) at a price equal to one-hundred percent (100%) of the principal amount of the beneficial interest of the deceased owner of such General Term Note plus accrued interest to the date of such payment, subject to the following limitations. The Company may, in its sole discretion, limit the aggregate principal amount of General Term Notes as to which exercises of the Survivor's Option will be accepted in any calendar year (the "Annual Put Limitation") to one percent (1%) of the outstanding principal amount of the General Term Notes as of the end of the most recent fiscal year, but not less than $500,000 in any such calendar year, or such greater amount as the Company in its sole discretion may determine for any calendar year, and may limit to $100,000, or such greater amount as the Company in its sole discretion may determine for any calendar year, the aggregate principal amount of General Term Notes (or portions thereof) as to which exercise of the Survivor's Option will be accepted in such calendar year with respect to any individual deceased owner of beneficial interests in such General Term Notes (the "Individual Put Limitation"). Moreover, the Company will not make principal repayments pursuant to exercise of the Survivor's Option in amounts that are less that $1,000, and, in the event that the limitations described in the preceding sentence would result in the partial repayment of any General Term Note, the principal amount of such General Term Note remaining outstanding after repayment must be at least $1,000 (the minimum authorized denomination of the General Term Notes). Any General Term Note (or portion thereof) tendered pursuant to exercise of the Survivor's Option may be withdrawn by a written request of its Holder received by the Trustee prior to its repayment. Each General Term Note (or portion thereof) that is tendered pursuant to a valid exercise of the Survivor's Option will be accepted promptly in the order all such General Term Notes are tendered, except for any General Term Note (or portion thereof) the acceptance of which would contravene (i) the Annual Put Limitation, if applied, or (ii) the Individual Put Limitation, if applied, with respect to the relevant individual deceased owner of beneficial interests therein. If, as of the end of any calendar year, the aggregate principal amount of General Term Notes (or portions thereof) that have been accepted pursuant to exercise of the Survivor's Option for such year has not exceeded the Annual Put Limitation, if applied, for such year, any exercise(s) of the Survivor's Option with respect to General Term Notes (or portions thereof) not accepted during such calendar year because such acceptance would have contravened the Individual Put Limitation, if applied, with respect to an individual deceased owner of beneficial interests therein will be accepted in the order all such General Term Notes (or portions thereof) were tendered, to the extent that any such exercise would not exceed the Annual Put Limitation, if applied, for such calendar year. Any General Term Note (or portion thereof) accepted for repayment pursuant to exercise of the Survivor's Option will be repaid no later than the first Interest Payment Date that occurs 20 or more calendar days after the date of such acceptance. Each General Term Note (or any portion thereof) tendered for repayment that is not accepted in any calendar year because of the application of the Annual Put Limitation will be deemed to be tendered in the following calendar year in the order in which all such General Term Notes (or portions thereof) were originally tendered, unless any such General Term Note (or portion thereof) is withdrawn by the Representative for the deceased owner prior to its repayment. In the event that a General Term Note (or any portion thereof) tendered for repayment pursuant to valid exercise of the Survivor's Option is not accepted, the Trustee will deliver a notice by first-class mail to the registered Holder thereof at its last known address as indicated in the Security Register that states the reasons such General Term Note (or portion thereof) has not been accepted for repayment. Subject to the foregoing, in order for a Survivor's Option to be validly exercised with respect to any General Term Note (or portion thereof), the Trustee must receive from the Representative of the individual deceased owner of beneficial interests therein (i) a written request for payment signed by the Representative, and such signature must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, (ii) if any such General Term Note is not represented by a Global Note (as described in Article VII below), tender of the General Term Note (or portion thereof) to be repaid, (iii) appropriate evidence satisfactory to the Company and the Trustee that (A) the Representative has authority to act on behalf of the individual deceased beneficial owner, (B) the death of such beneficial owner has occurred and (C) the deceased individual was the owner of a beneficial interest in such General Term Note at the time of death, (iv) if applicable, a properly executed assignment or endorsement, and (v) if the beneficial interest in such General Term Note is held by a nominee of the deceased beneficial owner, a certificate satisfactory to the Trustee from such nominee attesting to the deceased's ownership of a beneficial interest in such General Term Note. All questions as to the eligibility or validity of any exercise of the Survivor's Option will be determined by the Company, in its sole discretion, which determinations will be final and binding on all parties. If a General Term Note is represented by a Global Note (as described in Article VII below), the Depositary or its nominee will be the Holder of such General Term Note and therefore will be the only entity that can exercise the Survivor's Option for such General Term Note. To obtain repayment pursuant to exercise of the Survivor's Option with respect to such General Term Note, the Representative must provide to the broker or other entity through which the beneficial interest in such General Term Note is held by the deceased owner (i) the documents described in clauses (i) and (iii) of the preceding paragraph and (ii) instructions to such broker or other entity to notify the Depositary of such Representative's desire to obtain repayment pursuant to exercise of the Survivor's Option. Such broker or other entity shall provide to the Trustee (i) the documents received from the Representative referred to in clause (i) of the preceding sentence and (ii) a certificate satisfactory to the Trustee from such broker or other entity stating that it represents the deceased beneficial owner. Such broker or other entity will be responsible for disbursing any payments it receives pursuant to exercise of the Survivor's Option to the appropriate Representative. ARTICLE V ADDITIONAL COVENANTS OF THE COMPANY WITH RESPECT TO THE GENERAL TERM NOTES SECTION 501. Statement by Officers as to Default. (a) The Company will deliver to the Trustee, within 120 days after the end of each fiscal year a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants under this Third Supplemental Indenture. For such purposes, such compliance shall be determined without regard to any period of grace or requirement of notice provided hereunder and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. (b) The Company shall deliver to the Trustee, as soon as possible and in any event within 10 days after the Company becomes aware of the occurrence of an Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default, an Officers' Certificate setting forth the details of such Event of Default or default, and the action which the Company proposes to take with respect thereto. SECTION 502. Existence. So long as any of the General Term Notes are Outstanding, subject to Article 8 of the Indenture, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and all rights (charter and statutory) and franchises other than rights or franchises the loss of which would not be disadvantageous in any material respect to the Holders of the General Term Notes. SECTION 503. Maintenance of Properties. So long as any of the General Term Notes are Outstanding, the Company will cause all properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and not disadvantageous in any material respect to the Holders. SECTION 504. Payment of Taxes and Other Claims. So long as any of the General Term Notes are Outstanding, the Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount of which, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 505. Insurance. So long as any of the General Term Notes are Outstanding, the Company shall, and each of its Restricted Subsidiaries and Consumers shall, keep insured by financially sound and reputable insurers all property of a character usually insured by entities engaged in the same or similar businesses similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such entities and carry such amounts of other insurance as is usually carried by such entities. SECTION 506. Compliance with Laws. So long as any of the General Term Notes are Outstanding, the Company shall, and each of its Restricted Subsidiaries and Consumers shall, comply in all material respects with all laws applicable to the Company or such Restricted Subsidiary or Consumers, as the case may be, its respective business and properties. SECTION 508. Limitation on Certain Liens. (a) So long as any of the General Term Notes are outstanding, the Company shall not create, incur, assume or suffer to exist any lien, mortgage, pledge, security interest, conditional sale, title retention agreement or other charge or encumbrance of any kind, or any other type of arrangement intended or having the effect of conferring upon a creditor of the Company or any Subsidiary a preferential interest (hereinafter in this Section referred to as a "Lien") upon or with respect to the Capital Stock of Consumers, Enterprises or NOMECO without making effective provision whereby the General Term Notes shall (so long as any such other creditor shall be so secured) be equally and ratably secured (along with any other creditor similarly entitled to be secured) by a direct Lien on all property subject to such Lien, provided, however, that the foregoing restrictions shall not apply to: (i) Liens for taxes, assessments or governmental charges or levies to the extent not past due; (ii) pledges or deposits to secure (a) obligations under workmen's compensation laws or similar legislation, (b) statutory obligations of the Company or (c) Support Obligations not to exceed $30 million at any one time outstanding; (iii) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business securing obligations which are not overdue or which have been fully bonded and are being contested in good faith; (iv) purchase money Liens upon or in property acquired and held by the Company in the ordinary course of business to secure the purchase price of such property or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such property to be subject to such Liens, or Liens existing on any such property at the time of acquisition, or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided that no such Lien shall extend to or cover any property other than the property being acquired and no such extension, renewal or replacement shall extend to or cover property not theretofore subject to the Lien being extended, renewed or replaced, and provided, further, that the aggregate principal amount of the Indebtedness at any one time outstanding secured by Liens permitted by this clause (iv) shall not exceed $10,000,000; and (v) Liens not otherwise permitted by clauses (i) through (iv) of this Section securing Indebtedness of the Company; provided that on the date such Liens are created, and after giving effect to such Indebtedness, the aggregate principal amount at maturity of all of the secured Indebtedness of the Company at such date shall not exceed 10% of Consolidated Assets at such date. SECTION 509. Limitation on Consolidation, Merger, Sale or Conveyance. So long as the General Term Notes are Outstanding, and subject also to Article Eight of the Indenture, the Company shall not consolidate with or merge into any other Person or sell, lease or convey the property of the Company in the entirety or substantially as an entirety, unless (i) immediately after giving effect to such transaction the Consolidated Net Worth of the surviving entity is at least equal to the Consolidated Net Worth of the Company immediately prior to the transaction, and (ii) after giving effect to such transaction, the surviving entity would be entitled to incur at least one dollar of additional Indebtedness (other than revolving Indebtedness to banks) without violation of the limitations in Section 510 hereof. SECTION 510. Limitation on Consolidated Indebtedness. (a) So long as