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EXHIBIT 4a
FORM OF
SEVENTH SUPPLEMENTAL INDENTURE
DATED AS OF JANUARY ___, 1999
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This Seventh Supplemental Indenture, dated as of the ___th day of
January, 1999 between CMS Energy Corporation, a corporation duly organized and
existing under the laws of the State of Michigan (hereinafter called the
"Issuer") and having its principal ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and NBD Bank, a Michigan
banking corporation (hereinafter called the "Trustee") and having its principal
Corporate Trust Office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, the Issuer and the Trustee (formerly known as NBD Bank,
National Association) entered into an Indenture, dated as of September 15, 1992
(the "Original Indenture"), pursuant to which one or more series of debt
securities of the Issuer (the "Securities") may be issued from time to time; and
WHEREAS, Section 2.3 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 8.1(e) of the Original Indenture provides that a
supplemental indenture may be entered into by the Issuer 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 Issuer has requested the Trustee to join with it in the
execution and delivery of this Seventh Supplemental Indenture in order to
supplement and amend the Original Indenture
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by, among other things, establishing the form and terms of a series of
Securities to be known as the Issuer's "_____% Senior Unsecured Notes Due
20___" (the "20___ Notes"), providing for the issuance of the 20___ Notes and
amending and adding certain provisions thereof for the benefit of the Holders of
the 20___ Notes; and
WHEREAS, the Issuer and the Trustee desire to enter into this Seventh
Supplemental Indenture for the purposes set forth in Sections 2.3 and 8.1(e) of
the Original Indenture as referred to above; and
WHEREAS, the Issuer has furnished the Trustee with a copy of the
resolutions of its Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of this Seventh Supplemental Indenture; and
WHEREAS, all things necessary to make this Seventh Supplemental
Indenture a valid agreement of the Issuer and the Trustee and a valid supplement
to the Original Indenture have been done,
NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises and the purchase of the 20___
Notes to be issued hereunder by holders thereof, the Issuer and the Trustee
mutually covenant and agree, for the equal and proportionate benefit of the
respective holders from time to time of the 20___ Notes, as follows:
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ARTICLE I
STANDARD PROVISIONS; DEFINITIONS
SECTION 1.01. Standard Provisions. The Original Indenture together with
this Seventh Supplemental Indenture and all previous indentures supplemental
thereto entered into pursuant to the applicable terms thereof are hereinafter
sometimes collectively referred to as the "Indenture." 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 1.02. Definitions. Section 1.1 of the Original Indenture is
amended to insert the new definitions applicable to the 20___ 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.
"Applicable Premium" means, with respect to a 20___ Note (or portion
thereof) being redeemed at any time, the excess of (A) the present value at such
time of the principal amount of such 20___ Note (or portion thereof) being
redeemed plus all interest payments due on such 20___ Note (or portion thereof),
which present value shall be computed using a discount rate equal to the
Treasury Rate plus [50 basis points], over (B) the principal amount of such
20___ Note (or portion thereof) being redeemed at such time. For purposes of
this definition, the present values of interest and principal payments will be
determined in accordance with generally accepted principles of financial
analysis.
"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.
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"Capital Lease Obligation" of a Person means any obligation that is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; the stated maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty; and
such obligation shall be deemed secured by a Lien on any property or assets to
which such lease relates.
["Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock, including any Preferred Stock or Letter
Stock; provided that Hybrid Preferred Securities shall not be considered Capital
Stock for purposes of this definition.]
"Change in Control" means an event or series of events by which (i) the
Issuer 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 Issuer or Consumers, any
direct or indirect transfer of securities by the Issuer or Consumers, any
merger, consolidation, liquidation or dissolution of the Issuer 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 35% of the Voting Stock of the Issuer; or (iii) the
Issuer consolidates with or merges into another corporation or directly or
indirectly conveys, transfers or leases all or substantially all of its assets
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to any Person, or any corporation consolidates with or merges into the Issuer,
in either event pursuant to a transaction in which the outstanding Voting Stock
of the Issuer 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 Issuer is changed into or exchanged for Voting Stock of the
surviving corporation and (B) the holders of the Voting Stock of the Issuer
immediately prior to such transaction retain, directly or indirectly,
substantially proportionate ownership of the Voting Stock of the surviving
corporation immediately after such transaction.
"CMS Electric and Gas" means CMS Electric and Gas Company, a Michigan
corporation and wholly-owned subsidiary of Enterprises.
"CMS Gas Transmission and Storage" means CMS Gas Transmission and
Storage Company, a Michigan corporation and wholly-owned subsidiary of
Enterprises.
"CMS Generation" means CMS Generation Co., a Michigan corporation and
wholly-owned subsidiary of Enterprises.
"CMS MST" means CMS Marketing, Services and Trading Company, a Michigan
corporation and wholly-owned subsidiary of Enterprises.
