FIRST SUPPLEMENTAL INDENTURE
dated as of May 1, 1998
____________________
This First Supplemental Indenture, dated as of the 1st day
of May, 1998 between Consumers Energy Company, a corporation duly
organized and existing under the laws of the State of Michigan
(hereinafter called the "Company") and having its principal office at 212
West Michigan Avenue, Jackson, Michigan 49201, and The Chase Manhattan
Bank, a New York banking corporation (hereinafter called the "Trustee")
and having its principal Corporate Trust Office at 450 W. 33rd Street,
15th Floor, New York, New York, 10001.
WITNESSETH:
WHEREAS, the Company and the Trustee entered into an
Indenture, dated as of February 1, 1998 (the "Original Indenture"),
pursuant to which one or more series of debt of the Company (the "Notes")
may be issued from time to time; and
WHEREAS, Section 2.01 of the Original Indenture permits
the terms of any series of Notes to be established in an indenture
supplemental to the Original Indenture; and
WHEREAS, Section 13.01 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 Notes to establish the
form and terms of the Notes of any series; and
WHEREAS, the Company has requested the Trustee to join
with it in the execution and delivery of this First Supplemental Indenture
in order to supplement and amend the Original Indenture by, among other
things, establishing the form and terms of two series of Notes to be known
as the Company's "Senior Notes, 6.20%Reset Put Securities, Series A, Due
2008" (the "Series A REPS"), and the Company's "Senior Notes, 6.20%Reset
Put Securities, Series B, Due 2008" (the "Series B REPS" and collectively
with the Series A REPS, the "REPS") Company's providing for the issuance
of the REPS and amending and adding certain provisions thereof for the
benefit of the Holders of the REPS; and
WHEREAS, the Company and the Trustee desire to enter into
this First Supplemental Indenture for the purposes set forth in Sections
2.01 and 13.01 of the Original Indenture as referred to above; and
WHEREAS, the Company has furnished the Trustee with a
Board Resolution authorizing the execution of this First Supplemental
Indenture; and
WHEREAS, all things necessary to make this First
Supplemental Indenture a valid agreement of the Company and the Trustee
and a valid supplement to the Original Indenture have been done,
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises and the purchase
of the REPS 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 REPS, as
follows:
ARTICLE I
STANDARD PROVISIONS; DEFINITIONS
SECTION 1.01. STANDARD PROVISIONS. The Original
Indenture together with this First Supplemental Indenture are hereinafter
sometimes collectively referred to as the "Indenture." All capitalized
terms which are used herein and not otherwise defined herein or in
Exhibits A or B hereto are defined in the Indenture and are used herein
with the same meanings as in the Indenture.
ARTICLE II
DESIGNATION AND TERMS OF THE REPS; FORMS
SECTION 2.01. ESTABLISHMENT OF SERIES. There are hereby
created a series of Notes to be known and designated as the "Senior Notes,
6.20% Reset Put Securities, Series A, Due 2008" and "Senior Notes, 6.20%
Reset Put Securities, Series B, Due 2008, respectively, each such series
limited in aggregate principal amount (except as contemplated in Section
2.05(c) of the Indenture) to $250,000,000. The form and terms of the REPS
are established in the form of Notes attached hereto as Exhibits A and B.
ARTICLE III
ADDITIONAL EVENTS OF DEFAULT
WITH RESPECT TO THE REPS
SECTION 3.01 DEFINITION. All of the events specified in
clauses (1) through (6) of Section 8.01(a) of the Original Indenture shall
be "Events of Default" with respect to the REPS. In addition, the
following event that shall have occurred and be continuing shall be an
additional Event of Default with respect to each series of REPS: (7)
default in the payment of the Put Price (as defined in each form of REPS
attached hereto) at or prior to the Coupon Reset Date.
ARTICLE IV
MANDATORY PUT
SECTION 4.01. MANDATORY PUT OPTION OF THE TRUSTEE. The
Trustee agrees to exercise the Mandatory Put on behalf of the Holders of
the REPS as provided in each form of REPS set forth in Exhibits A and B
hereto and to take such other action as is contemplated in such form to be
taken by the Trustee.
ARTICLE V
SUPPLEMENTAL INDENTURES
SECTION 5.01. EFFECT ON ORIGINAL INDENTURE. This First
Supplemental Indenture is a supplement to the Original Indenture. As
supplemented by this First Supplemental Indenture, the Original Indenture
is in all respects ratified, approved and confirmed, and the Original
Indenture and this First Supplemental Indenture shall together constitute
one and the same instrument.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. COUNTERPARTS. This First 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.
SECTION 6.02. RECITALS. The recitals contained herein
shall be taken as the statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this First
Supplemental Indenture.
SECTION 6.03. GOVERNING LAW. This First Supplemental
Indenture shall be governed by and construed in accordance with the laws
of the jurisdiction which govern the Original Indenture and its
construction.
IN WITNESS WHEREOF, the parties hereto have caused this
First 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.
CONSUMERS ENERGY COMPANY
By: /s/ A.M. Wright
_______________________________
Name: Alan M. Wright
Title: Senior Vice President and
Chief Financial Officer
Attest: /s/ Thomas A. McNish
(Corporate Seal)
THE CHASE MANHATTAN BANK,
AS TRUSTEE
By: /s/ Glenn G. McKeever
________________________________
Name: Glenn G. McKeever
Title: Vice President
Attest: /s/ Wanda Eiland
Wanda Eiland
Trust Officer
(Corporate Seal)
STATE OF MICHIGAN )
)SS.
COUNTY OF WAYNE )
On th 1st day of May, 1998, before me personally came ALAN M.
WRIGHT, to me known, who, being by me duly sworn, did depose and say that
he resides at Ann Arbor, Michigan; that he is Senior Vice President and
Chief Financial Officer of Consumers Energy Company, a Michigan
corporation, and which executed the foregoing First Supplemental Indenture
that he knows the seal of said corporation; that the seal affixed to said
First Supplemental Indenture is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and
that he signed his name thereto by like authority.
/s/ Sherry Ann White
- ------------------------------
Sherry Ann White
Notary Public
Wayne County, Michigan
My Commission Expires: March 7, 2002
EXHIBIT A
REGISTERED REGISTERED
THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE
DEPOSITARY (REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL
IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED
HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT 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 OR BY
THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST THEREIN.
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE SECOND SENTENCE HEREOF. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO CONSUMERS OR ANY OF ITS SUBSIDIARIES, (B)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO CONSUMERS
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
CONSUMERS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "U.S. PERSONS" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION
S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING.
