EXHIBIT 4.5
EXECUTION COPY
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TERM LOAN AGREEMENT
Dated as of July 12, 2002
among
CONSUMERS ENERGY COMPANY,
as the Borrower,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Banks,
and
CITICORP USA, INC.,
as Agent
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SALOMON SMITH BARNEY INC.
as Lead Arranger and Sole Book Runner
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................................................1
1.1 Definitions............................................................................1
1.2 Singular and Plural...................................................................11
1.3 Accounting Terms......................................................................11
ARTICLE II THE TERM LOANS........................................................................12
2.1 Initial Term Loans....................................................................12
2.2 Deferred Draw Term Loans..............................................................12
2.3 Making of Term Loans..................................................................12
2.4 Repayment of Term Loans...............................................................12
2.5 Commitment Fee and Reductions of Commitment...........................................13
2.6 Optional Principal Payments...........................................................13
2.7 Mandatory Prepayments.................................................................14
2.8 Conversion or Continuation............................................................14
2.9 Interest Rates, Interest Payment Dates................................................15
2.10 Rate after Maturity...................................................................15
2.11 Method of Payment.....................................................................15
2.12 Evidence of Obligation; Telephonic Notices............................................16
2.13 Lending Installations.................................................................16
2.14 Non-Receipt of Funds by the Agent.....................................................17
ARTICLE III RESERVED..............................................................................17
ARTICLE IV CHANGE IN CIRCUMSTANCES...............................................................17
4.1 Yield Protection......................................................................17
4.2 Replacement Bank......................................................................18
4.3 Availability of Eurodollar Rate Loans.................................................18
4.4 Funding Indemnification...............................................................19
4.5 Taxes.................................................................................19
4.6 Bank Certificates.....................................................................21
ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................21
5.1 Incorporation and Good Standing.......................................................21
5.2 Corporate Power and Authority: No Conflicts...........................................21
5.3 Governmental Approvals................................................................21
5.4 Legally Enforceable Agreements........................................................21
5.5 Financial Statements..................................................................22
5.6 Litigation............................................................................22
5.7 Margin Stock..........................................................................22
5.8 ERISA.................................................................................22
5.9 Insurance.............................................................................22
5.10 Taxes.................................................................................22
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5.11 Investment Company Act................................................................23
5.12 Public Utility Holding Company Act....................................................23
5.13 Bonds.................................................................................23
ARTICLE VI AFFIRMATIVE COVENANTS.................................................................23
6.1 Payment of Taxes......................................................................23
6.2 Maintenance of Insurance..............................................................23
6.3 Preservation of Corporate Existence, Etc..............................................23
6.4 Compliance with Laws..................................................................23
6.5 Visitation Rights.....................................................................24
6.6 Keeping of Books......................................................................24
6.7 Reporting Requirements................................................................24
6.8 Use of Proceeds.......................................................................26
6.9 Maintenance of Properties, Etc........................................................26
6.10 Bonds.................................................................................26
6.11 Post-Closing Opinion..................................................................26
ARTICLE VII NEGATIVE COVENANTS....................................................................26
7.1 Liens.................................................................................26
7.2 Sale of Assets........................................................................27
7.3 Mergers, Etc..........................................................................28
7.4 Compliance with ERISA.................................................................28
7.5 Change in Nature of Business..........................................................28
7.6 Restricted Payments...................................................................28
7.7 Off-Balance Sheet Liabilities.........................................................28
ARTICLE VIII FINANCIAL COVENANTS...................................................................28
8.1 Debt to Capital Ratio.................................................................28
8.2 Interest Coverage Ratio...............................................................28
ARTICLE IX EVENTS OF DEFAULT.....................................................................29
9.1 Events of Default.....................................................................29
9.2 Remedies..............................................................................30
ARTICLE X WAIVERS. AMENDMENTS AND REMEDIES......................................................30
10.1 Amendments............................................................................30
10.2 Preservation of Rights................................................................31
ARTICLE XI CONDITIONS PRECEDENT..................................................................31
11.1 Initial Term Loans....................................................................31
11.2 Each Term Loan........................................................................32
11.3 Extension Option......................................................................33
ARTICLE XII GENERAL PROVISIONS....................................................................33
12.1 Successors and Assigns................................................................33
12.2 Survival of Representations...........................................................36
12.3 Governmental Regulation...............................................................36
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12.4 Taxes.................................................................................36
12.5 Choice of Law; Waiver of Jury Trial...................................................36
12.6 Headings..............................................................................36
12.7 Entire Agreement......................................................................36
12.8 Expenses; Indemnification.............................................................37
12.9 [Intentionally Omitted.]..............................................................37
12.10 Severability of Provisions............................................................37
12.11 Setoff................................................................................37
12.12 Ratable Payments......................................................................37
12.13 Nonliability of Banks.................................................................38
ARTICLE XIII THE AGENT.............................................................................38
13.1 Appointment...........................................................................38
13.2 Powers................................................................................38
13.3 General Immunity......................................................................38
13.4 No Responsibility for Loans, Recitals, Etc............................................38
13.5 Action on Instructions of Banks.......................................................39
13.6 Employment of Agents and Counsel......................................................39
13.7 Reliance on Documents; Counsel........................................................39
13.8 Agent's Reimbursement and Indemnification.............................................39
13.9 Rights as a Lender....................................................................39
13.10 Bank Credit Decision..................................................................40
13.11 Successor Agent.......................................................................40
13.12 Agent and Arranger Fees...............................................................40
ARTICLE XIV NOTICES...............................................................................40
14.1 Giving Notice.........................................................................40
14.2 Change of Address.....................................................................41
ARTICLE XV COUNTERPARTS..........................................................................42
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SCHEDULES
Commitment Schedule
EXHIBITS
Exhibit A-1 Form of Supplemental Indenture (Initial Borrowing Date)
Exhibit A-2 Form of Supplemental Indenture (Extension Option)
Exhibit B-1 Required Opinions from Michael D. VanHemert, Esq.
Exhibit B-2 Required Opinions from Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit B-3 Required Opinions from Miller, Canfield, Paddock and Stone, P.L.C.
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Assumption Agreement
Exhibit E Terms of Subordination (Junior Subordinated Debt)
Exhibit F Terms of Subordination (Guaranty of Hybrid Preferred Securities)
Exhibit G-1 Form of Bond Delivery Agreement (Initial Borrowing Date)
Exhibit G-2 Form of Bond Delivery Agreement (Extension Option)
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TERM LOAN AGREEMENT
This Term Loan Agreement, dated as of July 12, 2002, is among Consumers
Energy Company, a Michigan corporation (the "Company"), the financial
institutions listed on the signature pages hereof (together with their
respective successors and assigns, the "Banks") and Citicorp USA, Inc., a
Delaware corporation, as Agent.
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement:
"Agent" means Citicorp in its capacity as administrative agent for the
Banks pursuant to Article XIII, and not in its individual capacity as a Bank,
and any successor Agent appointed pursuant to Article XIII.
"Agreement" means this Term Loan Agreement, as amended from time to
time.
"Applicable Margin" means, with respect to Eurodollar Rate Loans at any
time, 2.50% per annum, and with respect to Floating Rate Loans at any time,
1.50% per annum.
"Arranger" means Salomon Smith Barney Inc., a New York corporation, and
its successors, in its capacity as Lead Arranger and Sole Book Runner.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Assignment Agreement" -- see Section 12.1(e).
"Banks" - see the preamble.