"CMS Oil & Gas" means CMS Oil & Gas Co. (formerly known as CMS NOMECO
Oil & Gas Co.), a Michigan corporation and wholly-owned subsidiary of
Enterprises.
"Consolidated Assets" means, at any date of determination, the
aggregate assets of the Issuer and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles.
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"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 Current Liabilities" means, for any period, the aggregate
amount of liabilities of the Issuer and its Consolidated Subsidiaries which may
properly be classified as current liabilities (including taxes accrued as
estimated), after (i) eliminating all inter-company items between the Issuer and
any Consolidated Subsidiary and (ii) deducting all current maturities of
long-term Indebtedness, all as determined in accordance with generally accepted
accounting principles.
"Consolidated Indebtedness" means, at any date of determination, the
aggregate Indebtedness of the Issuer and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that Consolidated Indebtedness shall not include
any subordinated debt owned by any Hybrid Preferred Securities Subsidiary.
"Consolidated Interest Expense" means, for any period, the total
interest expense in respect of Consolidated Indebtedness of the Issuer 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 Issuer
or any Consolidated Subsidiaries under clause (v) or (vi) of the definition of
Indebtedness, provided, however, that Consolidated Interest Expense shall
exclude (a) any costs otherwise included in interest expense recognized on early
retirement of debt and (b) any interest expense in respect of any Indebtedness
of any
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Subsidiary of Consumers, CMS Generation, CMS Oil & Gas, CMS Electric and Gas,
CMS Gas Transmission and Storage, CMS MST or any other Designated Enterprises
Subsidiary, provided that such Indebtedness is without recourse to any assets of
the Issuer, Consumers, Enterprises, CMS Generation, CMS Oil & Gas, CMS Electric
and Gas, CMS Gas Transmission and Storage, CMS MST or any other Designated
Enterprises Subsidiary.
"Consolidated Net Income" means, for any period, the net income of the
Issuer 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 Issuer'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 Issuer or a Consolidated Subsidiary as a dividend or other
distribution and (B) the Issuer'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 Issuer or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition;
(iii) any gain or loss realized upon the sale or other disposition of
any property, plant or equipment of the Issuer 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; and
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(iv) any net income of any Subsidiary of Consumers, CMS Generation, CMS
Oil & Gas, CMS Electric and Gas, CMS Gas Transmission and Storage, CMS MST
or any other Designated Enterprises Subsidiary whose interest expense is
excluded from Consolidated Interest Expense, provided, however, that for
purposes of this subsection (iv), any cash, dividends or distributions of
any such Subsidiary to the Issuer shall be included in calculating
Consolidated Net Income.
"Consolidated Net Tangible Assets" means, for any period, the total
amount of assets (less accumulated depreciation or amortization, allowances for
doubtful receivables, other applicable reserves and other properly deductible
items) as set forth on the most recently available quarterly or annual
consolidated balance sheet of the Issuer and its Consolidated Subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, and after giving effect to purchase accounting and after
deducting therefrom, to the extent otherwise included, the amounts of: (i)
Consolidated Current Liabilities; (ii) minority interests in Consolidated
Subsidiaries held by Persons other than the Issuer or a Restricted Subsidiary;
(iii) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors as evidenced by Board
resolutions; (iv) any revaluation or other write-up in value of assets
subsequent to December 31, 1996, as a result of a change in the method of
valuation in accordance with generally accepted accounting principles; (v)
unamortized debt discount and expenses and other unamortized deferred charges,
goodwill, patents, trademarks, service marks, trade names, copyrights, licenses
organization or developmental expenses and other intangible items; (vi) treasury
stock; and (vii) any cash set apart and held in a sinking or other analogous
fund established for the purpose of redemption or other retirement of Capital
Stock to the extent such obligation is not reflected in Consolidated Current
Liabilities.
"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
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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 Issuer in accordance
with generally accepted accounting principles.
"Consumers" means Consumers Energy Company, a Michigan corporation, all
of whose common stock is on the date hereof owned by the Issuer.
"Designated Enterprises Subsidiary" means any wholly-owned subsidiary
of Enterprises formed after the date of this Seventh Supplemental Indenture
which is designated a Designated Enterprises Subsidiary by the Board of
Directors.
"Enterprises" means CMS Enterprises Company, a Michigan corporation and
wholly-owned subsidiary of the Issuer.
"Event of Default" with respect to the 20___ Notes has the meaning
specified in [Article V] of this Seventh 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
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convertible into another security (other than Capital Stock of such corporation
that is neither Exchangeable Stock or Redeemable Stock).
"Hybrid Preferred Securities" means any preferred securities issued by
a Hybrid Preferred Securities Subsidiary, where such preferred securities have
the following characteristics:
(i) such Hybrid Preferred Securities Subsidiary lends substantially all of
the proceeds from the issuance of such preferred securities to the
Company or Consumers in exchange for subordinated debt issued by the
Company or Consumers respectively;
(ii) such preferred securities contain terms providing for the deferral of
distributions corresponding to provisions providing for the deferral of
interest payments on such subordinated debt; and
(iii)the Company or Consumers (as the case may be) makes periodic interest
payments on such subordinated debt, which interest payments are in turn
used by the Hybrid Preferred Securities Subsidiary to make
corresponding payments to the holders of the Hybrid Preferred
Securities.