CONSUMERS ENERGY COMPANY
SENIOR NOTE, 6.20% RESET PUT SECURITIES, SERIES A, DUE 2008
CUSIP: NUMBER: 1
ORIGINAL ISSUE DATE: May 1, 1998 PRINCIPAL AMOUNT:
INTEREST RATE: To but excluding MATURITY DATE: May 1, 2008, subject
May 1, 2003, 6.20%. From and to mandatory repayment of principal
including May 1, 2003, at the to the existing Holder hereof
Coupon Reset Rate, as described pursuant to the Call Option or
on the reverse of this Note. Mandatory Put described on the
reverse of this Note.
CONSUMERS ENERGY COMPANY, a corporation of the State of Michigan
(the "COMPANY"), for value received hereby promises to pay to Cede & Co.
or registered assigns, the principal sum of
DOLLARS
on the Maturity Date set forth above, and to pay interest thereon from May
1, 1998 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semiannually in arrears on May 1 and
November 1 in each year, commencing November 1, 1998, at the per annum
Interest Rate set forth above, until but excluding May 1, 2003 (the
"Coupon Reset Date"), whereupon the interest rate will be reset to the
Coupon Reset Rate as set forth on the reverse hereof (provided that during
the continuation of a Registration Default, as defined in the Registration
Rights Agreement dated as of May 1, 1998 among the Company, Morgan Stanley
& Co. Incorporated, Chase Securities Inc., First Chicago Capital Markets,
Inc. and Salomon Brothers Inc. (i) the Interest Rate shall be 6.45% per
annum, until but excluding the Coupon Reset Date, and (ii) shall be a
rate equal to the sum of the Coupon Reset Rate and .25% from and after the
Coupon Reset Date). No interest shall accrue on the Maturity Date, so
long as the principal amount of this Global Note is paid on the Maturity
Date. The interest so payable and punctually paid or duly provided for on
any such Interest Payment Date will, as provided in the Indenture, be paid
to the Person in whose name this Note is registered at the close of
business on the Regular Record Date for such interest, which shall be the
April 15 or October 15, as the case may be, next preceding such Interest
Payment Date; provided that interest payable on the Maturity Date set
forth above or, if applicable, acceleration, shall be payable to the
Person to whom principal shall be payable. Except as otherwise provided in
the Indenture (as defined below), any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date and shall be paid to the Person in whose name
this Note 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 Noteholders not fewer than ten days prior
to such Special Record Date. Unless the certificate of authentication
hereon has been executed by the Trustee, directly or through an
Authenticating Agent by manual signature of an authorized officer, this
Global Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
All terms used in this Global Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture unless
otherwise indicated herein.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
CONSUMERS ENERGY COMPANY
Dated: May 1, 1998 By:
_________________________________
Title: Senior Vice President and
Chief Financial Officer
Attest: _____________________________
Title: Vice President and Secretary
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This Note is one of the Notes of
the series herein designated,
described or provided for in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, As Trustee
By: _____________________________
Authorized Officer
This Global Note is a global security in respect of a duly
authorized issue of Senior Notes, 6.20% Reset Put Securities, Series A,
Due 2008, (the "NOTES OF THIS SERIES", which term includes any Global
Notes representing such Notes) of the Company issued and to be issued
under an Indenture dated as of February 1, 1998, between the Company and
The Chase Manhattan Bank, as trustee (the "TRUSTEE", which term includes
any successor Trustee under the Indenture) and indentures supplemental
thereto (collectively, the "INDENTURE"). Under the Indenture, one or more
series of notes may be issued and, as used herein, the term "Notes" refers
to the Notes of this Series and any other outstanding series of Notes.
Reference is hereby made to the Indenture for a more complete statement of
the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Noteholders and of the
terms upon which the Notes are and are to be authenticated and delivered.
This Global Note has been issued in respect of the series designated on
the first page hereof, limited in aggregate principal amount to
$250,000,000.
Prior to the Release Date (as hereinafter defined), the Notes will
be secured by first mortgage bonds (the "SENIOR NOTE FIRST MORTGAGE
BONDS") delivered by the Company to the Trustee for the benefit of the
Holders of the Notes, issued under the Indenture, dated as of September 1,
1945, from the Company to The Chase Manhattan Bank, as successor trustee
to City Bank Farmers Trust Company (the "MORTGAGE TRUSTEE"), as
supplemented and modified (collectively, the "FIRST MORTGAGE"). Reference
is made to the First Mortgage and the Indenture for a description of the
rights of the Trustee as holder of the Senior Note First Mortgage Bonds,
the property mortgaged and pledged, the nature and extent of the security,
the rights of the holders of first mortgage bonds under the First Mortgage
and the rights of the Company and of the Mortgage Trustee in respect
thereof, the duties and immunities of the Mortgage Trustee and the terms
and conditions upon which the Senior Note First Mortgage Bonds are secured
and the circumstances under which additional first mortgage bonds may be
issued.
From and after such time as all first mortgage bonds (other than
Senior Note First Mortgage Bonds) issued under the First Mortgage have
been retired through payment, redemption or otherwise at, before or after
the maturity thereof (the "Release Date"), the Senior Note First Mortgage
Bonds shall cease to secure the Notes in any manner. In certain
circumstances prior to the Release Date as provided in the Indenture, the
Company is permitted to reduce the aggregate principal amount of a series
of Senior Note First Mortgage Bonds held by the Trustee, but in no event
prior to the Release Date to amount less than the aggregate outstanding
principal amount of the series of Notes initially issued contemporaneously
with such Senior Note First Mortgage Bonds.
Each Note of this Series shall be dated and issued as of the date
of its authentication by the Trustee and shall bear an Original Issue
Date. Each Note or Global Note issued upon transfer, exchange or
substitution of such Note or Global Note shall bear the Original Issue
Date of such transferred, exchanged or substituted Note or Global Note, as
the case may be.
The Notes will not be subject to redemption prior to the Maturity
Date.
On the Coupon Reset Date (i) if all of the Notes are purchased on
such date by the Callholder pursuant to its Call Option (as defined
below), the Notes shall bear interest from and including the Coupon Reset
Date to but excluding Maturity Date at the Coupon Reset Rate determined in
accordance with the Coupon Reset Process described below (subject to
payment of additional interest of .25% per annum during the continuation
of a Registration Default as provided on the face hereof), or (ii) the
Notes shall be purchased by the Company pursuant to the exercise of the
Mandatory Put (as defined below) by the Trustee on behalf of the Holders
of the Notes.