"Base Eurodollar Rate" means, with respect to any Interest Period
applicable to a Borrowing of Eurodollar Rate Loans, the per annum interest rate
determined by the offered rate per annum at which deposits in Dollars appears on
Telerate page 3750 (or any successor page) as of 11:00 a.m. (London time), or in
the event such offered rate is not available from the Telerate page, the rate
offered on deposits in Dollars by Citibank's London Office to prime banks in the
London interbank market at 11:00 a.m. (London time), on the Eurodollar Interest
Rate Determination Date for such Interest Period and in an amount substantially
equal to the amount of the Eurodollar Rate Loan to be outstanding from Citicorp
North America, Inc. for such Interest Period.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the highest of:
(i) the rate of interest announced publicly by Citibank in New
York, New York from time to time, as Citibank's base rate; and
(ii) the sum (adjusted to the nearest one-quarter of one
percent (0.25%) or, if there is no nearest one-quarter of one percent
(0.25%), to the next higher one-quarter of one percent (0.25%)) of (A)
one-half of one percent (0.50%) per annum plus (B) the rate per annum
obtained by dividing (I) the latest three-week moving average of
secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market
banks, such three-week moving average (adjusted to the basis of a year
of 360 days) being determined weekly on each Monday (or, if any such
day is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday (or, if such day is not
a Business Day, on the next preceding Business Day) by Citibank on the
basis of such rates reported by certificate of deposit dealers to, and
published by, the Federal Reserve Bank of New York, or, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three (3) New York
certificate of deposit dealers of recognized standing selected by
Citibank, by (II) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by the FRB
for determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities consisting of or
including (among other liabilities) three-month U.S. dollar nonpersonal
time deposits in the United States plus (C) the average during such
three-week period of the annual assessment rates estimated by Citibank
for determining the then current annual assessment payable by Citibank
to the Federal Deposit Insurance Corporation (or any successor) for
insuring U.S. dollar deposits of Citibank in the United States; and
(iii) the sum of (A) one-half of one percent (0.50%) per annum
plus (B) the Federal Funds Rate in effect from time to time during such
period.
"Bonds" means a series of First Mortgage Bonds created under the
Supplemental Indenture issued in favor of, and in form and substance
satisfactory to, the Agent.
"Bond Delivery Agreement" means a bond delivery agreement whereby the
Agent (x) acknowledges delivery of the Bonds and (y) agrees to hold the Bonds
for the benefit of the Banks and to distribute all payments made by the Company
on account thereof to the Banks, to be delivered substantially in the form of
Exhibit G-1 on the Initial Borrowing Date and substantially in the form of
Exhibit G-2 in connection with the Extension Option.
"Borrowing" means a borrowing consisting of Term Loans of the same Type
made, continued or converted on the same day and, in the case of Eurodollar Rate
Loans, having the same Interest Period.
"Borrowing Date" means a date on which a Term Loan is made hereunder.
"Borrowing Notice" - see Section 2.1.
"Building Lease" means the Master Lease and Lease Supplement, each
dated as of April 23, 2001, between Consumers Campus Holdings, LLC, a wholly
owned Subsidiary of the
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Company, as lessee, and Wilmington Trust Company, not in its individual capacity
but solely as owner Trustee of CEC Trust 2001-A, as lessor, together with
certain other related agreements.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in New York, New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in New York, New York for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the
Fedwire system.
"Capital Lease" means any lease which has been or would be capitalized
on the books of the lessee in accordance with GAAP.
"Citibank" means Citibank, N.A., a national banking association.
"Citicorp" means Citicorp USA, Inc., a Delaware corporation, in its
individual capacity, and its successors and assigns.
"CMS" means CMS Energy Corporation, a Michigan corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitments" means the Initial Term Loan Commitments and the Deferred
Draw Term Loan Commitments.
"Commitment Fee" - see Section 2.5.
"Commitment Schedule" means the Schedule identifying each Bank's
Initial Term Loan Commitment and Deferred Draw Term Loan Commitment as of the
date hereof attached hereto and identified as such.
"Company" - see the preamble.
"Consolidated EBIT" means Consolidated Net Income plus, (i) to the
extent deducted from revenues in determining Consolidated Net Income (without
duplication), (a) Consolidated Interest Expense, (b) expense for taxes paid or
accrued, (c) any non-cash write-offs and write-downs contained in the Company's
Consolidated Net Income, including, without limitation, write-offs or
write-downs related to the sale of assets, impairment of assets and loss on
contracts, and (d) the pre-tax write-off for the fiscal period ending December
31, 2001 in an amount not to exceed $126,000,000 arising from the loss on Power
Purchase Agreement -MCV Partnership, minus, (ii) to the extent included in
Consolidated Net Income, extraordinary gains realized other than in the ordinary
course of business, all calculated for the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means with respect to any period for
which the amount thereof is to be determined, an amount equal to interest
expense on Debt, including payments in
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the nature of interest under Capital Leases, all calculated for the Company and
its Subsidiaries on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries calculated on a
consolidated basis for such period.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Company in accordance
with GAAP.
"Conversion/Continuation Notice" -- see Section 2.8(ii).
"Credit Agreement" means that certain 364 Day Credit Agreement, dated
as of July 12, 2002, by and among the Company, the banks from time to time
parties thereto, and Bank One, NA, as agent thereunder, as amended, restated,
supplemented or otherwise modified from time to time.
"Debt" means, with respect to any Person, and without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business which are not
overdue), (c) all Unfunded Vested Liabilities of such Person (if such Person is
not the Company, determined in a manner analogous to that of determining
Unfunded Vested Liabilities of the Company), (d) all obligations of such Person
arising under acceptance facilities, (e) all obligations of such Person as
lessee under Capital Leases, (f) all obligations of such Person arising under
any interest rate swap, "cap", "collar" or other hedging agreements; provided,
however, for purposes of the calculation of Debt for this clause (f) only, the
actual amount of Debt of such Person shall be determined on a net basis to the
extent such agreements permit such amounts to be calculated on a net basis, and
(g) all guaranties, endorsements (other than for collection in the ordinary
course of business) and other contingent obligations of such Person to assure a
creditor against loss (whether by the purchase of goods or services, the
provision of funds for payment, the supply of funds to invest in any Person or
otherwise) in respect of indebtedness or obligations of any other Person of the
kinds referred to in clauses (a) through (f) above.
"Default" means an event which but for the giving of notice or lapse of
time, or both, would constitute an Event of Default.
"Deferred Draw Period" means the period beginning on August 31, 2002
(or such earlier date as may be agreed to by the Arranger and the Company)
through and including September 30, 2002.
"Deferred Draw Term Loan" -- see Section 2.2.
"Deferred Draw Term Loan Commitment" means, for each Bank, the
obligation of such Bank to make a term loan to the Company during the Deferred
Draw Period in an amount not exceeding the amount set forth on the Commitment
Schedule as its Deferred Draw Term Loan Commitment or as set forth in any
Assignment Agreement that has become effective pursuant to Section 12.1, as such
amount may be modified from time to time.
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"Designated Officer" means the Chief Financial Officer, the Treasurer,
an Assistant Treasurer, any Vice President in charge of financial or accounting
matters or the principal accounting officer of the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with the Company.
"Eurodollar Interest Rate Determination Date" means the second Business
Day prior to the first day of each Interest Period.
"Eurodollar Rate" means, with respect to any Interest Period applicable
to a Eurodollar Rate Loan, an interest rate per annum equal to the sum of (i)
the quotient obtained by dividing (a) the Base Eurodollar Rate applicable to
that Interest Period by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to that Interest Period plus (ii) the Applicable Margin.
"Eurodollar Rate Loan" means a Term Loan which bears interest by
reference to the Eurodollar Rate.
"Event of Default" means an event described in Article IX.
"Excluded Taxes" means, in the case of each Bank or applicable Lending
Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (i) the jurisdiction under the laws of which
such Bank or the Agent is incorporated or organized or (ii) the jurisdiction in
which the Agent's or such Bank's principal executive office or such Bank's
applicable Lending Installation is located.
"Extended Maturity Date" means July 11, 2004.
"Extension Option" -- see Section 2.4.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by the Agent.
"Fee Letter" means the fee letter dated July 12, 2002 among the
Company, the Arranger, the Agent and the Banks party to this Agreement as of the
date hereof.
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"First Mortgage Bonds" means bonds issued by the Company pursuant to
the Indenture.
"Fitch" means Fitch, Inc. or any successor thereto.