any of the General Term Notes are Outstanding, the Company shall not, and shall not permit any Restricted Subsidiary of the Company to, issue, create, assume, guarantee, incur or otherwise become liable for (collectively, "issue"), directly or indirectly, any Indebtedness unless (i) the Consolidated Coverage Ratio of the Company and its Consolidated Subsidiaries for the four consecutive fiscal quarters immediately preceding the issuance of such Indebtedness (as shown by a pro forma consolidated income statement of the Company and its Consolidated Subsidiaries for the four most recent fiscal quarters ending at least 30 days prior to the issuance of such Indebtedness after giving effect to (i) the issuance of such Indebtedness and (if applicable) the application of the net proceeds thereof to refinance other Indebtedness as if such Indebtedness was issued at the beginning of the period, (ii) the issuance and retirement of any other Indebtedness since the first day of the period as if such Indebtedness was issued or retired at the beginning of the period and (iii) the acquisition of any company or business acquired by the Company or any Subsidiary since the first day of the period (including giving effect to the pro forma historical earnings of such company or business), including any acquisition which will be consummated contemporaneously with the issuance of such Indebtedness, as if in each case such acquisition occurred at the beginning of the period) exceeds a ratio of 1.6 to 1.0 and (ii), immediately after giving effect to the issuance of such Indebtedness and (if applicable) the application of the net proceeds thereof to refinance other Indebtedness, the Consolidated Leverage Ratio is equal to or less than a ratio of 0.75 to 1.0. (b) Notwithstanding the foregoing paragraph, the Company or any Restricted Subsidiary may issue, directly or indirectly, the following Indebtedness: (1) Revolving Indebtedness to banks not to exceed $450,000,000 in the aggregate outstanding principal amount at any time; (2) Indebtedness (other than Indebtedness described in clause (1) of this Subsection) outstanding on the date of the original Indenture, as set forth on Schedule 510(b)(2) attached hereto and made a part hereof, and Indebtedness issued in exchange for, or the proceeds of which are used to refund or refinance, any Indebtedness permitted by this clause (2); provided, however, that (i) the principal amount (or accreted value in the case of Indebtedness issued at a discount) of the Indebtedness so issued shall not exceed the principal amount (or accreted value in the case of Indebtedness issued at a discount) of, premium, if any, and accrued but unpaid interest on, the Indebtedness so exchanged, refunded or refinanced and (ii) the Indebtedness so issued (A) shall not mature prior to the stated maturity of the Indebtedness so exchanged, refunded or refinanced, (B) shall have an Average Life equal to or greater than the remaining Average Life of the Indebtedness so exchanged, refunded or refinanced and (C) if the Indebtedness to be exchanged, refunded or refinanced is subordinated to the General Term Notes, the Indebtedness is subordinated to the General Term Notes in right of payment; (3) Indebtedness of the Company owed to and held by a Subsidiary and Indebtedness of a Subsidiary owed to and held by the Company; provided, however, that, in the case of Indebtedness of the Company owed to and held by a Subsidiary, (i) any subsequent issuance or transfer of any Capital Stock that results in any such Subsidiary ceasing to be a Subsidiary or (ii) any transfer of such Indebtedness (except to the Company or a Subsidiary) shall be deemed for the purposes of this Subsection to constitute the issuance of such Indebtedness by the Company; (4) Indebtedness of the Company issued in exchange for, or the proceeds of which are used to refund or refinance, Indebtedness of the Company issued in accordance with Subsection (a) of this Section, provided that (i) the principal amount (or accreted value in the case of Indebtedness issued at a discount) of the Indebtedness so issued shall not exceed the principal amount (or accreted value in the case of Indebtedness issued at a discount) of, premium, if any, and accrued but unpaid interest on, the Indebtedness so exchanged, refunded or refinanced and (ii) the Indebtedness so issued (A) shall not mature prior to the stated maturity of the Indebtedness so exchanged, refunded or refinanced, (B) shall have an Average Life equal to or greater than the remaining Average Life of the Indebtedness so exchanged, refunded or refinanced and (C) if the Indebtedness to be exchanged, refunded or refinanced is subordinated to the General Term Notes, the Indebtedness so issued is subordinated to the General Term Notes in right of payment; and (5) Indebtedness of a Restricted Subsidiary issued in exchange for, or the proceeds of which are used to refund or refinance, Indebtedness of a Restricted Subsidiary issued in accordance with Subsection (a) of this Section, provided that (i) the principal amount (or accreted value in the case of Indebtedness issued at a discount) of the Indebtedness so issued shall not exceed the principal amount (or accreted value in the case of Indebtedness issued at a discount) of, premium, if any, and accrued but unpaid interest on, the Indebtedness so exchanged, refunded or refinanced and (ii) the Indebtedness so issued (A) shall not mature prior to the stated maturity of the Indebtedness so exchanged, refunded or refinanced and (B) shall have an Average Life equal to or greater than the remaining Average Life of the Indebtedness so exchanged, refunded or refinanced. SECTION 511. Limitation on Restricted Payments. (a) So long as the General Term Notes are Outstanding and are rated below BBB- by Standard & Poor's or by Duff & Phelps (or, if Duff & Phelps or Standard & Poor's shall change its rating system, an equivalent of such rating then employed by such organization) the Company shall not, and shall not permit any Restricted Subsidiary of the Company, directly or indirectly, to (i) declare or pay any dividend or make any distribution on the Capital Stock of the Company to the direct or indirect holders of the Capital Stock of the Company (except dividends or distributions payable solely in Non- Convertible Capital Stock of the Company or in options, warrants or other rights to purchase such Non-Convertible Capital Stock and except dividends or