"Hybrid Preferred Securities Subsidiary" means any business trust (or
similar entity) (i) all of the common equity interest of which is owned (either
directly or indirectly through one or more wholly-owned Subsidiaries of the
Company or Consumers) at all times by the Company or Consumers, (ii) that has
been formed for the purpose of issuing Hybrid Preferred Securities and (iii)
substantially all of the assets of which consist at all times solely of
subordinated debt issued by the Company or Consumers (as the case may be) and
payments made from time to time on such subordinated debt.
"Indebtedness" of any Person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such Person for
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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.
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"Interest Payment Date" means _____________ and each ______ and
____________ in each year thereafter.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Issuer 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 Cash Proceeds" means, (a) with respect to any Asset Sale, the
aggregate proceeds of such Asset Sale 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 Issuer, net of (i) brokerage commissions and other
fees and expenses (including fees and expenses of counsel and investment
bankers) related to such Asset Sale, (ii) provisions for all taxes (whether or
not such taxes will actually be paid or are payable) as a result of such Asset
Sale without regard to the consolidated results of operations of the Issuer and
its Restricted Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required to be paid as a result of such sale and (iv) appropriate amounts to be
provided by the Issuer or any Restricted Subsidiary of the Issuer as a reserve
against any liabilities associated with such Asset Sale including, without
limitation, pension and other post-employment benefit liabilities,
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liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as determined
in conformity with generally accepted accounting principles and (b) 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 Issuer, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees 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 Issuer
and its Consolidated Subsidiaries, the aggregate amount of Consolidated Net
Income after adding thereto Consolidated Interest Expense (adjusted to include
costs recognized on early retirement of debt), income taxes, depreciation
expense, Amortization Expense and any noncash amortization of debt issuance
costs, any nonrecurring, noncash charges to earnings and any negative accretion
recognition.
"Other Rating Agency" shall mean any one of Duff & ▇▇▇▇▇▇ Credit Rating
Co., Fitch
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Investors Service, L.P. or ▇▇▇▇▇'▇ Investors Service, Inc., and any successor to
any of these organizations which is a nationally recognized statistical rating
organization.
"Paying Agent" means any person authorized by the Issuer to pay the
principal of (and premium, if any) or interest on any of the 20___ Notes on
behalf of the Issuer. Initially, the Paying Agent shall be the Trustee.
["Predecessor 20___ Note" of any particular 20___ Note means every
previous 20___ Note evidencing all or a portion of the same debt as that
evidenced by such particular 20___ Note; and, for the purposes of the
definition, any 20___ Note authenticated and delivered under Section 2.9 of the
Indenture in exchange for or in lieu of a mutilated, destroyed, lost or stolen
20___ Note shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen 20___ Note.]
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation; provided that Hybrid Preferred Securities shall not be considered
Preferred Stock for purposes of this definition.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed prior to the first anniversary of the
Stated Maturity of the outstanding 20___ Notes or is redeemable at the option of
the holder thereof at any time prior to the first anniversary of the Stated
Maturity of the outstanding 20___ Notes.
"Restricted Subsidiary" means any Subsidiary (other than Consumers and
its subsidiaries) of the Issuer which, as of the date of the Issuer's most
recent quarterly consolidated balance sheet, constituted at least 10% of the
total Consolidated Assets of the Issuer and its Consolidated
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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 Issuer
and its Restricted Subsidiaries could not incur at least one dollar of
additional Indebtedness under Section 4.04, 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 Issuer or a
Restricted Subsidiary and (iii) such Restricted Subsidiary must be a
Consolidated Subsidiary.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
division of McGraw Hill Inc., and any successor thereto which is a nationally
recognized statistical rating organization, or if such entity shall cease to
rate the 20___ Notes or shall cease to exist and there shall be no such
successor thereto, any other nationally recognized statistical rating
organization selected by the Issuer which is acceptable to the Trustee.
"Subordinated Indebtedness" means any Indebtedness of the Issuer
(whether outstanding on the date of this Seventh Supplemental Indenture or
thereafter incurred) which is contractually subordinated or junior in right of
payment to the 20___ Notes.
"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
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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 Issuer, each of the
members of the Consolidated Group (as defined therein), and each of the
corporations that become members of the Consolidated Group.]
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two Business Days prior to the redemption
date or, in the case of defeasance, prior to the date of deposit (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the then remaining average life to
stated maturity of the 20___ Notes; provided, however, that if the average life
to stated maturity of the 20___ Notes is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given.
"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
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similar functions).
Certain terms, used principally in Articles Three, Four and Seven of
this Seventh Supplemental Indenture, are defined in those Articles.