The Notes will mature on the Maturity Date. On the Coupon Reset
Date, the Holder hereof will be entitled to receive 100% of the principal
amount hereof from either (i) the Callholder (who shall make such payment
to the Trustee for the benefit of the Holders), if the Callholder
purchases this Note pursuant to the Call Option, or (ii) in the event the
Callholder does not exercise the Call Option or fails for any reason to
pay the Call Price (as defined below) to the Trustee when required, from
Consumers following the exercise of the Mandatory Put by the Trustee for
and on behalf of the holders of the Notes.
By giving notice to the Trustee as described below (the "Call
Notice"), the Company, as initial Callholder, or any assignee of the Call
Option as Callholder, has the right to purchase the Notes, in whole but
not in part, on the Coupon Reset Date (the "Call Option"), at a price
equal to 100% of the principal amount thereof (the "Call Price") (interest
accrued to but excluding the Coupon Reset Date will be paid by the Company
on such date to the Holder hereof on the most recent Regular Record Date).
The Callholder will be required to give the Call Notice to the Trustee, in
writing, prior to 4:00 p.m., New York City time, no later than ninety
calendar days prior to the Coupon Reset Date. The Call Notice must
contain the requisite delivery details, including the identity of the
Callholder's account with The Depository Trust Company ("DTC"). If the
Callholder exercises the Call Option, (a) not later than 2:00 p.m., New
York City time, on the Business Day prior to the Coupon Reset Date the
Callholder shall pay the amount of the Call Price in immediately available
funds to the Trustee for payment thereof to the Holders of the Notes
(including, if applicable, the Holder hereof) on the Coupon Reset Date and
(ii) the Holder hereof will be required to deliver and will be deemed to
have delivered this Note to the Callholder against payment therefor on the
Coupon Reset Date through the facilities of DTC. The Call Notice may be
revoked by the Callholder at any time prior to 2:00 p.m., New York City
time, on the Business Day prior to the Coupon Reset Date. The Callholder
is not required to exercise the Call Option, and no Holder of the Notes or
any interest therein shall have any right or claim against the Callholder
as a result of the Callholder's decision whether or not to exercise the
Call Option or performance or non-performance of its obligations with
respect thereto.
The Callholder may at any time assign its rights and obligations
under its Call Option; provided, however, that (i) such rights and
obligations are assigned in whole and not in part and (ii) it provides the
Trustee and the Company with notice of such assignment contemporaneously
with such assignment. Upon receipt of notice of assignment, the Trustee
will treat the assignee as Callholder for all purposes hereunder. The
Callholder may assign its rights under the Call Option without notice to,
or consent of, the Holders of the Notes (including, if applicable, the
Holder hereof).
The Call Option provides for certain circumstances under which such
Call Option may be terminated (as described below).
If the Call Option is not exercised or if the Callholder fails to
pay the Call Price to the Trustee at or prior to the required time for any
reason or if the Call Option otherwise terminates, the Trustee will
exercise the right of the Holders of the Notes (including the Holder
hereof) to require the Company to purchase the Notes, in whole but not in
part (the "Mandatory Put"), on the Coupon Reset Date at a price equal to
100% of the principal amount thereof ("Put Price"), plus accrued but
unpaid interest to but excluding the Coupon Reset Date, in each case, to
be paid by the Company to the Holders of the Notes (including, if
applicable, the Holder hereof) in immediately available funds on the
Coupon Reset Date. If the Trustee exercises the Mandatory Put, then the
Company will deliver the Put Price in immediately available funds to the
Trustee by no later than 12:00 noon, New York City time, on the Coupon
Reset Date and the Holders of the Notes will be required to deliver and
will be deemed to have delivered the Notes to the Company against payment
therefor on the Coupon Reset Date through the facilities of DTC. By its
purchase of a Note, each Holder irrevocably agrees that the Trustee shall
exercise the Mandatory Put for or on behalf of the Holder of the Notes as
provided herein. No Holder of any Note or any interest therein has the
right to consent or object to the exercise of the Trustee's duties under
the Mandatory Put.
In anticipation of the exercise of the Call Option or Mandatory Put
on the Coupon Reset Date, notice of delivery of all Notes on the Coupon
Reset Date against payment of the Call Price or Put Price (the "Delivery
Notice") shall be given by mail not less than 30 nor more than 60 days
prior to the Coupon Reset Date (which, as long as the Notes are held in
the book-entry only system, will be DTC (or its nominee) or a successor
depositary (the "Depositary")); provided, however, that the failure to
duly give such Delivery Notice by mail, or any defect therein, shall not
affect the validity of any proceedings for the delivery of any Notes. The
Trustee will notify the Holders of Notes once it is determined whether the
Call Price or the Put Price will be delivered on the Coupon Reset Date.
Interest on the Notes accrues to, but excludes, the Coupon Reset Date.
Pursuant to the terms of a Calculation Agency Agreement, dated as
of May 1, 1998 between the Company and Morgan Stanley & Co. Incorporated,
Morgan Stanley & Co. Incorporated (or its successors or assigns) will be
the Calculation Agent. If the Callholder timely exercises its Call
Option, and the Call Option does not otherwise terminate in accordance
with its terms, then the Company and the Calculation Agent shall complete
the following steps (the "Coupon Reset Process") in order to determine the
interest rate to be paid on the Notes, from and including such Coupon
Reset Date, to but excluding the Maturity Date (the "Coupon Reset Rate").
(a) The Company will provide the Calculation Agent with (i) a
list (the "Dealer List"), no later than five Business Days prior to the
Coupon Reset Date, containing the names and addresses of three dealers,
one of which shall be Morgan Stanley & Co. Incorporated, from which it
desires the Calculation Agent to obtain Bids (as defined below) for the
purchase of the Notes and (ii) a copy of any other material reasonably
requested by the Calculation Agent to facilitate a successful Coupon Reset
Process.
(b) Within one Business Day following receipt by the Calculation
Agent of the Dealer List, the Calculation Agent will provide to each
dealer ("Dealer") on the Dealer List (i) a copy of the Offering Memorandum
relating to the Notes, (ii) a copy of the form of the Notes and (iii) a
written request that each Dealer submit a Bid to the Calculation Agent by
12:00 noon, New York City time, on the third Business Day prior to the
Coupon Reset Date (the "Bid Date"). As used herein, "Business Day" means
any day other than a Saturday, Sunday or a day on which banking
institutions in The City of New York are authorized or obligated by law,
executive order or governmental decree to be closed. "Bid" means an
irrevocable written offer given by a Dealer for the purchase of all of the
Notes, settling on the Coupon Reset Date, and shall be quoted by such
Dealer as a stated yield to maturity on the Notes ("Yield to Maturity").