"Floating Rate" means a rate per annum equal to (i) the Base Rate plus
(ii) the Applicable Margin, changing when and as the Base Rate changes.
"Floating Rate Loan" means a Term Loan which bears interest at the
Floating Rate.
"FRB" means the Board of Governors of the Federal Reserve System or any
successor thereto.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the date hereof, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.5 (except, for purposes of the financial statements required to be
delivered pursuant to Sections 6.7(b) and (c), for changes concurred in by the
Company's independent public accountants).
"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 a wholly-owned direct or indirect
Subsidiary of the Company in exchange for Junior Subordinated Debt
issued by the Company or such wholly-owned direct or indirect
Subsidiary, respectively;
(ii) such preferred securities contain terms providing for the
deferral of interest payments corresponding to provisions providing for
the deferral of interest payments on the Junior Subordinated Debt; and
(iii) the Company or a wholly-owned direct or indirect
Subsidiary of the Company (as the case may be) makes periodic interest
payments on the Junior Subordinated Debt, which interest payments are
in turn used by the Hybrid Preferred Securities Subsidiary to make
corresponding payments to the holders of the preferred securities.
"Hybrid Preferred Securities Subsidiary" means any Delaware 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) at all times by the Company or a wholly-owned
direct or indirect Subsidiary of the Company, (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 Junior Subordinated Debt
issued by the Company or a wholly-owned direct or indirect Subsidiary of the
Company (as the case may be) and payments made from time to time on such Junior
Subordinated Debt.
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"Indenture" means the Indenture, dated as of September 1, 1945, as
supplemented and amended from time to time, from the Company to JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as successor Trustee.
"Initial Borrowing Date" means July 15, 2002.
"Initial Term Loan Commitment" means, for each Bank, the obligation of
such Bank to make a term loan to the Company on the Initial Borrowing Date in an
amount not exceeding the amount set forth on the Commitment Schedule as its
Initial Term Loan Commitment.
"Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two, three or six months, or such shorter period agreed to by the
Company and the Banks, commencing on a Business Day selected by the Company
pursuant to this Agreement. Such Interest Period shall end on the day which
corresponds numerically to such date one, two, three or six months thereafter
(or such shorter period agreed to by the Company and the Banks), provided,
however, that if there is no such numerically corresponding day in such next,
second, third or sixth succeeding month (or such shorter period, as applicable),
such Interest Period shall end on the last Business Day of such next, second,
third or sixth succeeding month (or such shorter period, as applicable). If an
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business Day.
The Company may not select any Interest Period that ends after the Maturity Date
or the Extended Maturity Date, as applicable.
"Junior Subordinated Debt" means any unsecured Debt of the Company or a
Subsidiary of the Company (i) issued in exchange for the proceeds of Hybrid
Preferred Securities and (ii) subordinated to the rights of the Banks hereunder
and under the other Loan Documents pursuant to terms of subordination
substantially similar to those set forth in Exhibit E. or pursuant to other
terms and conditions satisfactory to the Majority Banks.
"Lending Installation" means any office, branch, subsidiary or
affiliate of a Bank.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loan" means a Floating Rate Loan or a Eurodollar Rate Loan.
"Loan Documents" means this Agreement, the Supplemental Indenture and
the Bonds.
"Majority Banks" means, as of any date of determination, Banks whose
Pro Rata Shares, in the aggregate, are 51% or greater as of such date.
"Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a material adverse effect
on (a) the business, assets, property, financial condition, results of
operations or prospects of the Company and its Subsidiaries, considered as a
whole, (b) the Company's ability to perform its obligations under
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this Agreement and the other Loan Documents or (c) the validity or
enforceability of any Loan Document or the rights or remedies of the Agent or
the Banks thereunder.
"Maturity Date" means July 11, 2003.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds of Sale" means proceeds received by the Company in
cash (including cash, equivalents readily convertible into cash, and such
proceeds of any notes received as consideration of any other non-cash
consideration) from the sale, assignment or other disposition of (but not the
lease or license of) any Property, other than sales of inventory in the ordinary
course of business and sales of accounts receivable pursuant to the Receivables
Sale Agreement, net of (A) the costs of sale, assignment or other disposition,
(B) any income, franchise, transfer or other tax liability arising from such
transaction and (C) amounts applied to the repayment of Debt (other than the
Obligations) secured by a Lien permitted by Section 7.1 on the asset disposed
of, if such net proceeds arise from any individual sale, assignment or other
disposition or from any group of related sales, assignments or other
dispositions.
"Net Proceeds" means, with respect to any sale or issuance of
securities or incurrence of Debt by any Person, the excess of (i) the gross cash
proceeds received by or on behalf of such Person in respect of such sale,
issuance or incurrence (as the case may be) over (ii) customary underwriting
commissions, auditing and legal fees, printing costs, rating agency fees and
other customary and reasonable fees and expenses incurred by such Person in
connection therewith.
"Net Worth" means, with respect to any Person, the excess of such
Person's total assets over its total liabilities, total assets and total
liabilities each to be determined in accordance with GAAP consistently applied,
excluding, however, from the determination of total assets (i) goodwill,
organizational expenses, research and development expenses, trademarks, trade
names, copyrights, patents, patent applications, licenses and rights in any
thereof, and other similar intangibles, (ii) cash held in a sinking or other
analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or Debt, and (iii) any items not included in clauses
(i) or (ii) above, that are treated as intangibles in conformity with GAAP.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Term Loans, all accrued and unpaid Commitment Fees and all other
obligations of the Company to the Banks or to any Bank or the Agent or Arranger
arising under the Loan Documents.
"Off-Balance Sheet Liability" of a Person means (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability under any sale and leaseback
transaction which is not a Capital Lease, (iii) any liability under any
so-called "synthetic lease" transaction entered into by such Person, or (iv) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.
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"Operating Lease" of a Person means any lease of Property (other than a
Capital Lease) by such Person as lessee.
"Other Taxes" - see Section 4.5(b).
"Payment Date" means the second Business Day of each calendar quarter
occurring after the Initial Borrowing Date.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Plan" means any employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Company or any ERISA Affiliate and covered
by Title IV of ERISA.
"Prior Agreement" means that certain Credit Agreement dated as of July
14, 1999, as amended, among the Company, certain banks and Bank One, NA
(formerly known as The First National Bank of Chicago), as agent.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Pro Rata Share" means, with respect to any Bank, at any time, the
percentage obtained by dividing (i) the sum of such Bank's Deferred Draw Term
Loan Commitment, if any, at such time plus the outstanding principal balance of
such Bank's Term Loans at such time by (ii) the sum of the aggregate amount of
all of the Deferred Draw Term Loan Commitments plus the outstanding principal
balance of all Term Loans.
"Receivables Sale Agreement" means the Amended and Restated Receivables
Sale Agreement among the Company, Asset Securitization Cooperative Corporation
and Canadian Imperial Bank of Commerce, dated as of April 1, 2002.
"Regulation D" means Regulation D of the FRB from time to time in
effect and shall include any successor or other regulation or official
interpretation of said FRB relating to reserve requirements applicable to member
banks of the Federal Reserve System.
"Regulation U" means Regulation U of the FRB from time to time in
effect and shall include any successor or other regulation or official
interpretation of said FRB relating to the extension of credit by banks,
non-banks and non-broker-dealers for the purpose of purchasing or carrying
margin stocks.
"Reportable Event" has the meaning assigned to that term in Title IV of
ERISA.
9
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"S&P" means Standard and Poor's Rating Services, a division of The
McGraw Hill Companies, Inc. or any successor thereto.
"SEC" means the Securities and Exchange Commission or any governmental
authority which may be substituted therefor.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Securitized Bonds" shall mean any nonrecourse bonds or similar
asset-backed securities issued by a special-purpose Subsidiary of the Company
which are payable solely from specialized charges authorized by the utility
commission of the relevant state in connection with the recovery of regulatory
assets or other stranded costs.
"Senior Debt" means the First Mortgage Bonds.