ARTICLE II
DESIGNATION AND TERMS OF THE 20___ NOTES; FORMS
SECTION 2.01. Establishment of Series. (a) There is hereby created a
series of Securities to be known and designated as the "___% Senior Notes Due
20___" and limited in aggregate principal amount (except as contemplated in
Section 2.3(f)(2) of the Indenture) to [$480,000,000]. The Stated Maturity of
the 20___ Notes is ____.
(b) The 20___ Notes 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 of___% per annum stated therein until the principal thereof is paid
or made available for payment. Interest will be payable semiannually on each
Interest Payment Date and at Maturity, as provided in the form of the 20___ Note
in Section 2.03 hereof.
(c) The Record Date referred to in Section 2.3(f)(4) of the Indenture
for the payment of the interest on any 20___ Note payable on any Interest
Payment Date (other than at Maturity) shall be the 15th day (whether or not a
Business Day) of the calendar month preceding the month in which such Interest
Payment Date occurs and, in the case of interest payable at Maturity, the Record
Date shall be the date of Maturity.
(d) The payment of the principal of, premium (if any) and interest on
the 20___ Notes
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shall not be secured by a security interest in any property.
(e) The 20___ Notes shall be redeemable at the option of the Issuer, in
whole or in part, at any time and from time to time, or not less than 30 days'
notice at a redemption price equal to 100% of the principal amount of such 20___
Notes being redeemed plus the Applicable Premium, if any, thereon at the time of
redemption, together with accrued interest, if any, thereon to the redemption
date. In no event will the redemption price ever be less than 100% of the
principal amount of the 20___ Notes plus accrued interest to the redemption
date. The 20___ Notes shall be purchased by the Issuer at the option of the
Holders thereof as provided in Sections 3.01 and 4.06 hereof.
(f) The 20___ Notes shall not be convertible.
(g) The 20___ Notes will not be subordinated to the payment of Senior
Debt.
(h) The Issuer will not pay any additional amounts on the 20___ Notes
held by a Person who is not a U.S. Person in respect of any tax, assessment or
government charge withheld or deducted.
(i) The events specified in Events of Default with respect to the 20___
Notes shall include the events specified in Article Five of this Seventh
Supplemental Indenture. In addition to the covenants set forth in Article Three
of the Original Indenture, the Holders of the 20___ Notes shall have the benefit
of the covenants of the Issuer set forth in Article Four hereto.
SECTION 2.02. Forms Generally. The 20___ Notes and Trustee's
certificates of authentication 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,
19
be determined by the officers executing such 20___ Notes, as evidenced by their
execution thereof.
The definitive 20___ 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 20___ Notes, as evidenced by their
execution thereof.
20
SECTION 2.03. Form of Face of 20___ Note.
CMS ENERGY CORPORATION
___% SENIOR NOTES DUE 20___
No. ________ $__________
CMS Energy Corporation, a corporation duly organized and existing under
the laws of the State of Michigan (herein called the "Issuer", 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
November 15, 20___ ("Maturity") and to pay interest thereon from ___________,
1999 (the "Original Issue Date") or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semi-annually on _____ 15
and _____________ 15 in each year, commencing ____________, 1999 and at Maturity
at the rate of _____% per annum, until the principal hereof is paid or made
available for payment. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year of twelve 30-day months.
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 20___ Note (or one or more Predecessor 20___ Notes) is
registered at the close of business on the Record Date for such interest, which
shall be the 15th day of the calendar month preceding the month in which such
Interest Payment Date occurs (whether or not a Business Day) except that the
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 Record Date and may either be paid to the
Person in whose name this 20___ Note (or one or more Predecessor 20___ Notes) is
registered at the close of business on a
21
subsequent Record Date (which shall be not less than five Business Days prior to
the date of payment of such defaulted interest) for the payment of such
defaulted interest to be fixed by the Trustee, notice whereof shall be given to
Holders of 20___ Notes not less than 15 days preceding such subsequent Record
Date.
Payment of the principal of (and premium, if any) and interest, if any,
on this 20___ Note will be made at the office or agency of the Issuer 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 Issuer 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 20___ 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 20___
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated:
CMS ENERGY CORPORATION
By
----------------------------
22
Its:
By
----------------------------
Its:
Attest:
SECTION 2.04. Form of Reverse of 20___ Note.
This ____% Senior Note Due 20___ is one of a duly authorized
issue of securities of the Issuer (herein called the "20___ Notes"), issued and
to be issued under an Indenture, dated as of September 15, 1992, as supplemented
by certain supplemental indentures, including the Seventh Supplemental
Indenture, dated as of January ___, 1999 (herein collectively referred to as the
"Indenture"), between the Issuer and NBD Bank, a Michigan banking corporation
(formerly known as NBD Bank, National Association), 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 Issuer, the Trustee, and the Holders of the 20___
Notes and of the terms upon which the 20___ Notes are, and are to be,
authenticated and delivered. This 20___ Note is one of the series designated on
the face hereof, limited in aggregate principal amount to $480,000,000.