distributions payable to the Company or a Subsidiary), (ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company (any such dividend, distribution, purchase, redemption, other acquisition or retirement being hereinafter referred to as a "Restricted Payment") if at the time the Company or such Subsidiary makes such Restricted Payment: (1) an Event of Default, or an event that with the lapse of time or the giving of notice or both would constitute an Event of Default, shall have occurred and be continuing (or would result therefrom); or (2) the aggregate amount of such Restricted Payment and all other Restricted Payments made since September 30, 1993, would exceed the sum of: (A) $120,000,000; (B) 100% of Consolidated Net Income, accrued during the period (treated as one accounting period) from September 30, 1993 to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or, in case such sum shall be a deficit, minus 100% of the deficit); and (C) the aggregate Net Proceeds received by the Company from the issue or sale of or contribution with respect to its Capital Stock subsequent to September 30, 1993. For the purpose of determining the amount of any Restricted Payment not in the form of cash, the amount shall be the fair value of such Restricted Payment as determined in good faith by the Board of Directors, provided that if the value of the non-cash portion of such Restricted Payment as determined by the Board of Directors is in excess of $25 million, such value shall be based on the opinion from a nationally recognized firm experienced in the appraisal of similar types of transactions. (b) The provisions of Section 511(a) shall not prohibit: (i) any purchase or redemption of Capital Stock of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Redeemable Stock or Exchangeable Stock); provided, however, that such purchase or redemption shall be excluded from the calculation of the amount of Restricted Payments; (ii) dividends or other distributions paid in respect of any class of the Company's Capital Stock issued in respect of the acquisition of any business or assets by the Company or a Restricted Subsidiary if the dividends or other distributions with respect to such Capital Stock are payable solely from the net earnings of such business or assets; (iii) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this Section; provided, however, that at the time of payment of such dividend, no Event of Default shall have occurred and be continuing (or result therefrom), and provided further, however, that such dividends shall be included (without duplication) in the calculation of the amount of Restricted Payments; or (iv) payments pursuant to the Tax-Sharing Agreement. SECTION 512. Limitation on Transactions with Affiliates. So long as any of the General Term Notes are Outstanding, the Company shall not directly or indirectly, conduct any business or enter into any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with an Affiliate unless the terms of such business, transaction or series of transactions are as favorable to the Company as terms that could be obtainable at the time for a comparable transaction or series of related transactions in arm's-length dealings with an unrelated third Person. This Section shall not apply to (x) compensation paid to officers and directors of the Company which has been approved by the Board of Directors of the Company or (y) loans to the Company or an Affiliate pursuant to a global cash management program, which loans mature within one year from the date thereof. ARTICLE VI ADDITIONAL EVENTS OF DEFAULT WITH RESPECT TO THE GENERAL TERM NOTES SECTION 601. Definition. All of the events specified in Section 501 of the Indenture and the events specified in Section 602 of this Article shall be "Events of Default" with respect to the General Term Notes. SECTION 602. Additional Events of Default. As contemplated by Sections 301(15) and 501(7) of the Indenture, any one of the following events (whatever the reason for such Event of Default and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall be an Event of Default with respect to the General Term Notes for all purposes of the Indenture: (a) a default or event of default in respect of any Indebtedness of the Company having an aggregate outstanding principal amount at the time of such default in excess of $25,000,000 shall occur which results in the acceleration of such Indebtedness or Indebtedness of the Company having an outstanding principal amount at maturity in excess of $25,000,000 shall not be paid at maturity thereof, which default shall not have been waived by the holder or holders of such Indebtedness within 30 days of such default; or (b) the entry of a final judgment or judgments against the Company aggregating in excess of $25,000,000 which remain undischarged or unbonded for a period (during which execution shall not be effectively stayed) of 60 days. ARTICLE VII GLOBAL NOTES The General Term Notes will be issued initially in the form of Global Notes. "Global Note" means a registered General Term Note evidencing one or more General Term Notes issued to a depositary (the "Depositary") or its nominee, in accordance with this Article and bearing the legend prescribed in this Article. A single Global Note will represent all General Term Notes issued on the same date and having the same terms, including, but not limited to, the same Interest Payment Dates, rate of interest, Stated Maturity, and redemption provisions (if any). The Company shall execute and the Trustee shall, in accordance with this Article and the Company Order with respect to the General Term Notes, authenticate and deliver one or more Global Notes in temporary or permanent form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the General Term Notes to be represented by such Global Note or Notes, (ii) shall be registered in the name of the Depositary for such Global Note or Notes or the nominee of such Depositary, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions and (iv) shall bear a legend substantially to the following effect: "Unless this Global Note is presented by an authorized representative of the Depositary to the Company or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of the Depositary or in such other name as is requested by the Depositary, any transfer, pledge or other use hereof for value or otherwise by or to any person shall be wrongful inasmuch as the registered owner hereof, the