Each Dealer shall also be provided with (A) the Company's name, (B) an
estimate of the Purchase Price (which shall be stated as a U.S. dollar
amount and be calculated by the Calculation Agent in accordance with
clause (c) below), (C) the principal amount and Maturity Date of the Notes
and (D) the method by which interest will be calculated on the Notes.
(c) The purchase price to be paid by any Dealer for the Notes
(the "Purchase Price") shall be equal to (i) the total principal amount of
the Notes, plus (ii) a premium (the "Notes Premium") which shall be equal
to the excess, if any, on the Coupon Reset Date of (A) the discounted
present value to the Coupon Reset Date of a bond with a maturity of May 1,
2008, which has an interest rate of 5.75%, semi-annual interest payments
on each May 1 and November 1, commencing November 1, 2003, and a principal
amount of $250,000,000 million, and assuming a discount rate equal to the
Treasury Rate over (B) $250,000,000. "Treasury Rate" for the Notes means
the per annum rate equal to the offer side yield to maturity of the
current on-the-run five-year United States Treasury Security per Telerate
page 500 ( or any successor page or substitute page as may replace such
page on such service), at 11:00 a.m., New York City time, on the 90th
calendar day prior to the Coupon Reset Date (or such other time or date
that may be agreed upon by Consumers and the Calculation Agent) or, if
such rate does not appear on Telerate page 500 ( or any successor page or
substitute page as may replace such page on such service) at such time,
the rate on GovPX End-of-Day Pricing at 3:00 p.m., New York City time, on
such date (or such other time or date that may be agreed upon by Consumers
and the Calculation Agent).
(d) The Calculation Agent will provide written notice to the
Company by 12:30 p.m., New York City time, on the Bid Date, setting forth
(i) the names of each of the Dealers from whom the Calculation Agent
received Bids on the Bid Date, (ii) the Bid submitted by each such Dealer
and (iii) the Purchase Price as determined pursuant to paragraph (c)
above. Unless the Call Option has terminated in accordance with its
terms, the Calculation Agent will thereafter select from the Bids received
the Bid with the lowest Yield to Maturity (the "Selected Bid") and set the
Coupon Reset Rate equal to the interest rate which would amortize the
Notes Premium fully over the term of the Notes at the Yield to Maturity
indicated by the Selected Bid; provided, however, that if the Calculation
Agent has not received a timely Bid from a Dealer on the Bid Date, the
Selected Bid shall be the lowest of all Bids received by such time, and
provided further, that if any two or more of the lowest Bids submitted are
equivalent, Consumers shall in its sole discretion select any of such
equivalent Bids (and such selected Bid shall be the Selected Bid). In all
cases, Morgan Stanley & Co. Incorporated, in its capacity as a dealer, has
the right to match the Bid with the lowest Yield to Maturity, whereby
Morgan Stanley & Co. Incorporated's Bid becomes the Selected Bid.
(e) Immediately after calculating the Coupon Reset Rate, the
Calculation Agent will provide written notice to the Company and the
Trustee, setting forth the Coupon Reset Rate. At the request of the
Holders of any Notes, the Calculation Agent will provide to the Holders
the Coupon Reset Rate. The Trustee shall notify the Mortgage Trustee of
the Coupon Reset Rate.
If the Calculation Agent determines that at any time prior to the
sale of the Notes on the Bid Date (i) an Event of Default has occurred and
is continuing under Sections 8.01(a)(1), (2), (3) or (4) (other than, with
respect to clause (4), any Event of Default resulting from a default under
Section 11.01(d) or (e) of the Mortgage ), the Callholder may terminate
the Call Option by written notice to the Company and the Trustee; or (ii)
an Event of Default has occurred and is continuing under Sections
8.01(a)(4) (to the extent that such Event of Default results from a
default under Section 11.04(d) or (e) of the Mortgage), (5) or (6) of the
Indenture, the Call Option shall immediately and automatically terminate.
In addition, if the Calculation Agent determines that following the Call
Notice, (A) the Callholder fails to pay the Call Price by 2:00 p.m., New
York City time, on the Business Day prior to the Coupon Reset Date due to
the occurrence of a Market Disruption Event (as defined below) or (B)
fewer than two Dealers have submitted Bids in a timely manner
substantially as provided above, such Call Option will be automatically
revoked and terminated, and the Trustee will exercise the Mandatory Put on
behalf of the Holders. "Market Disruption Event" shall mean any of the
following: (A) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or the establishment
of minimum prices on such exchange; (B) a general moratorium on commercial
banking activities declared by either federal or New York State
authorities; (C) any material adverse change in the existing financial,
political or economic conditions in the United States of America; (D) an
outbreak or escalation of major hostilities involving the United States of
America or a declaration of a national emergency or war by the United
States of America; or (E) any material disruption of the U.S. Treasury
securities market, U.S. corporate bond market or U.S. federal wire system;
provided, in each case, that in the judgment of the Calculation Agent the
effect of the foregoing makes it impracticable to conduct the Coupon Reset
Process.
Interest payments for this Global Note shall be computed and paid
on the basis of a 360-day year of twelve 30-day months. If any Interest
Payment Date or date on which the principal of this Global Note is
required to be paid is not a Business Day, then payment of principal,
premium or interest need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date or date on which the principal of, and any
premium on, this Global Note is required to be paid and, in the case of
timely payment thereof, no interest shall accrue for the period from and
after such Interest Payment Date or the date on which the principal and
premium of this Global Note is required to be paid.
The Company, at its option, and subject to the terms and conditions
provided in the Indenture, will be discharged from any and all obligations
in respect of the Notes (except for certain obligations including
obligations to register the transfer or exchange of Notes, replace stolen,
lost or mutilated Notes, maintain paying agencies and hold monies for
payment in trust, all as set forth in the Indenture) if the Company
deposits with the Trustee money, U.S. Government Obligations which through
the payment of interest thereon and principal thereof in accordance with
their terms will provide money, or a combination of money and U.S.
Government Obligations, in any event in an amount sufficient, without
reinvestment, to pay all the principal of and any premium and interest on
the Notes on the dates such payments are due in accordance with the terms
of the Notes.
If an Event of Default shall occur and be continuing, the principal
of the Notes may be declared due and payable in the manner and with the
effect provided in the Indenture and, upon such declaration, the Trustee
shall demand the redemption of the Senior Note First Mortgage Bonds as
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modifications of the rights and obligations
of the Company and the rights of the Noteholders 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 the outstanding Notes. Any
such consent or waiver by the Holder of this Global Note shall be
conclusive and binding upon such Holder and upon all future Holders of
this Global Note and of any Note issued upon the registration of transfer
hereof or in exchange therefor or in lieu thereof whether or not notation
of such consent or waiver is made upon the Note.