The 20___ Notes are subject to redemption at the option of the Issuer,
in whole or in part, upon not more than 60 nor less than 30 days' notice as
provided in the Indenture at any time and from time to time, at a redemption
price equal to 100% of the principal amount of such 20___ Notes being redeemed
plus the Applicable Premium, if any, thereon at the time of redemption, together
with accrued interest, if any, thereon to the redemption date, but interest
installments whose Stated Maturity is on or prior to such redemption date will
be payable to the Holder of record at the close of business on the relevant
Record Date referred to on the face hereof, all as provided in the Indenture. In
no event will the
23
redemption price ever be less than 100% of the principal amount of the 20___
Notes plus accrued interest to the redemption date.
The following definitions are used to determine the Applicable Premium:
"Applicable Premium" means, with respect to a 20___ Note (or portion
thereof) being redeemed at any time, the excess of (A) the present value at such
time of the principal amount of such 20___ Note (or portion thereof) being
redeemed plus all interest payments due on such 20___ Note (or portion thereof),
which present value shall be computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (B) the principal amount of such 20___
Note (or portion thereof) being redeemed at such time. For purposes of this
definition, the present values of the interest and principal payments will be
determined in accordance with generally accepted principles of financial
analysis.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the redemption
date or, in the case of defeasance, prior to the date of deposit (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the then remaining average life to
stated maturity of the 20___ Notes; provided, however, that if the average life
to stated maturity of the 20___ Notes is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given.
In the event of redemption of this 20___ Note in part only, a new 20___
Note for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.
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If a Change in Control occurs, the Issuer shall notify the Holder of
this 20___ Note of such occurrence and such Holder shall have the right to
require the Issuer to make a Required Repurchase of all or any part of this
20___ Note at a Change in Control Purchase Price equal to 101% of the principal
amount of this 20___ 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 20___ Note, a new 20___
Note or Notes for the unrepurchased portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If an Event of Default with respect to this 20___ Note shall occur and
be continuing, the principal of this 20___ 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, repurchase date, Stated
Maturity or Maturity of any 20___ Note shall not be a Business Day at any Place
of Payment, then (notwithstanding any other provision of the Indenture or this
20___ 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, repurchase 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, repurchase date, Stated Maturity or Maturity, as the case may be, to such
Business Day.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of this 20___ Note or (ii) certain restrictive covenants and
Events of Default with respect to this 20___ Note, in each case upon compliance
with certain conditions set forth therein.
25
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of all outstanding 20___ Notes under the
Indenture at any time by the Issuer and the Trustee with the consent of the
Holders of not less than a majority in principal amount of Securities of all
series then outstanding and affected (voting as one class).
The Indenture permits the Holders of not less than a majority in
principal amount of Securities of all series at the time outstanding with
respect to which a default shall have occurred and be continuing (voting as one
class) to waive on behalf of the Holders of all outstanding Securities of such
series any past default by the Issuer, provided that no such waiver may be made
with respect to a default in the payment of the principal of or the interest on
any Security of such series or the default by the Issuer 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 20___ 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
Securities of each affected series (voting as one class) shall have made written
request, and offered reasonable 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 Securities of each affected
series (voting as one class) 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 20___ Note on or after the respective due dates
expressed herein.
26
No reference herein to the Indenture and no provision of this 20___
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and any premium and
interest on this 20___ 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 20___ Note is registerable in the Security
Register, upon surrender of this 20___ Note for registration of transfer at the
office or agency of the Issuer in any place where the principal of and any
premium and interest on this 20___ Note are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Issuer and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new 20___ 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 20___ Notes 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, 20___ Notes are
exchangeable for a like aggregate principal amount of 20___ Notes 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 Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Issuer shall not be required to (a) issue, exchange or register the
transfer of this 20___ Note for a period of 15 days next preceding the mailing
of the notice of redemption of 20___ Notes or (b) exchange or register the
transfer of any 20___ Note or any portion thereof selected, called or being
27
called for redemption, except in the case of any 20___ Note to be redeemed in
part, the portion thereof not so to be redeemed.
Prior to due presentment of this 20___ Note for registration of
transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this 20___ Note is registered as the owner hereof
for all purposes, whether or not this 20___ Note be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this 20___ Note without definition which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
SECTION 2.05. 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 Securities of the series designated herein referred
to in the within-mentioned Indenture.
----------------------------------------,
as Trustee
By
--------------------------------------
Authorized Officer
ARTICLE III
CHANGE OF CONTROL
SECTION 3.01. 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 20___
28
Note shall have the right to require that the Issuer repurchase (a "Required
Repurchase") all or any part of such Holder's 20___ Note at a repurchase price
payable in cash equal to 101% of the principal amount of such 20___ Note plus
accrued interest to the Purchase Date (the "Change in Control Purchase Price").