Depositary, has an interest herein." Notwithstanding Section 305 of the Indenture, unless and until it is exchanged in whole or in part for General Term Notes in definitive form, a Global Note representing one or more General Term Notes may not be transferred except as a whole by the Depositary, to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for General Term Notes or a nominee of such successor Depositary. If at any time the Depositary for the General Term Notes is unwilling or unable to continue as Depositary for the General Term Notes, the Company shall appoint a successor Depositary with respect to the General Term Notes. If a successor Depositary for the General Term Notes is not appointed by the Company by the earlier of (i) 90 days from the date the Company receives notice to the effect that the Depositary is unwilling or unable to act, or the Company determines that the Depositary is unable to act or (ii) the effectiveness of the Depositary's resignation or failure to fulfill its duties as Depositary, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive General Term Notes, will authenticate and deliver General Term Notes in definitive form in an aggregate principal amount equal to the principal amount of the Global Note or Notes representing such General Term Notes in exchange for such Global Note or Notes. The Company may at any time and in its sole discretion determine that the General Term Notes issued in the form of one or more Global Notes shall no longer be represented by such Global Note or Notes. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive General Term Notes, will authenticate and deliver General Term Notes in definitive form in an aggregate principal amount equal to the principal amount of the Global Note or Notes representing such General Term Notes in exchange for such Global Note or Notes. The Depositary for such General Term Notes may surrender a Global Note or Notes for such General Term Notes in exchange in whole or in part for General Term Notes in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge: (i) to each Person specified by such Depositary a new General Term Note or Notes, of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Note; and (ii) to such Depositary a new Global Note in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Note and the aggregate principal amount of General Term Notes in definitive form delivered to Holders thereof. In any exchange provided for in this Article, the Company will execute and the Trustee will authenticate and deliver General Term Notes in definitive registered form in authorized denominations. Upon the exchange of a Global Note for General Term Notes in definitive form, such Global Note shall be cancelled by the Trustee. General Term Notes in definitive form issued in exchange for a Global Note pursuant to this Article shall be registered in such names and in such authorized denominations as the Depositary for such Global Note, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or Security Registrar. The Trustee shall deliver such General Term Notes to the persons in whose names such General Term Notes are so registered. ARTICLE VIII DEFEASANCE All of the provisions of Article Fourteen of the Original Indenture shall be applicable to the General Term Notes. Upon satisfaction by the Company of the requirements of Section 1404 of the Indenture, in connection with any covenant defeasance (as provided in Section 1403 of the Indenture), the Company shall be released from its obligations under Article Eight of the Original Indenture and under Articles III and V of this Third Supplemental Indenture with respect to the General Term Notes. ARTICLE IX SUPPLEMENTAL INDENTURES This Third Supplemental Indenture is a supplement to the Original Indenture. As supplemented by this Third Supplemental Indenture, the Original Indenture is in all respects ratified, approved and confirmed, and the Original Indenture and this Third Supplemental Indenture shall together constitute one and the same instrument. The Company may, by supplemental indenture, amend this Third Supplemental Indenture to provide for additional definitions, terms and provisions relating to General Term Notes. Any such supplemental indenture shall not adversely affect the rights and privileges of Holders of General Term Notes issued prior to such supplemental indenture. Any such supplemental indenture may include, but is not limited to including, additional provisions permitting payment of General Term Notes prior to Stated Maturity at the option of the Holders, issuance of General Term Notes in currencies other than Dollars, and special provisions relating to interest rate provisions. TESTIMONIUM This Third Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first written above. CMS ENERGY CORPORATION By:____________________________ Attest: ______________________________ (Corporate Seal) THE CHASE MANHATTAN BANK as Trustee By:______________________________ Attest: _______________________________ (Corporate Seal) EX-5 4 EXHIBIT 5 - OPINION OF COUNSEL Exhibit (5) November 25, 1996 CMS Energy Corporation Fairlane Plaza South 330 Town Center Drive Suite 1100 Dearborn, MI 48126 Gentlemen: I am the Assistant General Counsel of CMS Energy Corporation, a Michigan Corporation (the "Company"), and have acted as such in connection with the Registration Statement on Form S-3 (the "Registration Statement") being filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of $150,000,000 aggregate principal amount of General Term Notes (the "Debt Securities"). In rendering this opinion, I have examined and relied upon a copy of the Registration Statement. I have also examined, or have arranged for the examination by an attorney or attorneys under my general supervision, originals, or copies of originals certified to my satisfaction, of such agreements, documents, certificates and other statements of governmental officials and other instruments, and have examined such questions of law and have satisfied myself as to such matters of fact, as I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of all natural persons and the conformity with the original documents of any copies thereof submitted to me for examination. Based on the foregoing, it is my opinion that: 1. The Company is duly incorporated and validly existing under the laws of the State of Michigan. 