"Single Employer Plan" means a Plan maintained by the Company or any
ERISA Affiliate for employees of the Company or any ERISA Affiliate.
"Subsidiary" means, as to any Person, any corporation or other entity
of which at least a majority of the securities or other ownership interests
having ordinary voting power (absolutely or contingently) for the election of
directors or other Persons performing similar functions are at the time owned
directly or indirectly by such Person.
"Supplemental Indenture" means a supplemental indenture substantially
in the form of Exhibit A-1 with respect to the Bonds issued on the Initial
Borrowing Date and substantially in the form of Exhibit A-2 with respect to the
Bonds issued in connection with the Extension Option.
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.
"Termination Event" means (a) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), or (b) the withdrawal of the Company or any of its ERISA
Affiliates from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001 (a) (2) of ERISA, or (c) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of proceedings
to terminate a Plan by the PBGC or to appoint a trustee to administer any Plan.
"Term Loans" means the Initial Term Loans and the Deferred Draw Term
Loans.
10
"Total Consolidated Capitalization" means, at any date of
determination, the sum of (a) Total Consolidated Debt, (b) equity of the common
stockholders of the Company, (c) equity of the preference stockholders of the
Company and (d) equity of the preferred stockholders of the Company, in each
case determined at such date.
"Total Consolidated Debt" means, at any date of determination, the
aggregate Debt of the Company and its Consolidated Subsidiaries; provided, that
Total Consolidated Debt shall exclude (i) the principal amount of any
Securitized Bonds, (ii) any Junior Subordinated Debt owned by any Hybrid
Preferred Securities Subsidiary, (iii) any guaranty by the Company of payments
with respect to any Hybrid Preferred Securities, provided that such guaranty is
subordinated to the rights of the Banks hereunder and under the other Loan
Documents pursuant to terms of subordination substantially similar to those set
forth in Exhibit F, or pursuant to other terms and conditions satisfactory to
the Majority Banks, (iv) such percentage of the Net Proceeds from any issuance
of hybrid debt/equity securities (other than Junior Subordinated Debt and Hybrid
Preferred Securities) by the Company or any Consolidated Subsidiary as shall be
agreed to be deemed equity by the Agent and the Company prior to the issuance
thereof (which determination shall be based on, among other things, the
treatment (if any) given to such securities by the applicable rating agencies).
"Type" means, with respect to any Loan, the character of such Loan as a
Eurodollar Rate Loan or a Floating Rate Loan.
"Unfunded Vested Liabilities" means, (i) in the case of Single Employer
Plans, the amount (if any) by which the present value of all vested
nonforfeitable benefits under such Plan exceeds the fair market value of all
Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, and (ii) in the case of Multiemployer
Plans, the withdrawal liability of the Company and its ERISA Affiliates.
1.2 Singular and Plural. The foregoing definitions shall be equally
applicable to both the singular and plural forms of the defined terms.
1.3 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. If any changes in generally
accepted accounting principles are hereafter required or permitted and are
adopted by the Company or any of its Subsidiaries, or the Company or any of its
Subsidiaries shall change its application of generally accepted accounting
principles with respect to any Off-Balance Sheet Liabilities, in each case, with
the agreement of its independent certified public accountants and such changes
result in a change in the method of calculation of any of the financial
covenants, tests, restrictions or standards herein or in the related definitions
or terms used therein ("Accounting Changes"), the parties hereto agree, at the
Company's request, to enter into negotiations, in good faith, in order to amend
such provisions in a credit neutral manner so as to reflect equitably such
changes with the desired result that the criteria for evaluating the Company's
and its Subsidiaries' financial condition shall be the same after such changes
as if such changes had not been made; provided, however, until such provisions
are amended in a manner reasonably satisfactory to the Agent, the Arranger and
the Majority Banks, no Accounting Change shall be given effect in such
calculations. In the event such amendment is entered into, all references in
this Agreement to GAAP shall mean generally accepted accounting principles as of
the date of such amendment.
11
ARTICLE II
THE TERM LOANS
2.1 Initial Term Loans. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make a term loan to the Company on
the Initial Borrowing Date in an amount equal to such Bank's Initial Term Loan
Commitment (each individually, an "Initial Term Loan" and, collectively, the
"Initial Term Loans"). The Company shall give the Agent irrevocable notice (a
"Borrowing Notice") not later than 11:00 a.m. (New York time) on the Initial
Borrowing Date, specifying (i) the Borrowing Date, which shall be the Initial
Borrowing Date, and (ii) the aggregate amount of the Initial Term Loans. The
Initial Term Loans shall initially be Floating Rate Loans and thereafter may be
continued as Floating Rate Loans or converted into Eurodollar Rate Loans in the
manner provided in Section 2.8.
2.2 Deferred Draw Term Loans. Each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to make a term loan to the Company
on any Business Day during the Deferred Draw Period in an amount equal to such
Bank's Deferred Draw Term Loan Commitment (each individually, a "Deferred Draw
Term Loan" and, collectively, the "Deferred Draw Term Loans"). The Company shall
give the Agent an irrevocable Borrowing Notice not later than 11:00 a.m. (New
York time) on the third Business Day prior to the proposed Borrowing Date,
specifying (i) the Borrowing Date, which shall be a Business Day, (ii) the
aggregate amount of the Deferred Draw Term Loans, (iii) whether the Deferred
Draw Term Loans initially will be Floating Rate Loans or Eurodollar Rate Loans
and (iv) in the case of Eurodollar Rate Loans, the initial Interest Period
applicable thereto. If the Deferred Draw Term Loans are not borrowed by the
Company during the Deferred Draw Period, the Deferred Draw Term Loan Commitments
shall terminate on the last day of the Deferred Draw Period unless earlier
terminated by the Company pursuant to Section 2.5(b). The Deferred Draw Term
Loans, if requested, shall be drawn in a single borrowing, and the excess, if
any, of the aggregate Deferred Draw Term Loan Commitments on the Borrowing Date
over the aggregate amount of the Deferred Draw Term Loans requested by the
Company on such Borrowing Date shall terminate on such Borrowing Date.
2.3 Making of Term Loans. Promptly after receipt thereof, the Agent
will notify each Bank of the contents of each Borrowing Notice. Not later than
1:00 p.m. (New York time) on each Borrowing Date, each Bank shall make available
its applicable Term Loan in funds immediately available in New York to the Agent
at its address specified pursuant to Section 14. To the extent funds are
received from the Banks, the Agent will make such funds available to the Company
at the Agent's aforesaid address. No Bank's obligation to make any Term Loan
shall be affected by any other Bank's failure to make any Term Loan.
2.4 Repayment of Term Loans. The Term Loans shall be paid in full on
the Maturity Date; provided, however, that the Company may elect to extend the
maturity of the Term Loans to the Extended Maturity Date (the "Extension
Option") on the terms and conditions contained in this Section 2.4 and in
Section 11.3. The Company may elect the Extension Option by (i) providing
irrevocable notice of such election to the Agent not more than 60 days and not
less than 15 days prior to the Maturity Date and (ii) paying an extension fee to
the Agent on the Maturity Date in an aggregate amount equal to 0.125% of the
aggregate outstanding principal amount of the Term Loans on the Maturity Date,
for the account of the Banks in accordance with
12
their respective Pro Rata Shares. Promptly after receipt thereof, the Agent will
send a copy of such notice to each Bank. Notwithstanding the foregoing and the
giving of such notice, if a Default or Event of Default has occurred and is
continuing on the Maturity Date, the Extension Option shall not be available and
the Term Loan shall be paid in full on the Maturity Date.
2.5 Commitment Fee and Reductions of Commitment. (a) The Company agrees
to pay to the Agent for the account of each Bank according to its Pro Rata Share
a commitment fee (the "Commitment Fee") at the rate of 0.50% per annum on the
aggregate Deferred Draw Term Loan Commitments from the Initial Borrowing Date to
but not including the earlier of (i) the Borrowing Date of the Deferred Draw
Term Loans and (ii) the date on which the Deferred Draw Term Loan Commitments
are terminated in full (the earlier of such dates being the "Termination Date").