(a) Within 30 days following the Change in Control Date, the
Issuer 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 Issuer to
repurchase all or any part of such Holder's 20___ 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 20___ Notes to be repurchased, which shall be
consistent with this Section and the Indenture.
(b) Holders electing to have a 20___ Note repurchased must
deliver a written notice (the "Change in Control Purchase Notice") to
the Paying Agent (initially the Trustee) at its corporate trust office
in Detroit, Michigan, 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
29
Notice shall state: (i) the portion of the principal amount of any
20___ Notes to be repurchased, which portion must be $1,000 or an
integral multiple thereof; (ii) that such 20___ Notes are to be
repurchased by the Issuer pursuant to the change in control provisions
of the Indenture; and (iii) unless the 20___ Notes are represented by
one or more Global Notes, the certificate numbers of the 20___ Notes to
be delivered by the Holder thereof for repurchase by the Issuer. 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 20___ Notes as to which the withdrawal
notice relates and the principal amount of such 20___ Notes, if any,
which remains subject to a Change in Control Purchase Notice.
If a 20___ Note is represented by a Global Note (as described
in Article VI below), the Depositary or its nominee will be the Holder
of such 20___ Note and therefore will be the only entity that can elect
a Required Repurchase of such 20___ Note. To obtain repayment pursuant
to this Section 3.01 with respect to such 20___ Note, the beneficial
owner of such 20___ Note must provide to the broker or other entity
through which it holds the beneficial interest in such 20___ 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
3.01. 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 3.01 to such
beneficial owner.
30
(c) Payment of the Change of Control Purchase Price for a
20___ Note for which a Change in Control Purchase Notice has been
delivered and not withdrawn is conditioned (except in the case of a
20___ Note represented by one or more Global Notes) upon delivery of
such 20___ Note (together with necessary endorsements) to the Paying
Agent at its office in Detroit, Michigan, 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 20___ Note will be made promptly following the later of
the Purchase Date or the time of delivery of such 20___ 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
20___ Note on the Business Day following the Purchase Date, then, on
and after such date, interest will cease accruing, 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 20___ Note).
(d) The Issuer shall comply with the provisions of
Regulation 14E and any other tender offer rules under the Exchange Act,
which may then be applicable in connection with any offer by the Issuer
to repurchase 20___ Notes at the option of Holders upon a Change in
Control.
(e) No 20___ Note may be repurchased by the Issuer 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 20___ Notes).
31
ARTICLE IV
ADDITIONAL COVENANTS OF THE ISSUER
WITH RESPECT TO THE 20___ NOTES
SECTION 4.01. Existence. So long as any of the 20___ Notes are
outstanding, subject to Article 9 of the Original Indenture, the Issuer will do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
SECTION 4.02. Limitation on Certain Liens. (a) So long as any of the
20___ Notes are outstanding, the Issuer 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 Issuer or any Subsidiary a preferential interest (hereinafter in
this Section referred to as a "Lien") upon or with respect to any of its
property of any character, including without limitation any shares of Capital
Stock of Consumers or Enterprises, without making effective provision whereby
the 20___ 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
Issuer or (c) Support Obligations;
(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
Issuer in the ordinary
32
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 Issuer; 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 Issuer at
such date shall not exceed 5% of Consolidated Net Tangible Assets at such date.
SECTION 4.03. Limitation on Consolidation, Merger, Sale or Conveyance.
So long as any of the 20___ Notes are outstanding and until the 20___ Notes are
rated BBB- or above (or an equivalent rating) by Standard & Poor's and one Other
Rating Agency (or, if Standard & Poor's shall change its rating system, an
equivalent of such rating then employed by such organization), at which time the
Issuer will be permanently released from the provisions of this Section 4.03,
and subject also to Article Nine of the Indenture, the Issuer shall not
consolidate with or merge into any other Person or sell, lease or convey the
property of the Issuer 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 Issuer 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 4.04 hereof.
33
SECTION 4.04. Limitation on Consolidated Indebtedness. (a) So long as
any of the 20___ Notes are outstanding and until the 20___ Notes are rated BBB-
or above (or an equivalent rating) by Standard & Poor's and one Other Rating
Agency (or, if Standard & Poor's shall change its rating system, an equivalent
of such rating then employed by such organization), at which time the Issuer
will be permanently released from the provisions of this Section 4.04, the
Issuer shall not, and shall not permit any Consolidated Subsidiary of the Issuer
to, issue, create, assume, guarantee, incur or otherwise become liable for
(collectively, "issue"), directly or indirectly, any Indebtedness unless the
Consolidated Coverage Ratio of the Issuer 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
Issuer 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
Issuer 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 1.7 to 1.0.