As set forth in and subject to the provisions of the Indenture, no
Holder of any Notes 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 with respect to such Notes, the Holders of not less than
a majority in principal amount of the outstanding Notes affected by such
Event of Default shall have made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as Trustee and the
Trustee shall have failed to institute such proceeding within 60 days;
provided that such limitations do not apply to a suit instituted by the
Holder hereof for the enforcement of payment of the principal of and any
premium or interest on this Note on or after the respective due dates
expressed here.
No reference herein to the Indenture and to provisions of this
Global 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 Global Note at the times, places and
rates and the coin or currency prescribed in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, this Global Note may be transferred only as permitted
by the legend hereto.
The Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM -- as tenants UNIF GIFT
in common MIN ACT - _____ Custodian ______
(Cust) (Minor)
TEN ENT -- as tenants by the Under Uniform Gifts to Minors
entireties
JT TEN -- as joint tenants with
right of survivorship and not
as tenants in common ________________________________
State
Additional abbreviations may also be used
though not in the above list.
___________________
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
______________________________
the within note and all rights
thereunder, hereby irrevocably
constituting and appointing
attorney to
transfer said note on the books
of the Company, with full power
of substitution in the premises.
The undersigned certifies that said Note is being resold, pledged or
otherwise transferred as follows: (check one)
___ to the Issuer;
___ to a Person whom the undersigned reasonably believes is a qualified
institution within the meaning of Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act") purchasing for its
own account or for the account of a qualified institutional buyer
to whom notice is given that the resale, pledge or other transfer
is being made in reliance on Rule 144A;
___ in an offshore transaction in accordance with Rule 903 or 904 of
Regulation S under the Securities Act;
___ to an institution that is an "accredited investor" as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
acquiring this Note for investment purposes and not for
distribution; (attach a copy of an Investment Letter For
Institutional Accredited Investors in the form annexed signed by an
authorized officer of the transferee);
___ as otherwise permitted by the non-registration legend appearing on
this Note; or
___ as otherwise agreed by the Issuer, confirmed in writing to the
Trustee, as follows: (describe)
__________________________________________________________________________
__________________________________________________________________________
Dated: ______________________
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within instrument in every particular,
without alteration or enlargement or
any change whatever.FORM OF INVESTMENT
LETTER FOR INSTITUTIONAL
ACCREDITED INVESTORS
(Transferor, Trustee and Issuer Names and Addresses)
Ladies and Gentlemen:
In connection with our proposed purchase of Senior Notes, 6.20%,
Series A, Due 2008 (the "Notes") issued by Consumers Energy Company
("Issuer"), we confirm that:
1. We have received a copy of the Offering Memorandum (the
"Offering Memorandum") relating to the Notes and such other
information as we deem necessary in order to make our
investment decision. We acknowledge that we have read and
agree to the matters stated under the caption NOTICE TO
INVESTORS in such Offering Memorandum, and the restrictions on
duplication or circulation of, or disclosure relating to, such
Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture relating to Notes (the "Indenture") and that any
subsequent transfer of the Notes is subject to certain
restrictions and conditions set forth under NOTICE TO INVESTORS
in the Offering Memorandum and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the
Notes except in compliance with such restrictions and
conditions and the Securities Act of 1933, as amended
("Securities Act").
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes
may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if
we sell any Senior Notes, we will do so only (A) to the Issuer,
(B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an
institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes to the Trustee (as defined in
the Indenture) a signed letter containing certain
representations and agreements relating to the restrictions on
transfer of the Notes (substantially in the form of this
letter) and, if such transfer is in respect of an aggregate
principal amount of Notes at the time of transfer of less than
$250,000, an opinion of counsel acceptable to the Issuer that
such transfer is in compliance with the Securities Act, (D)
outside the United States in accordance with Rule 903 or 904 of
Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the
Securities Act (if available), or (F) pursuant to an effective
registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Notes from
us a notice advising such purchaser that resales of the Notes
are restricted as stated herein.
4. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee and Issuer such
certifications, legal opinions and other information as the
Trustee and Issuer may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
6. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we
exercise sole investment discretion.
You, the Issuer and the Trustee are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby.
Very truly yours,
By: ____________________________
Name:
Title:
EXHIBIT B
REGISTERED REGISTERED
THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY
(REFERRED TO HEREIN) OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY,
THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT 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 OR BY
THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST THEREIN.
CONSUMERS ENERGY COMPANY
SENIOR NOTE, 6.20% RESET PUT SECURITIES, SERIES B, DUE 2008
CUSIP: NUMBER:
ORIGINAL ISSUE DATE: May 1, 1998 PRINCIPAL AMOUNT:
INTEREST RATE: To but excluding MATURITY DATE: May 1, 2008,
May 1, 2003, 6.20% from and subject to mandatory
including May 1, 2003, at the repayment of
Coupon Reset Rate, as described principal to the existing
on the reverse of this Note. Holder hereof pursuant to the
Call Option or Mandatory Put
described on the reverse of
this Note.
CONSUMERS ENERGY COMPANY, a corporation of the State of Michigan
(the "COMPANY"), for value received hereby promises to pay to Cede & Co.
or registered assigns, the principal sum of
DOLLARS
on the Maturity Date set forth above, and to pay interest thereon from May
1, 1998 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semiannually in arrears on May 1 and
November 1 in each year, commencing November 1, 1998, at the per annum
Interest Rate set forth above, until but excluding May 1, 2003 (the
"Coupon Reset Date"), whereupon the interest rate will be reset to the
Coupon Reset Rate as set forth on the reverse hereof (provided that during
the continuation of a Registration Default, as defined in the Registration
Rights Agreement dated as of May 1, 1998 among the Company, Morgan Stanley
& Co. Incorporated, Chase Securities Inc., First Chicago Capital Markets,
Inc. and Salomon Brothers Inc. (i) the Interest Rate shall be 6.45% per
annum, until but excluding the Coupon Reset Date, and (ii) shall be a
rate equal to the sum of the Coupon Reset Rate and .25% from and after the
Coupon Reset Date). No interest shall accrue on the Maturity Date, so
long as the principal amount of this Global Note is paid on the Maturity
Date. The interest so payable and punctually paid or duly provided for on
any such Interest Payment Date will, as provided in the Indenture, be paid
to the Person in whose name this Note is registered the close of business
on the Regular Record Date for such interest, which shall be the April 15
or October 15, as the case may be, next preceding such Interest Payment
Date; provided that interest payable on the Maturity Date set forth above
or, if applicable, acceleration, shall be payable to the Person to whom
principal shall be payable. Except as otherwise provided in the Indenture
(as defined below), any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and shall be paid to the Person in whose name this
Note is registered at the close of business on the Regular Record Date for
such interest, which shall be the April 15 or October 15, as the case may
be, next preceding such Interest Payment Date; provided that interest
payable on the Maturity Date set forth above or, if applicable,
acceleration, shall be payable to the Person to whom principal shall be
payable. Except as otherwise provided in the Indenture (as defined below),
any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date
and shall be paid to the Person in whose name this Note 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 Noteholders not fewer than ten days prior to such Special Record
Date. Unless the certificate of authentication hereon has been executed
by the Trustee, directly or through an Authenticating Agent by manual
signature of an authorized officer, this Global Note shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any
purpose.