2. The Indenture dated as of January 15, 1994, as supplemented (the "Indenture"), between the Company and The Chase Manhattan Bank (National Association), as trustee (the "Trustee"), has been duly authorized, executed and delivered and the Company has the corporate power and authority to execute and deliver the Third Supplemental Indenture to the Indenture (the "Supplemental Indenture") between the Company and The Chase Manhattan Bank (National Association), as Trustee, to be filed as Exhibit 4(a)(iv) to the Registration Statement, under which the Debt Securities are to be issued, and to authorize and sell the Debt Securities. 3. The Debt Securities will be legally issued and binding obligations of the Company (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law) when: (i) the Registration Statement, as finally amended (including any necessary post- effective amendments), shall have become effective under the Securities Act and the Indenture (including any necessary supplemental indenture) shall have been qualified under the Trust Indenture Act of 1939, as amended, and duly executed and delivered by the Company and the Trustee; (ii) an appropriate Pricing Supplement with respect to the particular Debt Securities then being sold by the Company shall have been filed (or mailed for filing) with the Commission pursuant to Rule 424 under the Securities Act; (iii) the Company's Board of Directors or a duly authorized committee thereof shall have duly adopted final resolutions authorizing the issuance and sale of the particular Debt Securities then being sold by the Company as contemplated by the Registration Statement and the Indenture; and (iv) the Third Supplemental Indenture under which the Debt Securities are to be issued has been duly authorized, executed and delivered, and the particular Debt Securities then being sold by the Company shall have been duly executed and authenticated as provided in the Indenture and such resolutions and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor. For purposes of this opinion, I have assumed that there will be no changes in the laws currently applicable to CMS Energy and that such laws will be the only laws applicable to CMS Energy. I do not find it necessary for the purposes of this opinion to cover, and accordingly I express no opinion as to, the application of the securities or blue sky laws of the various states to the sale of the Debt Securities. I am a member of the bar of the State of Michigan and I express no opinion as to the laws of any jurisdiction other than the State of Michigan and the federal law of the United States of America. I hereby consent to the filing of this opinion as an exhibit to the Company's Registration Statement on Form S-3 relating to the Debt Securities and to all references to me included in or made a part of the Registration Statement. Very Truly Yours, /s/ Michael D. Van Hemert -------------------------- Michael D. Van Hemert EX-12 5 EX.12 - STMT. RE: EARNINGS RATIO TO FIXED CHARGES Exhibit (12) CMS ENERGY CORPORATION Ratio of Earnings to Fixed Charges (Millions of Dollars)
Nine Months Ended Years Ended December 31 Sept. 30, 1996 1995 1994 1993 1992 1991 (2) (3)(4) ----- ---- ---- ---- ---- ---- Earnings as defined (1) - ----------------------- Net Income $196 $204 $179 $155 $(297) $(262) Income taxes 116 118 92 75 (146) (94) Exclude equity basis sub- (61) (57) (18) (6) 10 10 sidiaries Fixed charges as defined, adjusted to exclude capitalized interest of $5, $8, $6, $5, $3, and $5 million for the nine months ended September 30, 1996 and for the years ended December 31, 1995, 1994, 1993, 1992 and 1991,respectively 195 254 214 234 217 354 ---------------------------------------- Earnings as defined $446 $519 $467 $458 $(216) $ 8 ======================================== Fixed charges as defined (1) - ---------------------------- Interest on long-term debt $174 $224 $193 $204 $169 $274 Estimated interest portion 7 9 9 11 16 17 of lease rental Other interest charges 19 27 18 24 35 68 ---------------------------------------- Fixed charges as defined $200 $260 $220 $239 $220 $359 ======================================== Ratio of earnings to 2.23 2.00 2.12 1.92 - - fixed charges ========================================
[FN] NOTES: (1) Earnings and fixed charges as defined in instructions for Item 503 of Regulation S-K. (2) For the year ended December 31, 1992, fixed charges exceeded earnings by $441 million. Earnings as defined include a $520 million pretax loss on the settlement of MCV Power Purchases, $(15) million for potential customer refunds and other reserves related to 1992 but recorded in 1991, and $6 million relating to CMS Generation Company's reduction in its investment in The Oxford Energy Company. The ratio of earnings to fixed charges would have been 1.34 excluding these amounts. (3) Excludes an extraordinary after-tax loss of $14 million. (4) For the year ended December 31, 1991, fixed charges exceeded earnings by $356 million. Earnings as defined include pretax losses of $398 million for write-downs and reserve amounts related to Consumers' abandonment of the Midland nuclear plant, $76 million for potential customer refunds and other reserves, and $51 million relating to CMS Generation Company's reduction in its investment in The Oxford Energy Company. The ratio of earnings to fixed charges would have been 1.48 excluding these amounts. EX-15 6 ACCOUNTANT LTR. RE: UNAUDITED INTERIM FINANCIALS To CMS Energy Corporation: We are aware that CMS Energy Corporation has incorporated by reference in this registration statement its Form 10-Q for the quarter ended March 31, 1996, its Form 10-Q for the quarter ended June 30, 1996 and its Form 10-Q for the quarter ended September 30, 1996, which include our reports dated May 10, 1996, August 9, 1996 and November 11, 1996, respectively, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, these reports are not considered a part of the registration statement prepared or certified by our Firm or a report prepared or certified by our Firm within the meaning of Sections 7 and 11 of the Act. /s/ Arthur Andersen LLP Detroit, Michigan, November 25, 1996. EX-23 7 EXHIBIT 23(B) - CONSENT OF ARTHUR ANDERSEN LLP 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, 1996 included or incorporated by reference in CMS Energy Corporation's Form 10-K for the year ended December 31, 1995, and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP Detroit, Michigan, November 25, 1996. EX-24 8 EXHIBIT 24 - POWERS OF ATTORNEY Exhibit (24) November 15, 1996 