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EXHIBIT 10.7
PROMISSORY NOTE
$56,411,000 May 26, 1999
CMS OIL AND GAS COMPANY, a corporation duly organized and existing in good
standing under the laws of the State of Michigan (the "Borrower"), for value
received, hereby promises to pay to the order of CMS ENERGY CORPORATION, a
Michigan corporation (the "Lender"), the principal sum of Fifty-Six Million Four
Hundred and Eleven Thousand Dollars ($56,411,000) on April 15, 2009.
The Borrower promises to pay interest on the unpaid principal balance of
the loan made hereunder commencing on April 15, 1999 to the maturity date of
such loan, at a rate per annum equal to the Eurodollar Rate plus two percent for
the most recent quarter (the "Borrowing Rate"), payable quarterly in arrears and
on such maturity date, provided, however, that for the period April 15, 1999 to
April 14, 2004 interest shall be determined and added to the principal balance
of this note on such quarterly dates rather than being paid on such dates. Any
principal not paid when due shall bear interest from maturity until paid in
full, payable upon demand, at a rate per annum equal to 120% of the Borrowing
Rate. Interest shall be calculated on the basis of a year of 360 days and actual
days elapsed.
All payments hereunder shall be made in lawful money of the United States
and in immediately available funds. Any extension of time for the payment of the
principal of this note resulting from the due date falling on a Saturday, Sunday
or legal holiday shall be included in computation of interest.
If (i) any sum payable on any liability of the Borrower to the Lender
hereunder shall not be paid when due and such default shall continue for 30
consecutive days; or (ii) the Borrower shall default on any obligation for
repayment of borrowed money and the holder of such borrowed money shall
accelerate the due date thereof, the Lender may, at its option, declare the
principal and interest on this note immediately due and payable, without
protest, presentment, notice or demand, all of which the Borrower hereby waives.
The Borrower agrees to pay on demand all expenses, including reasonable
attorneys fees, the Lender may incur in connection with the enforcement of this
note.
The indebtedness evidenced by this note (including the obligations
described in the preceding paragraph) and any renewals or extension hereof,
shall at all times be wholly subordinate and junior in right of payment to any
and all present and future indebtedness, obligations and liabilities of the
Borrower pursuant to the Credit Agreement dated as of May 26, 1999 among the
Borrower, the banks now or hereafter parties thereto, the syndication agent and
documentation agent thereto, and The First National Bank of Chicago, as Agent,
as such Credit Agreement is amended, modified, restated or refinanced from time
to time (the "Credit Agreement") and all renewals or increases therein, and
further including without limitation all reimbursement obligations pursuant to
any letters of credit issued pursuant thereto and all
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obligations pursuant to any promissory notes issued pursuant thereto, all
amounts accruing after the filing of any petition in bankruptcy or similar loss,
whether or not such amount is an allowable claim, all guarantees, all guarantees
for any of the foregoing and all rights and remedies of the holders of any of
the foregoing (herein called a "Superior Indebtedness"), in the manner and with
the force and effect hereafter set forth:
(1) In the event of any liquidation, dissolution, or winding up of the
Borrower, or of any execution, receivership, insolvency, bankruptcy,
liquidation, reorganization or other similar proceeding relative to the
Borrower or its property; all Superior Indebtedness shall first be paid
in full in cash or cash equivalents before any payment is made upon the
indebtedness evidenced by this note; and in any such event any payment
or distribution of any kind or character, whether in cash, property or
securities (other than in securities, including securities, or other
evidences of indebtedness, the payment of which is subordinated to the
payment of all Superior Indebtedness which may at the time be
outstanding in the same manner as all the subordinated notes are
subordinated to the Superior Indebtedness, but only to the extent the
court awarding or permitting the distribution of such securities states
that in doing so it is giving effect to the subordination of this note
to the Superior Indebtedness set forth herein) which shall be made upon
or in respect of this note shall be paid over to the holders of
Superior Indebtedness, pro rata, for application in payment thereof
unless and until such Superior Indebtedness shall have been paid or
satisfied in full;
(2) In the event that this note is declared or becomes due and payable
because of the occurrence of any event of default hereunder or
otherwise than at the option of the Borrower, under circumstances when
the forgoing clause (1) shall not be applicable, the Lender shall be
entitled to payments only after there shall first have been paid in
full in cash or cash equivalents all Superior Indebtedness outstanding
at the time this note so becomes due and payable because of any such
event, or payment shall have been made provided for in a manner
satisfactory to the holders of such Superior Indebtedness; and
(3) During the continuance of any default with respect to any Superior
Indebtedness permitting the holders thereof to accelerate the maturity
of such Superior Indebtedness, no payment of principal, premium or
interest or other amounts shall be made on this note, unless permitted
by the Subordination Agreement (as defined below).