All terms used in this Global Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture unless
otherwise indicated herein.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
CONSUMERS ENERGY COMPANY
Dated: May 1, 1998 By:_________________________
Title: Senior Vice President and
Chief Financial Officer
Attest:________________________
Title: Vice President and
Secretary
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This Note is one of the Notes of
the series herein designated,
described or provided for in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, As Trustee
By: ________________________________
Authorized Officer
This Global Note is a global security in respect of a duly
authorized issue of Senior Notes, 6.20% Reset Put Securities, Series A,
Due 2008, (the "NOTES OF THIS SERIES", which term includes any Global
Notes representing such Notes) of the Company issued and to be issued
under an Indenture dated as of February 1, 1998, between the Company and
The Chase Manhattan Bank, as trustee (the "TRUSTEE", which term includes
any successor Trustee under the Indenture) and indentures supplemental
thereto (collectively, the "INDENTURE"). Under the Indenture, one or more
series of notes may be issued and, as used herein, the term "Notes" refers
to the Notes of this Series and any other outstanding series of Notes.
Reference is hereby made to the Indenture for a more complete statement of
the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Noteholders and of the
terms upon which the Notes are and are to be authenticated and delivered.
This Global Note has been issued in respect of the series designated on
the first page hereof, limited in aggregate principal amount to
$250,000,000.
Prior to the Release Date (as hereinafter defined), the Notes will
be secured by first mortgage bonds (the "SENIOR NOTE FIRST MORTGAGE
BONDS") delivered by the Company to the Trustee for the benefit of the
Holders of the Notes, issued under the Indenture, dated as of September 1,
1945, from the Company to The Chase Manhattan Bank, as successor trustee
to City Bank Farmers Trust Company (the "MORTGAGE TRUSTEE"), as
supplemented and modified (collectively, the "FIRST MORTGAGE"). Reference
is made to the First Mortgage and the Indenture for a description of the
rights of the Trustee as holder of the Senior Note First Mortgage Bonds,
the property mortgaged and pledged, the nature and extent of the security,
the rights of the holders of first mortgage bonds under the First Mortgage
and the rights of the Company and of the Mortgage Trustee in respect
thereof, the duties and immunities of the Mortgage Trustee and the terms
and conditions upon which the Senior Note First Mortgage Bonds are secured
and the circumstances under which additional first mortgage bonds may be
issued.
From and after such time as all first mortgage bonds (other than
Senior Note First Mortgage Bonds) issued under the First Mortgage have
been retired through payment, redemption or otherwise at, before or after
the maturity thereof (the "Release Date"), the Senior Note First Mortgage
Bonds shall cease to secure the Notes in any manner. In certain
circumstances prior to the Release Date as provided in the Indenture, the
Company is permitted to reduce the aggregate principal amount of a series
of Senior Note First Mortgage Bonds held by the Trustee, but in no event
prior to the Release Date to amount less than the aggregate outstanding
principal amount of the series of Notes initially issued contemporaneously
with such Senior Note First Mortgage Bonds.
Each Note of this Series shall be dated and issued as of the date
of its authentication by the Trustee and shall bear an Original Issue
Date. Each Note or Global Note issued upon transfer, exchange or
substitution of such Note or Global Note shall bear the Original Issue
Date of such transferred, exchanged or substituted Note or Global Note, as
the case may be.
The Notes will not be subject to redemption prior to the Maturity
Date.
On the Coupon Reset Date (i) if all of the Notes are purchased on
such date by the Callholder pursuant to its Call Option (as defined
below), the Notes shall bear interest from and including the Coupon Reset
Date to but excluding Maturity Date at the Coupon Reset Rate determined in
accordance with the Coupon Reset Process described below (subject to
payment of additional interest of .25% per annum during the continuation
of a Registration Default as provided on the face hereof), or (ii) the
Notes shall be purchased by the Company pursuant to the exercise of the
Mandatory Put (as defined below) by the Trustee on behalf of the Holders
of the Notes.
The Notes will mature on the Maturity Date. On the Coupon Reset
Date, the Holder hereof will be entitled to receive 100% of the principal
amount hereof from either (i) the Callholder (who shall make such payment
to the Trustee for the benefit of the Holders), if the Callholder
purchases this Note pursuant to the Call Option, or (ii) in the event the
Callholder does not exercise the Call Option or fails for any reason to
pay the Call Price (as defined below) to the Trustee when required, from
Consumers following the exercise of the Mandatory Put by the Trustee for
and on behalf of the holders of the Notes.
By giving notice to the Trustee as described below (the "Call
Notice"), the Company, as initial Callholder, or any assignee of the Call
Option as Callholder, has the right to purchase the Notes, in whole but
not in part, on the Coupon Reset Date (the "Call Option"), at a price
equal to 100% of the principal amount thereof (the "Call Price") (interest
accrued to but excluding the Coupon Reset Date will be paid by the Company
on such date to the Holder hereof on the most recent Regular Record Date).