(b) Notwithstanding the foregoing paragraph, the Issuer or any
Restricted Subsidiary may issue, directly or indirectly, the following
Indebtedness:
(1) Indebtedness of the Issuer to banks not to exceed $1,000,000,000
in aggregate outstanding principal amount at any time;
34
(2) Indebtedness (other than Indebtedness described in clause (1) of
this Subsection) outstanding on the date of this Seventh Supplemental
Indenture, as set forth on Schedule 4.04(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 20___ Notes, the Indebtedness is
subordinated to the 20___ Notes in right of payment;
(3) Indebtedness of the Issuer owed to and held by a Subsidiary and
Indebtedness of a Subsidiary owed to and held by the Issuer; provided,
however, that, in the case of Indebtedness of the Issuer 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 Issuer or a Subsidiary) shall
be deemed for the purposes of this Subsection to constitute the issuance of
such Indebtedness by the Issuer;
(4) Indebtedness of the Issuer issued in exchange for, or the proceeds
of which are used to refund or refinance, Indebtedness of the Issuer 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
35
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 20___ Notes, the Indebtedness so issued
is subordinated to the 20___ Notes in right of payment;
(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.
(6) Indebtedness of a Consolidated Subsidiary issued to acquire,
develop, improve, construct or to provide working capital for a gas, oil or
electric generation, exploration, production, distribution, storage or
transmission facility and related assets, provided that such Indebtedness is
without recourse to any assets of the Issuer, Consumers, Enterprises, CMS
Generation, CMS Oil & Gas, CMS Electric and Gas, CMS Gas Transmission and
Storage, CMS MST or any other Designated Enterprises Subsidiary;
36
(7) Indebtedness of a Person existing at the time at which such person
became a Subsidiary and not incurred in connection with, or in contemplation
of, such Person becoming a Subsidiary. Such Indebtedness shall be deemed to
be incurred on the date the acquired Person becomes a Consolidated
Subsidiary;
(8) Indebtedness issued by the Issuer not to exceed $150,000,000 in
aggregate principal amount at any time; and
(9) Indebtedness of a Consolidated Subsidiary in respect of rate
reduction bonds issued to recover electric restructuring transition costs of
Consumers provided that such Indebtedness is without recourse to the assets
of Consumers.
SECTION 4.05. Limitation on Restricted Payments. (a) So long as the
20___ Notes are outstanding and until the 20___ Notes are rated BBB- or above
(or an equivalent rating) by Standard & Poor's and one Other Rating Agency (or,
if Standard & Poor's shall change its rating system, an equivalent of such
rating then employed by such organization), at which time the Issuer will be
permanently released from the provisions of this Section 4.05, the Issuer shall
not, and shall not permit any Restricted Subsidiary of the Issuer, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on the
Capital Stock of the Issuer to the direct or indirect holders of its Capital
Stock (except dividends or distributions payable solely in its Non-Convertible
Capital Stock or in options, warrants or other rights to purchase such
Non-Convertible Capital Stock and except dividends or distributions payable to
the Issuer or a Subsidiary), (ii) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of the Issuer, or (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity or scheduled repayment thereof, any Subordinated Indebtedness (any such
dividend, distribution, purchase, redemption, repurchase, defeasing, other
acquisition or retirement being hereinafter referred to as a "Restricted
Payment") if at the time the Issuer
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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 _____ would exceed the sum of:
(A) $100,000,000;
(B) 100% of Consolidated Net Income, accrued during the
period (treated as one accounting period) from _________ 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 Cash Proceeds received by the Issuer
from the issue or sale of or contribution with respect to its
Capital Stock subsequent to __________.
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 4.05(a) shall not prohibit:
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(i) any purchase or redemption of Capital Stock of the
Issuer made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Issuer
(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 Issuer's Capital Stock issued in respect of
the acquisition of any business or assets by the Issuer 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 4.06. Limitation on Asset Sales. So long as any of the 20___
Notes are outstanding, the Issuer may not sell, transfer or otherwise dispose of
any property or assets of the Issuer, including Capital Stock of any
Consolidated Subsidiary, in one transaction or a series of transactions in an
amount which exceeds $50,000,000 (an "Asset Sale") unless the Issuer shall (i)
apply an amount equal to such excess Net Cash Proceeds to permanently repay
Indebtedness of a Consolidated Subsidiary or Indebtedness of the Issuer which is
pari passu with the 20___ Notes or (ii) invest an equal amount not so
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used in clause (i) in property or assets of related business within 24 months
after the date of the Asset Sale (the "Application Period") or (iii) apply such
excess Net Cash Proceeds not so used in (i) or (ii) (the "Excess Proceeds") to
make an offer, within 30 days after the end of the Application Period, to
purchase from the Holders on a pro rata basis an aggregate principal amount of
20___ Notes on the relevant purchase date equal to the Excess Proceeds on such
date, at a purchase price equal to 100% of the principal amount of the 20___
Notes on the relevant purchase date and unpaid interest, if any, to the purchase
date. The Issuer shall only be required to make an offer to purchase 20___ Notes
from Holders pursuant to subsection (iii) if the Excess Proceeds equal or exceed
$25,000,000 at any given time.