The Commitment Fee shall be payable quarterly in arrears on each Payment Date
(for the quarter then most recently ended) and on the Termination Date (for the
period then ended for which such fee has not previously been paid). The
Commitment Fee shall be calculated for actual days elapsed on the basis of a 360
day year.
(a) The Company may permanently reduce the aggregate Deferred Draw Term
Loan Commitments in whole, or in part ratably among the Banks in the minimum
amount of $10,000,000 (and in multiples of $1,000,000 if in excess thereof),
upon at least five Business Days' written notice to the Agent, which shall
specify the amount of any such reduction. All accrued Commitment Fees shall be
payable on the effective date of any termination of the obligation of the Banks
to make Deferred Draw Term Loans hereunder. Upon any permanent reduction in the
aggregate Deferred Draw Term Loan Commitments pursuant to the terms of this
Section 2.5(b), the Agent shall, upon request of the Company, promptly surrender
to or upon the order of the Company one or more Bonds specified by the Company;
provided that the Company remains in compliance with Section 6.10.
2.6 Optional Principal Payments. The Company may, upon at least three
(3) Business Days' prior written notice to the Agent (which the Agent shall
promptly transmit to each Bank), at any time and from time to time, without
penalty or premium, prepay the Term Loans which are Floating Rate Loans, in
whole or in part. Term Loans which are Eurodollar Rate Loans may be prepaid in
whole or in part upon at least five (5) Business Days' prior written notice to
the Agent (which the Agent shall promptly transmit to each Bank), (A) on the
expiration date of the then applicable Interest Period therefor, and (B) on any
other date upon payment of the amounts required by Section 4.4, but otherwise
without penalty or premium. Any notice of prepayment given to the Agent under
this Section 2.6 shall specify the date (which shall be a Business Day) of
prepayment, the aggregate principal amount of the prepayment and any allocation
of such amount among Floating Rate Loans and Eurodollar Rate Loans. When notice
of prepayment is delivered as provided herein, the principal amount of the Term
Loans specified in the notice shall become due and payable on the prepayment
date specified in such notice. Unless the aggregate outstanding principal
balance of the Term Loans is to be prepaid in full, voluntary prepayments of the
Term Loans shall be in an aggregate minimum amount of $10,000,000 and integral
multiples of $1,000,000 in excess of that amount. Each voluntary prepayment of
the Term Loans shall be allocated first to Term Loans which are Floating Rate
Loans until paid in full and then to Term Loans which are Eurodollar Rate Loans.
Amounts prepaid hereunder may not be reborrowed. Upon any prepayment of the Term
Loans pursuant to the terms of this Section 2.6, the Agent shall, upon request
of the Company, promptly surrender to or upon the order of the
13
Company one or more Bonds specified by the Company; provided that the Company
remains in compliance with Section 6.10.
2.7 Mandatory Prepayments. (a) Within three Business Days after the
Company's receipt of any Net Cash Proceeds of Sale, the Company shall make a
written offer to the Banks to prepay the Term Loans by an amount equal to 50% of
such Net Cash Proceeds of Sale; provided, however, that (i) the Company may
retain up to an aggregate of $100,000,000 of such Net Cash Proceeds of Sale
during the term of this Agreement before it shall be required to make any such
mandatory offer, and (ii) the Company shall not be required to make any such
mandatory offer unless and until the aggregate amount of such mandatory offer
(on a cumulative basis) would be at least $1,000,000. Such offer shall be
transmitted by facsimile and by overnight courier to each Bank and shall be
deemed received on the Business Day following transmittal. Each Bank shall have
three Business Days following its receipt of such offer to submit a written
response to the Company's prepayment offer, and if any Bank shall not have
responded by the close of business on the third Business Day, it shall be deemed
to have accepted such offer. Payment shall be made to the Agent for the account
of all Banks that have accepted the prepayment offer on the fourth Business Day
following their receipt of the offer from the Company. If any Bank elects not to
accept its Pro Rata Share thereof, such prepayment shall be applied ratably to
the Term Loans of the Banks that have accepted such offer. Amounts prepaid
hereunder may not be reborrowed. Upon any prepayment of the Term Loans pursuant
to the terms of this Section 2.7(a), the Agent shall, upon request of the
Company, promptly surrender to or upon the order of the Company one or more
Bonds specified by the Company; provided that the Company remains in compliance
with Section 6.10.
(a) If the Company fails to execute any amendment to the Loan Documents
required by the Fee Letter and such failure continues after written notice
thereof from the Arranger, then on the third Business Day after receipt by the
Company of such notice, the Commitments shall be terminated and the entire
principal amount of the Term Loans outstanding hereunder, all interest thereon
and all other Obligations payable under this Agreement and the other Loan
Documents shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Company.
2.8 Conversion or Continuation. (i) The Company shall have the option
(A) to convert at any time all or any part of outstanding Floating Rate Loans to
Eurodollar Rate Loans; (B) to convert all or any part of outstanding Eurodollar
Rate Loans having Interest Periods which expire on the same date to Floating
Rate Loans on such expiration date; or (C) to continue all or any part of
outstanding Eurodollar Rate Loans having Interest Periods which expire on the
same date as Eurodollar Rate Loans, and the succeeding Interest Period of such
continued Loans shall commence on such expiration date; provided, however, no
such outstanding Loan may be continued as, or be converted into, a Eurodollar
Rate Loan (i) if the continuation of, or the conversion into, would violate any
of the provisions of this Agreement or (ii) if a Default or Event of Default
would occur or has occurred and is continuing. Any conversion into or
continuation of Eurodollar Rate Loans under this Section 2.8 shall be in a
minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess
of that amount.
(ii) To convert or continue a Loan under Section 2.8(i), the
Company shall deliver an irrevocable notice (a "Conversion/Continuation
Notice") to the Agent no later than
14
11:00 a.m. (New York time) at least three (3) Business Days in advance of the
proposed conversion/continuation date. A Conversion/Continuation Notice shall
specify (A) the proposed conversion/continuation date (which shall be a Business
Day), (B) the principal amount of the Loan to be converted/continued, (C)
whether such Loan shall be converted and/or continued, and (D) in the case of a
conversion to, or continuation of, a Eurodollar Rate Loan, the requested
Interest Period. Promptly after receipt of a Conversion/Continuation Notice
under this Section 2.8(ii) (or telephonic notice in lieu thereof), the Agent
shall notify each Bank by telex or telecopy, or other similar form of
transmission, of the proposed conversion/continuation. Any
Conversion/Continuation Notice for conversion to, or continuation of, a Loan (or
telephonic notice in lieu thereof) shall be irrevocable, and the Company shall
be bound to convert or continue in accordance therewith.
2.9 Interest Rates, Interest Payment Dates. (a) Subject to Section
2.10, each Term Loan shall bear interest as follows:
(i) if it is a Floating Rate Loan, at a rate per annum equal
to the Floating Rate from time to time in effect; and
(ii) if it is a Eurodollar Rate Loan, at a rate per annum
equal to the Eurodollar Rate for each applicable Interest Period
therein.
Changes in the rate of interest on that portion of any Term Loan maintained as a
Floating Rate Loan will take effect simultaneously with each change in the
Floating Rate.
(b) Interest accrued on each Floating Rate Loan shall be payable on
each Payment Date and at maturity. Interest accrued on each Eurodollar Rate Loan
shall be payable on the last day of its applicable Interest Period, on any date
on which such Eurodollar Rate Loan is prepaid and at maturity. Interest accrued
on each Eurodollar Rate Loan having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval during such
Interest Period. Interest on all Term Loans shall be calculated for actual days
elapsed on the basis of a 360-day year. In computing interest on any Term Loan,
the date of the making of the Term Loan or the first day of an Interest Period,
as the case may be, shall be included and the date of payment or the expiration
date an Interest Period, as the case may be, shall be excluded; provided,
however, if a Term Loan is repaid on the same day on which it is made, one (1)
day's interest shall be paid on such Term Loan. If any payment of principal of
or interest on an Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a principal payment, such extension of time shall be included in computing
interest in connection with such payment.