The Callholder will be required to give the Call Notice to the Trustee, in
writing, prior to 4:00 p.m., New York City time, no later than ninety
calendar days prior to the Coupon Reset Date. The Call Notice must
contain the requisite delivery details, including the identity of the
Callholder's account with The Depository Trust Company ("DTC"). If the
Callholder exercises the Call Option, (a) not later than 2:00 p.m., New
York City time, on the Business Day prior to the Coupon Reset Date the
Callholder shall pay the amount of the Call Price in immediately available
funds to the Trustee for payment thereof to the Holders of the Notes
(including, if applicable, the Holder hereof) on the Coupon Reset Date and
(ii) the Holder hereof will be required to deliver and will be deemed to
have delivered this Note to the Callholder against payment therefor on the
Coupon Reset Date through the facilities of DTC. The Call Notice may be
revoked by the Callholder at any time prior to 2:00 p.m., New York City
time, on the Business Day prior to the Coupon Reset Date. The Callholder
is not required to exercise the Call Option, and no Holder of the Notes or
any interest therein shall have any right or claim against the Callholder
as a result of the Callholder's decision whether or not to exercise the
Call Option or performance or non-performance of its obligations with
respect thereto.
The Callholder may at any time assign its rights and obligations
under its Call Option; provided, however, that (i) such rights and
obligations are assigned in whole and not in part and (ii) it provides the
Trustee and the Company with notice of such assignment contemporaneously
with such assignment. Upon receipt of notice of assignment, the Trustee
will treat the assignee as Callholder for all purposes hereunder. The
Callholder may assign its rights under the Call Option without notice to,
or consent of, the Holders of the Notes (including, if applicable, the
Holder hereof).
The Call Option provides for certain circumstances under which such
Call Option may be terminated (as described below).
If the Call Option is not exercised or if the Callholder fails to
pay the Call Price to the Trustee at or prior to the required time for any
reason or if the Call Option otherwise terminates, the Trustee will
exercise the right of the Holders of the Notes (including the Holder
hereof) to require the Company to purchase the Notes, in whole but not in
part (the "Mandatory Put"), on the Coupon Reset Date at a price equal to
100% of the principal amount thereof ("Put Price"), plus accrued but
unpaid interest to but excluding the Coupon Reset Date, in each case, to
be paid by the Company to the Holders of the Notes (including, if
applicable, the Holder hereof) in immediately available funds on the
Coupon Reset Date. If the Trustee exercises the Mandatory Put, then the
Company will deliver the Put Price in immediately available funds to the
Trustee by no later than 12:00 noon, New York City time, on the Coupon
Reset Date and the Holders of the Notes will be required to deliver and
will be deemed to have delivered the Notes to the Company against payment
therefor on the Coupon Reset Date through the facilities of DTC. By its
purchase of a Note, each Holder irrevocably agrees that the Trustee shall
exercise the Mandatory Put for or on behalf of the Holder of the Notes as
provided herein. No Holder of any Note or any interest therein has the
right to consent or object to the exercise of the Trustee's duties under
the Mandatory Put.
In anticipation of the exercise of the Call Option or Mandatory Put
on the Coupon Reset Date, notice of delivery of all Notes on the Coupon
Reset Date against payment of the Call Price or Put Price (the "Delivery
Notice") shall be given by mail not less than 30 nor more than 60 days
prior to the Coupon Reset Date (which, as long as the Notes are held in
the book-entry only system, will be DTC (or its nominee) or a successor
depositary (the "Depositary")); provided, however, that the failure to
duly give such Delivery Notice by mail, or any defect therein, shall not
affect the validity of any proceedings for the delivery of any Notes. The
Trustee will notify the Holders of Notes once it is determined whether the
Call Price or the Put Price will be delivered on the Coupon Reset Date.
Interest on the Notes accrues to, but excludes, the Coupon Reset Date.
Pursuant to the terms of a Calculation Agency Agreement, dated as
of May 1, 1998 between the Company and Morgan Stanley & Co. Incorporated,
Morgan Stanley & Co. Incorporated (or its successors or assigns) will be
the Calculation Agent. If the Callholder timely exercises its Call
Option, and the Call Option does not otherwise terminate in accordance
with its terms, then the Company and the Calculation Agent shall complete
the following steps (the "Coupon Reset Process") in order to determine the
interest rate to be paid on the Notes, from and including such Coupon
Reset Date, to but excluding the Maturity Date (the "Coupon Reset Rate").
(a) The Company will provide the Calculation Agent with (i) a list
(the "Dealer List"), no later than five Business Days prior to the Coupon
Reset Date, containing the names and addresses of three dealers, one of
which shall be Morgan Stanley & Co. Incorporated, from which it desires
the Calculation Agent to obtain Bids (as defined below) for the purchase
of the Notes and (ii) a copy of any other material reasonably requested by
the Calculation Agent to facilitate a successful Coupon Reset Process.
(b) Within one Business Day following receipt by the Calculation
Agent of the Dealer List, the Calculation Agent will provide to each
dealer ("Dealer") on the Dealer List (i) a copy of the Prospectus
relating to the Notes, (ii) a copy of the form of the Notes and (iii) a
written request that each Dealer submit a Bid to the Calculation Agent by
12:00 noon, New York City time, on the third Business Day prior to the
Coupon Reset Date (the "Bid Date"). As used herein, "Business Day" means
any day other than a Saturday, Sunday or a day on which banking
institutions in The City of New York are authorized or obligated by law,
executive order or governmental decree to be closed. "Bid" means an
irrevocable written offer given by a Dealer for the purchase of all of the
Notes, settling on the Coupon Reset Date, and shall be quoted by such
Dealer as a stated yield to maturity on the Notes ("Yield to Maturity").
Each Dealer shall also be provided with (A) the Company's name, (B) an
estimate of the Purchase Price (which shall be stated as a U.S. dollar
amount and be calculated by the Calculation Agent in accordance with
clause (c) below), (C) the principal amount and Maturity Date of the Notes
and (D) the method by which interest will be calculated on the Notes.
(c) The purchase price to be paid by any Dealer for the Notes (the
"Purchase Price") shall be equal to (i) the total principal amount of the
Notes, plus (ii) a premium (the "Notes Premium") which shall be equal to
the excess, if any, on the Coupon Reset Date of (A) the discounted present
value to the Coupon Reset Date of a bond with a maturity of May 1, 2008,
which has an interest rate of 5.75%, semi-annual interest payments on
each May 1 and November 1, commencing November 1, 2003, and a principal
amount of $250,000,000 million, and assuming a discount rate equal to the
Treasury Rate over (B) $250,000,000. "Treasury Rate" for the Notes means
the per annum rate equal to the offer side yield to maturity of the
current on-the-run five-year United States Treasury Security per Telerate
page 500 ( or any successor page or substitute page as may replace such
page on such service), at 11:00 a.m., New York City time, on the 90th
calendar day prior to the Coupon Reset Date (or such other time or date
that may be agreed upon by Consumers and the Calculation Agent) or, if
such rate does not appear on Telerate page 500 ( or any successor page or
substitute page as may replace such page on such service) at such time,
the rate on GovPX End-of-Day Pricing at 3:00 p.m., New York City time, on
such date (or such other time or date that may be agreed upon by Consumers
and the Calculation Agent).