The procedures to be followed by the Issuer in making an offer to
purchase 20___ Notes from the Holders with Excess Proceeds, and for the
acceptance of such offer by the Holders, shall be the same as those set forth in
Section 3.01 herein with respect to a Change in Control.
ARTICLE V
ADDITIONAL EVENTS OF DEFAULT
WITH RESPECT TO THE 20___ NOTES
SECTION 4.01. Definition. All of the events specified in clauses (a)
through (h) of Section 5.1 of the Original Indenture shall be "Events of
Default" with respect to the 20___ Notes.
SECTION 4.02. Amendments to Section 5.1 of the Original Indenture.
Solely for the purpose of determining Events of Default with respect to the
20___ Notes, paragraphs (e), (f) and (h) of Section 5.1 of the Original
Indenture shall be amended such that each and every reference therein to the
Issuer shall be deemed to mean either the Issuer or Consumers.
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ARTICLE VI
GLOBAL NOTES
The 20___ Notes will be issued initially in the form of Global Notes.
"Global Note" means a registered 20___ Note evidencing one or more 20___ Notes
issued to a depositary (the "Depositary") or its nominee, in accordance with
this Article and bearing the legend prescribed in this Article. One or more
Global Notes will represent all 20___ Notes. The Issuer shall execute and the
Trustee shall, in accordance with this Article and the Issuer Order with respect
to the 20___ 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 20___ 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 the Global 20___ Note is
presented by an authorized representative of the Depository to the Issuer or its
agent for registration of transfer, exchange or payment, and any 20___ Note
issued is registered in the name of a nominee of the Depository, or in such
other name as is requested by an authorized representative of the Depository
(and any payment is made to the nominee of the Depository, or to such other
entity as is requested by an authorized representative of the Depository), any
transfer, pledge or other use hereof for value or otherwise by or to any Person
is wrongful inasmuch as the registered owner hereof has an interest herein."
Notwithstanding Section 2.8 of the Indenture, unless and until it is
exchanged in whole or in part for 20___ Notes in definitive form, a Global Note
representing one or more 20___ 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 20___ Notes or a
nominee of such successor Depositary.
If at any time the Depositary for the 20___ Notes is unwilling or
unable to continue as
41
Depositary for the 20___ Notes, the Issuer shall appoint a successor Depositary
with respect to the 20___ Notes. If a successor Depositary for the 20___ Notes
is not appointed by the Issuer by the earlier of (i) 90 days from the date the
Issuer receives notice to the effect that the Depositary is unwilling or unable
to act, or the Issuer 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 Issuer will execute, and the Trustee, upon receipt of
a Issuer Order for the authentication and delivery of definitive 20___ Notes,
will authenticate and deliver 20___ Notes in definitive form in an aggregate
principal amount equal to the principal amount of the Global Note or Notes
representing such 20___ Notes in exchange for such Global Note or Notes.
The Issuer may at any time and in its sole discretion determine that
the 20___ 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 Issuer will
execute, and the Trustee, upon receipt of a Issuer Order for the authentication
and delivery of definitive 20___ Notes, will authenticate and deliver 20___
Notes in definitive form in an aggregate principal amount equal to the principal
amount of the Global Note or Notes representing such 20___ Notes in exchange for
such Global Note or Notes.
The Depositary for such 20___ Notes may surrender a Global Note or
Notes for such 20___ Notes in exchange in whole or in part for 20___ Notes in
definitive form on such terms as are acceptable to the Issuer and such
Depositary. Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and deliver, without service charge:
(i) to each Person specified by such Depositary a new 20___ 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
42
any, between the principal amount of the surrendered Global Note and
the aggregate principal amount of 20___ Notes in definitive form
delivered to Holders thereof.
In any exchange provided for in this Article, the Issuer will execute
and the Trustee will authenticate and deliver 20___ Notes in definitive
registered form in authorized denominations.
Upon the exchange of a Global Note for 20___ Notes in definitive form,
such Global Note shall be cancelled by the Trustee. 20___ 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 20___ Notes to the persons in whose names such 20___
Notes are so registered.
ARTICLE VII
DEFEASANCE
All of the provisions of Article Ten of the Original Indenture shall be
applicable to the 20___ Notes. Upon satisfaction by the Issuer of the
requirements of Section 10.1(c) of the Indenture, in connection with any
covenant defeasance (as provided in Section 10.1(c) of the Indenture), the
Issuer shall be released from its obligations under Article Nine of the Original
Indenture and under Articles III and IV of this Seventh Supplemental Indenture
with respect to the 20___ Notes.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
This Seventh Supplemental Indenture is a supplement to the Original
Indenture. As
43
supplemented by this Seventh Supplemental Indenture, the Original Indenture is
in all respects ratified, approved and confirmed, and the Original Indenture and
this Seventh Supplemental Indenture shall together constitute one and the same
instrument.
TESTIMONIUM
This Seventh 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Seventh
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)
NBD BANK
as Trustee
By:
--------------------------
Attest:
(Corporate Seal)