2.10 Rate after Maturity. Any Term Loan not paid by the Company at
maturity, whether by acceleration or otherwise, shall bear interest until paid
in full at a rate per annum equal to the higher of the rate otherwise applicable
thereto plus 1% or the Floating Rate plus 1%.
2.11 Method of Payment. All payments of principal, interest and fees
hereunder shall be made in immediately available funds to the Agent at its
address specified on its signature page to this Agreement (or at any other
Lending Installation of the Agent specified in writing by the Agent to the
Company) not later than 1:00 p.m. (New York time) on the date when due and shall
15
be applied ratably by the Agent among the Banks. Funds received after such time
shall be deemed received on the following Business Day unless the Agent shall
have received from, or on behalf of, the Company a Federal Reserve reference
number with respect to such payment before 1:00 p.m. (New York time) on the date
of such payment. Each payment delivered to the Agent for the account of any Bank
shall be delivered promptly by the Agent in the same type of funds received by
the Agent to such Bank at the address specified for such Bank on its signature
page to this Agreement or at any Lending Installation specified in a notice
received by the Agent from such Bank. The Agent is hereby authorized to charge
the account of the Company maintained with Citicorp, if any, for each payment of
principal, interest and fees as such payment becomes due hereunder.
2.12 Evidence of Obligation; Telephonic Notices.
(a) The obligation of the Company to repay the Obligations shall be
evidenced by one or more Bonds.
(b) Each Bank shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Company to such Bank
resulting from each Term Loan made by such Bank from time to time, including the
amounts of principal and interest payable and paid to such Bank from time to
time hereunder.
(c) The Agent shall also maintain accounts in which it will record (i)
the amount of each Term Loan made hereunder, the Type thereof and the Interest
Period with respect thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from the Company to each Bank
hereunder, and (iii) the amount of any sum received by the Agent hereunder from
the Company and each Bank's share thereof.
(d) The entries maintained in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the failure
of the Agent or any Bank to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Company to repay the Obligations
in accordance with their terms.
(e) The Company hereby authorizes the Banks and the Agent to make,
convert or continue Term Loans based on telephonic notices made by any person or
persons the Agent or any Bank in good faith believes to be acting on behalf of
the Company, The Company agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by a Designated Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Banks, the records of the Agent and the Banks shall govern
absent manifest error.
2.13 Lending Installations. Subject to the provisions of Section 4.6,
each Bank may book its Term Loans at any Lending Installation selected by such
Bank and may change its Lending Installation from time to time. All terms of
this Agreement shall apply to any such Lending Installation and the Term Loans
shall be deemed held by the applicable Bank for the benefit of such Lending
Installation. Each Bank may, by written or facsimile notice to the
16
Company, designate a Lending Installation through which Term Loans will be made
by it and for whose account payments on the Term Loans are to be made.
2.14 Non-Receipt of Funds by the Agent. Unless a Bank or the Company,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Bank, the
proceeds of a Term Loan or (ii) in the case of the Company, a payment of
principal, interest or fees to the Agent for the account of the Banks, that it
does not intend to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Bank or the Company, as the case may be, has not in fact made such payment
to the Agent, the recipient of such payment shall, on demand by the Agent, repay
to the Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Agent until the date the Agent recovers such amount at a
rate per annum equal to (i) in the case of payment by a Bank, the Federal Funds
Rate for such day or (u) in the case of payment by the Company, the interest
rate applicable to the relevant Term Loan.
ARTICLE III
RESERVED.
ARTICLE IV
CHANGE IN CIRCUMSTANCES
4.1 Yield Protection. If any change in law or any governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any interpretation thereof by any agency or authority having
jurisdiction over any Bank,
(i) subjects any Bank or any applicable Lending Installation
to any increased tax, duty, charge or withholding on or from payments
due from the Company (excluding taxation measured by or attributable to
the overall net income of such Bank or applicable Lending Installation,
whether overall or in any geographic area), or changes the rate of
taxation of payments to any Bank in respect of its Term Loans or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by any Bank or any applicable Lending Installation (including,
without limitation, any reserve costs under Regulation D with respect
to Eurocurrency liabilities (as defined in Regulation D)), or
(iii) imposes any other condition the result of which is to
increase the cost to any Bank or any applicable Lending Installation of
making, funding or maintaining Term Loans, or reduces any amount
receivable by any Bank or any applicable Lending Installation in
connection with Term Loans or requires any Bank or any applicable
Lending Installation to make any payment calculated by reference to its
Term Loans or interest received by it, by an amount deemed material by
such Bank, or
17
(iv) affects the amount of capital required or expected to be
maintained by any Bank or Lending Installation or any corporation
controlling any Bank and such Bank determines the amount of capital
required is increased by or based upon the existence of this Agreement
or its obligation to make Term Loans hereunder or of commitments of
this type,
then, upon presentation by such Bank to the Company of a certificate (as
referred to in the immediately succeeding sentence of this Section 4.1) setting
forth the basis for such determination and the additional amounts reasonably
determined by such Bank for the period of up to 90 days prior to the date on
which such certificate is delivered to the Company and the Agent, to be
sufficient to compensate such Bank in light of such circumstances, the Company
shall within 30 days of such delivery of such certificate pay to the Agent for
the account of such Bank the specified amounts set forth on such certificate.
The affected Bank shall deliver to the Company and the Agent a certificate
setting forth the basis of the claim and specifying in reasonable detail the
calculation of such increased expense, which certificate shall be prima facie
evidence as to such increase and such amounts. An affected Bank may deliver more
than one certificate to the Company during the term of this Agreement. In making
the determinations contemplated by the above-referenced certificate, any Bank
may make such reasonable estimates, assumptions, allocations and the like that
such Bank in good faith determines to be appropriate, and such Bank's selection
thereof in accordance with this Section 4.1 shall be conclusive and binding on
the Company, absent manifest error.
(b) No Bank shall be entitled to demand compensation or be compensated
hereunder to the extent that such compensation relates to any period of time
more than 90 days prior to the date upon which such Bank first notified the
Company of the occurrence of the event entitling such Bank to such compensation
(unless, and to the extent, that any such compensation so demanded shall relate
to the retroactive application of any event so notified to the Company).
4.2 Replacement Bank. If any Bank shall make a demand for payment under
Section 4.1, then within 30 days after such demand, the Company may, with the
approval of the Agent (which approval shall not be unreasonably withheld) and
provided that no Default or Event of Default shall then have occurred and be
continuing, demand that such Bank assign to one or more financial institutions
designated by the Company and approved by the Agent all (but not less than all)
of such Bank's Deferred Draw Term Loan Commitment, if any, and outstanding Term
Loans within the period ending on the later of such 30th day and the last day of
the longest of the then current Interest Periods or maturity dates for such
outstanding Term Loans. It is understood that such assignment shall be
consummated on terms satisfactory to the Company, the Agent and the assigning
Bank, provided that such assigning Bank's consent to such an assignment shall
not be unreasonably withheld.
4.3 Availability of Eurodollar Rate Loans. If
(a) any Bank determines that maintenance of a Eurodollar Rate Loan at a
suitable Lending Installation would violate any applicable law, rule, regulation
or directive, whether or not having the force of law, or
18
(b) the Majority Banks determine that (i) deposits of a type and
maturity appropriate to match fund Eurodollar Rate Loans are not available or
(ii) the Base Eurodollar Rate does not accurately reflect the cost of making or
maintaining a Eurodollar Rate Loan, then the Agent shall suspend the
availability of Eurodollar Rate Loans and, in the case of clause (a), require
any Eurodollar Rate Loans to be converted to Floating Rate Loans on such date as
is required by the applicable law, rule, regulation or directive.