Mr. Alan M. Wright and Mr. Thomas A. McNish CMS Energy Corporation Fairlane Plaza South, Suite 1100 330 Town Center Drive Dearborn, MI 48126 We hereby appoint each of you lawful attorney for each of us and in each of our names to sign and cause to be filed with the Securities and Exchange Commission registration statement(s) and/or any amendment(s) thereto, including post-effective amendment or amendments, to be accompanied in each case by a prospectus or supplemental prospectus and any necessary exhibits with respect to the issue and sale of up to $150 million of the Corporation's General Term Notes and/or the sale of up to $500 million of debt securities of the Corporation. Yours very truly, /s/ William T. McCormick, Jr. /s/ Michael G. Morris ______________________________ ________________________________ William T. McCormick, Jr. Michael G. Morris /s/ James J. Duderstadt /s/ William U. Parfet ______________________________ ________________________________ James J. Duderstadt William U. Parfet /s/ Kathleen R. Flaherty /s/ Percy A. Pierre ______________________________ ________________________________ Kathleen R. Flaherty Percy A. Pierre /s/ Victor J. Fryling /s/ Kenneth Whipple _____________________________ ________________________________ Victor J. Fryling Kenneth Whipple /s/ Earl D. Holton /s/ John B. Yasinsky _____________________________ ________________________________ Earl D. Holton John B. Yasinsky /s/ Lois A. Lund _____________________________ Lois A. Lund Extract from the minutes of a meeting of the Board of Directors of CMS Energy Corporation (the "Corporation") held on October 25, 1996. - - - - - - - - PROPOSED ISSUE AND SALE OF GENERAL TERM NOTES The officers of the Corporation recommended that the Corporation issue and sell up to $150,000,000 aggregate principal amount of senior unsecured debt in the form of General Term Notes (the "Notes") (in addition to the amount of General Term Notes remaining under Registration Statement No. 333-01261) to be distributed pursuant to the terms of a distribution agreement at the prices and on the terms deemed desirable in the interest of the Corporation as determined by the Chairman of the Board, a Vice Chairman, the President or the Chief Financial Officer of the Corporation, or certain persons designated as agents for the Corporation. The proceeds will be used for general corporate purposes. The matter was discussed fully. Upon motion duly made and seconded, the following resolutions were thereupon unanimously adopted: RESOLVED: That the Board of Directors approves the issue and sale of not more than $150,000,000 aggregate principal amount of senior unsecured debt in the form of General Term Notes (the "Notes") and the officers of the Corporation, and each of them, are authorized in their discretion, on its behalf, to execute and file with the Securities and Exchange Commission a Registration Statement on Form S-3 under the Securities Act of 1933, as amended (the "Act") with respect to the issue and sale of not more than $150,000,000 aggregate principal amount of the Notes, in such form as may be approved by the officers executing the same, and to do all other things necessary to make such registration effective, including the execution and filing of any necessary or appropriate amendments or supplements thereto; and RESOLVED FURTHER: That the officers of the Corporation, and each of them, are authorized in their discretion, on its behalf, to take all actions necessary or advisable to consummate the negotiation, registration, and sale of up to $150,000,000 aggregate principal amount of the Notes, which Notes shall be issued pursuant to an Indenture dated as of January 15, 1994 entered into between the Corporation and The Chase Manhattan Bank, National Association, as Trustee, to be supplemented by a third supplemental indenture to be entered into between the Corporation and The Chase Manhattan Bank, National Association, as Trustee (such indenture as so supplemented, the "Indenture"); and RESOLVED FURTHER: That the officers of the Corporation, and each of them, are authorized to execute and deliver a third supplemental indenture, on behalf of the Corporation in such form as may be approved by the officers executing the same and as counsel may advise; and RESOLVED FURTHER: That any one of the following persons: the Chairman of the Board, a Vice Chairman, the President or Chief Financial Officer, or Doris F. Galvin, Martin R. Walicki, or Janet Sanders, as agents for the Corporation, are authorized in their discretion, to execute, issue, deliver and sell from time to time up to $150,000,000 aggregate principal amount of the Notes pursuant to and in accordance with the Indenture and a distribution agreement hereinafter described and authorized, but subject to the effectiveness of the Registration Statement under the Act; and RESOLVED FURTHER: That the officers of the Corporation, and each of them, are authorized in their discretion, to execute and deliver, on its behalf, a distribution agreement relating to the sale of up to $150,000,000 aggregate principal amount of the Notes in such form as may be approved by the officers executing the same and as counsel may advise, and such officers are authorized to perform all acts and things necessary to effectuate the transaction contemplated by said distribution agreement; and RESOLVED FURTHER: That each Note issued by the Corporation shall be sold at a price equal to 100% of the principal amount thereof and have such terms (including, without limitation, interest rate, maturity date, redemption provisions (if any) and other terms permitted or contemplated by the Indenture) as shall be set forth in a certificate delivered to the Trustee pursuant to the terms of the Indenture, and any one of the following persons: the Chairman of the Board, a Vice Chairman, the President or Chief Financial Officer, or Doris F. Galvin, Martin R. Walicki, or Janet Sanders, as agents of the Corporation, are empowered to approve and authorize such terms and to execute and deliver such certificate setting forth the same; and RESOLVED FURTHER: That each Note issued by the Corporation shall bear interest at such rate, pay interest and principal on such dates, and have such other terms and provisions (including, but not limited to, redemption terms or a survivor's option), and shall be issued in definitive registered form as a global note pursuant to the terms of the Indenture, as determined by any one of the