(d) The Calculation Agent will provide written notice to the
Company by 12:30 p.m., New York City time, on the Bid Date, setting forth
(i) the names of each of the Dealers from whom the Calculation Agent
received Bids on the Bid Date, (ii) the Bid submitted by each such Dealer
and (iii) the Purchase Price as determined pursuant to paragraph (c)
above. Unless the Call Option has terminated in accordance with its
terms, the Calculation Agent will thereafter select from the Bids received
the Bid with the lowest Yield to Maturity (the "Selected Bid") and set the
Coupon Reset Rate equal to the interest rate which would amortize the
Notes Premium fully over the term of the Notes at the Yield to Maturity
indicated by the Selected Bid; provided, however, that if the Calculation
Agent has not received a timely Bid from a Dealer on the Bid Date, the
Selected Bid shall be the lowest of all Bids received by such time, and
provided further, that if any two or more of the lowest Bids submitted are
equivalent, Consumers shall in its sole discretion select any of such
equivalent Bids (and such selected Bid shall be the Selected Bid). In all
cases, Morgan Stanley & Co. Incorporated, in its capacity as a dealer, has
the right to match the Bid with the lowest Yield to Maturity, whereby
Morgan Stanley & Co. Incorporated's Bid becomes the Selected Bid.
(e) Immediately after calculating the Coupon Reset Rate, the
Calculation Agent will provide written notice to the Company and the
Trustee, setting forth the Coupon Reset Rate. At the request of the
Holders of any Notes, the Calculation Agent will provide to the Holders
the Coupon Reset Rate. The Trustee shall notify the Mortgage Trustee of
the Coupon Reset Rate.
If the Calculation Agent determines that at any time prior to the
sale of the Notes on the Bid Date (i) an Event of Default has occurred and
is continuing under Sections 8.01(a)(1), (2), (3) or (4) (other than, with
respect to clause (4), any Event of Default resulting from a default under
Section 11.01(d) or (e) of the Mortgage ), the Callholder may terminate
the Call Option by written notice to the Company and the Trustee; or (ii)
an Event of Default has occurred and is continuing under Sections
8.01(a)(4) (to the extent that such Event of Default results from a
default under Section 11.04(d) or (e) of the Mortgage), (5) or (6) of the
Indenture, the Call Option shall immediately and automatically terminate.
In addition, if the Calculation Agent determines that following the Call
Notice, (A) the Callholder fails to pay the Call Price by 2:00 p.m., New
York City time, on the Business Day prior to the Coupon Reset Date due to
the occurrence of a Market Disruption Event (as defined below) or (B)
fewer than two Dealers have submitted Bids in a timely manner
substantially as provided above, such Call Option will be automatically
revoked and terminated, and the Trustee will exercise the Mandatory Put on
behalf of the Holders. "Market Disruption Event" shall mean any of the
following: (A) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or the establishment
of minimum prices on such exchange; (B) a general moratorium on commercial
banking activities declared by either federal or New York State
authorities; (C) any material adverse change in the existing financial,
political or economic conditions in the United States of America; (D) an
outbreak or escalation of major hostilities involving the United States of
America or a declaration of a national emergency or war by the United
States of America; or (E) any material disruption of the U.S. Treasury
securities market, U.S. corporate bond market or U.S. federal wire system;
provided, in each case, that in the judgment of the Calculation Agent the
effect of the foregoing makes it impracticable to conduct the Coupon Reset
Process.
Interest payments for this Global Note shall be computed and paid
on the basis of a 360-day year of twelve 30-day months. If any Interest
Payment Date or date on which the principal of this Global Note is
required to be paid is not a Business Day, then payment of principal,
premium or interest need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date or date on which the principal of, and any
premium on, this Global Note is required to be paid and, in the case of
timely payment thereof, no interest shall accrue for the period from and
after such Interest Payment Date or the date on which the principal and
premium of this Global Note is required to be paid.
The Company, at its option, and subject to the terms and conditions
provided in the Indenture, will be discharged from any and all obligations
in respect of the Notes (except for certain obligations including
obligations to register the transfer or exchange of Notes, replace stolen,
lost or mutilated Notes, maintain paying agencies and hold monies for
payment in trust, all as set forth in the Indenture) if the Company
deposits with the Trustee money, U.S. Government Obligations which through
the payment of interest thereon and principal thereof in accordance with
their terms will provide money, or a combination of money and U.S.
Government Obligations, in any event in an amount sufficient, without
reinvestment, to pay all the principal of and any premium and interest on
the Notes on the dates such payments are due in accordance with the terms
of the Notes.
If an Event of Default shall occur and be continuing, the principal
of the Notes may be declared due and payable in the manner and with the
effect provided in the Indenture and, upon such declaration, the Trustee
shall demand the redemption of the Senior Note First Mortgage Bonds as
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modifications of the rights and obligations
of the Company and the rights of the Noteholders 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 the outstanding Notes. Any
such consent or waiver by the Holder of this Global Note shall be
conclusive and binding upon such Holder and upon all future Holders of
this Global Note and of any Note issued upon the registration of transfer
hereof or in exchange therefor or in lieu thereof whether or not notation
of such consent or waiver is made upon the Note.
As set forth in and subject to the provisions of the Indenture, no
Holder of any Notes 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 with respect to such Notes, the Holders of not less than
a majority in principal amount of the outstanding Notes affected by such
Event of Default shall have made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as Trustee and the
Trustee shall have failed to institute such proceeding within 60 days;
provided that such limitations do not apply to a suit instituted by the
Holder hereof for the enforcement of payment of the principal of and any
premium or interest on this Note on or after the respective due dates
expressed here.
No reference herein to the Indenture and to provisions of this
Global 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 Global Note at the times, places and
rates and the coin or currency prescribed in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, this Global Note may be transferred only as permitted
by the legend hereto.
The Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT
MIN ACT - _____ Custodian ______
(Cust) (Minor)
TEN ENT -- as tenants by the
entireties Under
Uniform Gifts to Minors
JT TEN -- as joint tenants with right
of survivorship and not as tenants in
common ____________________________
State
Additional abbreviations may also be used
though not in the above list.
___________________
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
______________________________
the within note and all rights
thereunder, hereby irrevocably
constituting and appointing
attorney to
transfer said note on the books
of the Company, with full power
of substitution in the premises.
Dated: ______________________
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within instrument in every
particular, without alteration or
enlargement or any change whatever.