4.4 Funding Indemnification. If any payment of a Eurodollar Rate Loan
occurs on a date which is not the last day of an applicable Interest Period,
whether because of prepayment or otherwise, or a Eurodollar Rate Loan is not
made on the date specified by the Company for any reason other than default by
the Banks, the Company will indemnify each Bank for any loss or cost (but not
lost profits) incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Rate Loan; provided that the Company shall not be
liable for any of the foregoing to the extent they arise because of acceleration
by any Bank.
4.5 Taxes.
(a) All payments by the Company to or for the account of any Bank or
the Agent hereunder or under any Bond shall be made free and clear of and
without deduction for any and all Taxes. If the Company shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder to any Bank
or the Agent, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 4.5) such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant authority in
accordance with applicable law and (iv) the Company shall furnish to the Agent
the original copy of a receipt evidencing payment thereof within 30 days after
such payment is made.
(b) In addition, the Company hereby agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any Bond or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Bond ("Other Taxes").
(c) The Company hereby agrees to indemnify the Agent and each Bank for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by
the Agent or such Bank and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due under this
indemnification shall be made within 30 days of the date the Agent or such Bank
makes demand therefor pursuant to Section 4.6.
(d) Each Bank that is not incorporated under the laws of the United
States of America or a state thereof (each a "Non-U.S. Bank") agrees that it
will, not more than ten Business Days after the date hereof, or, if later, not
more than ten Business Days after becoming a Bank hereunder, (i) deliver to each
of the Company and the Agent two (2) duly completed copies of United States
Internal Revenue Service Form W8BEN or W8ECI, certifying in either case that
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such Bank is entitled to receive payments under this Agreement without deduction
or withholding of any United States federal income taxes, and (ii) deliver to
each of the Company and the Agent a United States Internal Revenue Form W-8 or
W-9, as the case may be, and certify that it is entitled to an exemption from
United States backup withholding tax. Each Non-U.S. Bank further undertakes to
deliver to each of the Company and the Agent (x) renewals or additional copies
of such form (or any successor form) on or before the date that such form
expires or becomes obsolete, and (y) after the occurrence of any event requiring
a change in the most recent forms so delivered by it, such additional forms or
amendments thereto as may be reasonably requested by the Company or the Agent.
All forms or amendments described in the preceding sentence shall certify that
such Bank is entitled to receive payments under this Agreement without deduction
or withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Bank from duly completing and delivering any such form or amendment with respect
to it and such Bank advises the Company and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
(e) For any period during which a Non-U.S. Bank has failed to provide
the Company with an appropriate form pursuant to clause (d), above (unless such
failure is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Bank shall not be entitled to indemnification under
this Section 4.5 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Bank which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required under clause (d) above, the Company shall take such
steps as such Non-U.S. Bank shall reasonably request to assist such Non-U.S.
Bank to recover such Taxes.
(f) Any Bank that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Bond
pursuant to the law of any relevant jurisdiction or any treaty shall deliver to
the Company (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at
a reduced rate.
(g) If the U.S. Internal Revenue Service or any other governmental
authority of the United States or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form was
not delivered or properly completed, because such Bank failed to notify the
Agent of a change in circumstances which rendered its exemption from withholding
ineffective, or for any other reason), such Bank shall indemnify the Agent fully
for all amounts paid, directly or indirectly, by the Agent as tax, withholding
therefor, or otherwise, including penalties and interest, and including taxes
imposed by any jurisdiction on amounts payable to the Agent under this
subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Agent, which attorneys may
be
20
employees of the Agent). The obligations of the Banks under this Section 4.5(g)
shall survive the payment of the Obligations and termination of this Agreement.
4.6 Bank Certificates. Survival of Indemnity. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to Eurodollar Rate Loans to reduce any liability of the Company to such
Bank under Section 4.1 or to avoid the unavailability of Eurodollar Rate Loan
under Section 4.3, so long as such designation is not disadvantageous to such
Bank. A certificate of such Bank as to the amount due under Section 4.1, 4.4 or
4.5 shall be final, conclusive and binding on the Company in the absence of
manifest error, Determination of amounts payable under such Sections in
connection with a Eurodollar Rate Loan shall be calculated as though each Bank
funded each Eurodollar Rate Loan through the purchase of a deposit of the type
and maturity corresponding to the deposit used as a reference in determining the
Base Eurodollar Rate applicable to such Eurodollar Rate Loan whether in fact
that is the case or not. Unless otherwise provided herein, the amount specified
in any certificate shall be payable on demand after receipt by the Company of
such certificate. The obligations of the Company under Sections 4.1, 4.4 and 4.5
shall survive payment of the Obligations and termination of this Agreement,
provided, that no Bank shall be entitled to compensation to the extent that such
compensation relates to any period of time more than 90 days after the
termination of this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants that:
5.1 Incorporation and Good Standing. The Company is duly incorporated,
validly existing and in good standing under the laws of the State of Michigan.
5.2 Corporate Power and Authority: No Conflicts. The execution,
delivery and performance by the Company of the Loan Documents are within the
Company's corporate powers, have been duly authorized by all necessary corporate
action and do not (i) violate the Company's charter, bylaws or any applicable
law, or (ii) breach or result in an event of default under any indenture or
material agreement, and do not result in or require the creation of any Lien
upon or with respect to any of its properties (except the lien of the Indenture
securing the Bonds).
5.3 Governmental Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Company of any Loan Document, except for the authorization to issue, sell or
guarantee secured and/or unsecured short-term debt granted by the Federal Energy
Regulatory Commission, which authorization has been obtained and is in full
force and effect.
5.4 Legally Enforceable Agreements. Each Loan Document constitutes a
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, subject to (a) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
21
affecting the enforcement of creditors' rights generally and (b) the application
of general principles of equity (regardless of whether considered in a
proceeding in equity or at law).
5.5 Financial Statements. The audited balance sheet of the Company and
its Consolidated Subsidiaries as at December 31, 2001, and the related
statements of income and cash flows of the Company and its Consolidated
Subsidiaries for the fiscal year then ended, as set forth in the Company's
Annual Report on Form 10-K (copies of which have been furnished to each Bank),
and the unaudited balance sheet of the Company and its Consolidated Subsidiaries
as at March 31, 2002 (copies of which have been furnished to each Bank), fairly
present the financial condition of the Company and its Consolidated Subsidiaries
as at such dates and the results of operations of the Company and its
Consolidated Subsidiaries for the periods ended on such dates, all in accordance
with GAAP, and since December 31, 2001, there has been no Material Adverse
Change (except to the extent described in the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2002 as filed with the SEC, copies of which
have been furnished to each Bank).
5.6 Litigation. Except (i) to the extent described in the Company's
Annual Report on Form 10-K for the year ended December 31, 2001, Quarterly
Report on Form 10-Q for the quarter ended March 31, 2002, and Current Report on
Form 8-K filed by the Company on May 29, 2002, in each case as filed with the
SEC, copies of which have been furnished to each Bank, and (ii) such other
similar actions, suits and proceedings predicated on the occurrence of the same
events giving rise to any actions, suits and proceedings described in the
Reports filed with the SEC set forth in clause (i) hereof, there is no pending
or threatened action or proceeding against the Company or any of its
Consolidated Subsidiaries before any court, governmental agency or arbitrator,
which, if adversely determined, might reasonably be expected to materially
adversely affect the financial condition, results of operations, business,
Property or prospects of the Company and its Consolidated Subsidiaries, taken as
a whole, or that would materially adversely affect the Company's ability to
perform its obligations under any Loan Document. As of the Initial Borrowing
Date, there is no litigation challenging the validity or the enforceability of
any of the Loan Documents.
5.7 Margin Stock. The Company is not engaged in the business of
extending credit for the purpose of buying or carrying margin stock (within the
meaning of Regulation U), and no proceeds of any Credit Extension will be used
to buy or carry any margin stock or to extend credit to others for the purpose
of buying or carrying any margin stock.