following persons: the Chairman of the Board, a Vice Chairman, the President or Chief Financial Officer of the Corporation, or Doris F. Galvin, Martin R. Walicki or Janet Sanders, as agents for the Corporation; and RESOLVED FURTHER: That the officers of the Corporation, and each of them, are authorized to take any and all action that any of such officers may deem necessary or advisable in order to effect the registration or qualification, or to request an exemption from such registration or qualification, of part or all of the Notes for offer and sale under the securities or Blue Sky laws of any of the States of the United States of America or other jurisdiction, and, in connection therewith, to execute, acknowledge, verify, deliver, file and publish all such applications, reports, resolutions, consents and other papers and instruments as may be required under such laws, and to take any and all further action that any such officer may deem necessary or advisable in order to maintain any such registration or qualification, or exemption therefrom, for as long as such officers may deem to be in the best interests of the Corporation; and RESOLVED FURTHER: That the officers of the Corporation, and each of them, are authorized and empowered to sign, seal and deliver such papers and documents, and to do or cause to be done all acts and things which any of them may consider necessary or advisable to carry out the intent and purposes of all the foregoing resolutions with respect to the issue and sale of up to $150,000,000 aggregate principal amount of the Notes of the Corporation. - - - - - - - - I, Thomas A. McNish, Secretary of CMS Energy Corporation, CERTIFY that the foregoing is a true and correct copy of resolutions duly and regularly adopted at a meeting of the Board of Directors of CMS Energy Corporation duly held on October 25, 1996, at which a quorum was in attendance and voting throughout, and that said resolutions have not since been rescinded but are still in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Company this 29th day of October 1996. /s/ Thomas A. McNish ----------------------- Thomas A. McNish Secretary EX-25 9 FORM T-1, STMT. OF ELIGIBILITY OF TRUSTEE Exhibit (25) ___________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ___________________________________________ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ________________________________________ THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) _____________________________________________ CMS Energy Corporation (Exact name of obligor as specified in its charter) (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) Michigan 38-2726431 Fairlane Plaza South, Suite 1100 330 Town Center Drive Dearborn, Michigan 48126 (Address of principal executive offices) (Zip Code) _________________________ General Term Notes, Series C (Title of Indenture securities) ______________________________________ GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. (On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, Chemical Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 20th day of November, 1996. THE CHASE MANHATTAN BANK By /s/ Mary Lewicki ----------------------------- Mary Lewicki Second Vice President Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1996, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . . . . . $ 4,167 Interest-bearing balances . . . . . . . . . . . . . . 5,094 Securities: . . . . . . . . . . . . . . . . . . . . . . . Held to maturity securities . . . . . . . . . . . . . . . 3,367 Available for sale securities . . . . . . . . . . . . . . 27,786 Federal Funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's: Federal funds sold . . . . . . . . . . . . . . . . . 7,204 Securities purchased under agreements to resell . . . 136 Loans and lease financing receivables: Loans and leases, net of unearned income $ 67,215 Less: Allowance for loan and lease losses . . 1,768 Less: Allocated transfer risk reserve . . . . . 75 Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . 65,372 Trading Assets . . . . . . . . . . . . . . . . . . . . . 28,610 Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . 1,326 Other real estate owned . . . . . . . . . . . . . . . . . 26 Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . 68 Customer's liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . 995 Intangible assets . . . . . . . . . . . . . . . . . . . . 309 Other assets . . . . . . . . . . . . . . . . . . . . . . 6,993 TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . $151,453 ========= LIABILITIES Deposits In domestic offices . . . . . . . . . . . . . . . . . $ 46,917 Noninterest-bearing . . . . . . . . . . . . $16,711 Interest-bearing . . . . . . . . . . . . . 30,206 In foreign offices, Edge and Agreement subsidiaries, and IBF's . . . . . . . . . . . . . . . . . . . . . . 31,577 Noninterest-bearing . . . . . . . . . . . .$ 2,197 Interest-bearing . . . . . . . . . . . . . 29,380 Federal funds purchased and securities sold under agree- ments to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's Federal funds purchased . . . . . . . . . . . . . . . 12,155 Securities sold under agreements to repurchase . . . 8,536 Demand notes issued to the U.S. Treasury . . . . . . . . 1,000 Trading liabilities . . . . . . . . . . . . . . . . . . . 20,914 Other Borrowed money: With a remaining maturity of one year or less . . . . 10,018 With a remaining maturity of more than one year . . . 192 Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . 12 Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . 1,001 Subordinated notes and debentures . . . . . . . . . . . . 3,411 Other liabilities . . . . . . . . . . . . . . . . . . . . 8,019 TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . 143,824 --------- EQUITY CAPITAL Common stock . . . . . . . . . . . . . . . . . . . . . . 620 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . 4,664 Undivided profits and capital reserves . . . . . . . . . 2,970 Net unrealized holding gains (Losses) on available-for-sale securities . . . . . . . . . . . . (633) Cumulative foreign currency translation adjustments . . . 8 TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . . . 7,629 --------- TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL . . . . . . . . . . . . . . $151,453 ========= I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) EDWARD D. MILLER )DIRECTORS THOMAS G. LABRECQUE ) -----END PRIVACY-ENHANCED MESSAGE-----