In the event that, notwithstanding the foregoing, any payment or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities, shall be received by any trustee, agent
or payment agent or the holders of this note (or, if the borrower of any
subsidiary or affiliate of the Borrower is acting as payment agent, money assets
or securities shall be segregated or held in trust) on account of principal of,
premium on, interest on or other amounts with respect to this note contrary to
terms hereof, such payment or distribution shall be received, segregated from
other funds, and held in trust by such trustee, agent, paying agent or holder
for the benefit of, and shall immediately be paid over to, the holders of
Superior Indebtedness or their representative, ratably according to the
respective amounts of Superior Indebtedness held or represented by each.
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The Lender undertakes and agrees for the benefit of each holder of Superior
Indebtedness to execute, verify, deliver and file any proofs of claim which any
holder of Superior Indebtedness may at any time require in order to prove and
realize upon any rights or claims pertaining to this note and to effectuate the
full benefit of the subordination contained herein; and upon failure of the
Lender so to do, any such holder of Superior Indebtedness shall be deemed to be
irrevocably appointed the agent and attorney-in-fact of the Lender to execute,
verify, deliver and file any such proofs of claim.
No right of any holder of any Superior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Borrower or the holders of
Superior Indebtedness, or by any noncompliance by the Borrower with any of the
terms, provisions and covenants of this note or the agreement under which they
are issued, regardless of any knowledge thereof that any holder of Superior
Indebtedness may have or be otherwise charged with.
The Borrower agrees, for the benefit of the holders of Superior
Indebtedness, that in the event that this note is declared due and payable
before its expressed maturity because of the occurrence of a default hereunder,
(i) the Borrower will give prompt notice in writing of such happening to the
holders of Superior Indebtedness, and (ii) all Superior Indebtedness shall
forthwith become immediately due and payable upon demand, regardless of the
express maturity thereof.
The Borrower may make optional prepayments on this note at any time,
provided that no event of default under the Superior Indebtedness and no event
which may become such event of default with notice of lapse of time, or both,
has occurred and is continuing at the time of such payment or would be caused by
such payment, in which case the Borrower shall not make, and the holder of this
note shall not accept, any such optional prepayment.
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The foregoing provisions are solely for the purpose of defining the
relative rights of the holders of Superior Indebtedness on the one hand, and the
Lender on the other hand, and nothing herein shall impair, as between the
Borrower and the Lender, the obligation of the Borrower which is unconditional
and absolute, to pay the principal, premium, if any, and interest on this note
in accordance with its terms, nor shall anything herein prevent the Lender from
exercising all remedies otherwise permitted by applicable law or hereunder upon
default hereunder, subject to the rights of the holders of Superior Indebtedness
as herein provided.
This note is subject to further terms and conditions specified in the
Subordination Agreement executed among the Lender and The First National Bank of
Chicago, as Agent under the Credit Agreement dated as of the date hereof (as
amended or modified from time to time, the "Subordination Agreement"), and if
there is any conflict between the terms and provisions of this note and the
Subordination Agreement that terms and provisions of the Subordination Agreement
shall control.
This note supercedes and replaces in its entirety the note dated January 7,
1998 in the amount of $56,411,000 payable by Borrower to Lender.
This note shall be governed by, and interpreted and construed in accordance
with, the laws of the State of Michigan.
CMS OIL AND GAS COMPANY
By: /s/ William H. Stephens III
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Its: Executive Vice President,
General Counsel & Secretary
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