5.8 ERISA. No Termination Event has occurred or is reasonably expected
to occur with respect to any Plan. Neither the Company nor any of its ERISA
Affiliates is an employer under a Multiemployer Plan.
5.9 Insurance. All insurance required by Section 6.2 is in full force
and effect.
5.10 Taxes. The Company and its Subsidiaries have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, or, to the extent the Company or
any of its Subsidiaries is contesting in good faith an assertion of liability
based on such returns, has provided adequate reserves for payment thereof in
accordance with GAAP.
22
5.11 Investment Company Act. The Company is not an investment company
(within the meaning of the Investment Company Act of 1940, as amended).
5.12 Public Utility Holding Company Act. The Company is exempt from the
registration requirements of the Public Utility Holding Company Act of 1935, as
amended, 15 USC 79, et seq.
5.13 Bonds. The issuance to the Agent of Bonds as evidence of the
Obligations (i) will not violate any provision of the Indenture or any other
agreement or instrument, or any law or regulation, or judicial or regulatory
order, judgment or decree, to which the Company or any of its Subsidiaries is a
party or by which any of the foregoing is bound and (ii) will provide the Banks,
as beneficial holders of the Bonds through the Agent, the benefit of the Lien of
the Indenture equally and ratably with the holders of other First Mortgage
Bonds.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Obligations shall remain unpaid or any Bank shall have
any Commitment under this Agreement, the Company shall:
6.1 Payment of Taxes. Etc. Pay and discharge before the same shall
become delinquent, (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property, and (b) all lawful claims which, if
unpaid, might by law become a Lien upon its property, provided that the Company
shall not be required to pay or discharge any such tax, assessment, charge or
claim (i) which is being contested by it in good faith and by proper procedures
or (ii) the non-payment of which will not materially adversely affect the
financial condition or results of operations of the Company and its Consolidated
Subsidiaries, taken as a whole.
6.2 Maintenance of Insurance. Maintain insurance in such amounts and
covering such risks with respect to its business and properties as is usually
carried by companies engaged in similar businesses and owning similar
properties, either with reputable insurance companies or, in whole or in part,
by establishing reserves or one or more insurance funds, either alone or with
other corporations or associations.
6.3 Preservation of Corporate Existence, Etc. Preserve and maintain its
corporate existence, rights and franchises, and qualify and remain qualified as
a foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business and operations or the ownership of its
properties, provided that the Company shall not be required to preserve any such
right or franchise or to remain so qualified unless the failure to do so would
have a material adverse effect on the financial condition or results of
operations of the Company and its Consolidated Subsidiaries, taken as a whole,
or the ability of the Company to enter into, or to perform its obligations
under, any Loan Document.
6.4 Compliance with Laws. Etc. Comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental authority,
the non-compliance with which would materially adversely affect the financial
condition or results of operations of the Company
23
and its Consolidated Subsidiaries, taken as a whole, or the ability of the
Company to perform its obligations under any Loan Document.
6.5 Visitation Rights. Subject to any necessary approval from the
Nuclear Regulatory Commission, at any reasonable time and from time to time,
permit the Agent, any of the Banks or any agents or representatives thereof to
examine and make copies of and abstracts from its records and books of account,
visit its properties and discuss its affairs, finances and accounts with any of
its officers,
6.6 Keeping of Books. Keep, and cause each Consolidated Subsidiary to
keep, adequate records and books of account, in which full and correct entries
shall be made of all of its financial transactions and its assets and business
so as to permit the Company and its Consolidated Subsidiaries to present
financial statements in accordance with GAAP.
6.7 Reporting Requirements. Furnish to the Agent, with sufficient
copies for each of the Banks:
(a) as soon as practicable and in any event within five Business Days
after becoming aware of the occurrence of any Default or Event of Default, a
statement of a Designated Officer as to the nature thereof, and as soon as
practicable and in any event within five Business Days thereafter, a statement
of a Designated Officer as to the action which the Company has taken, is taking
or proposes to take with respect thereto;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
at the end of such quarter, and the related consolidated statements of income,
cash flows and common stockholder's equity of the Company and its Consolidated
Subsidiaries as at the end of and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, or statements providing
substantially similar information (which requirement shall be deemed satisfied
by the delivery of the Company's quarterly report on Form 10-Q for such
quarter), all in reasonable detail and duly certified (subject to the absence of
footnotes and to year-end audit adjustments) by a Designated Officer as having
been prepared in accordance with GAAP, together with (i) a certificate of a
Designated Officer (which certificate shall also accompany the financial
statements delivered pursuant to clause (c) below) stating that such officer has
no knowledge (having made due inquiry with respect thereto) that a Default or
Event of Default has occurred and is continuing, or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the actions which the Company has taken, is taking or proposes to take with
respect thereto, and (ii) a certificate of a Designated Officer, in
substantially the form of Exhibit C hereto, setting forth the Company's
computation of the financial ratio specified in Section 8.1 as of the end of the
immediately preceding fiscal quarter or year, as the case may be, of the
Company;
(c) as soon as available and in any event within 120 days after the end
of each fiscal year of the Company, a copy of the Annual Report on Form 10-K (or
any successor form) for the Company for such year, including therein the
consolidated balance sheet of the Company and its
24
Consolidated Subsidiaries as at the end of such year and the consolidated
statements of income, cash flows and common stockholder's equity of the Company
and its Consolidated Subsidiaries as at the end of and for such year, or
statements providing substantially similar information, in each case certified
by independent public accountants of recognized national standing selected by
the Company (and not objected to by the Majority Banks), together with a
certificate of such accounting firm addressed to the Banks stating that, in the
course of its examination of the consolidated financial statements of the
Company and its Consolidated Subsidiaries, which examination was conducted by
such accounting firm in accordance with GAAP, (1) such accounting firm has
obtained no knowledge that an Event of Default, insofar as such Event of Default
related to accounting or financial matters, has occurred and is continuing, or
if, in the opinion of such accounting firm, such an Event of Default has
occurred and is continuing, a statement as to the nature thereof, and (2) such
accounting firm has examined a certificate prepared by the Company setting forth
the computations made by the Company in determining, as of the end of such
fiscal year, the ratio specified in Section 8.1. which certificate shall be
attached to the certificate of such accounting firm, and such accounting firm
confirms that such computations accurately reflect such ratio;
(d) promptly after the sending or filing thereof, copies of all proxy
statements which the Company sends to its stockholders, copies of all regular,
periodic and special reports (other than those which relate solely to employee
benefit plans) which the Company files with the SEC and notice of the sending or
filing of (and, upon the request of the Agent or any Bank, a copy of) any final
prospectus filed with the SEC;
(e) as soon as possible and in any event (i) within 30 days after the
Company or any of its ERISA Affiliates knows or has reason to know that any
Termination Event described in clause (a) of the definition of Termination Event
with respect to any Plan has occurred and (ii) within ten days after the Company
or any of its ERISA Affiliates knows or has reason to know that any other
Termination Event with respect to any Plan has occurred, a statement of the
Chief Financial Officer of the Company describing such Termination Event and the
action, if any, which the Company or such ERISA Affiliate, as the case may be,
proposes to take with respect thereto;
(f) promptly upon becoming aware thereof, notice of any upgrading or
downgrading of the rating of the Senior Debt by Fitch, Moody's or S&P;
(g) as soon as possible and in any event within five (5) days after the
occurrence of any material default under any material agreement to which the
Company or any of its Subsidiaries is a party, which default would materially
adversely affect the financial condition, business, results of operations,
Property or prospects of the Company and its Subsidiaries, considered as a
whole, any of which is continuing on the date of such certificate, a certificate
of the president or chief financial officer of the Company setting forth the
details of such material default and the action which the Company or any such
Subsidiary proposes to take with respect thereto; and
(h) such other information respecting the business, properties or
financial condition of the Company as the Agent or any Bank through the Agent
may from time to time reasonably request.
25
6.8 Use of Proceeds. The Company will use the proceeds of the Term
Loans for general corporate purposes, working capital and refinancing the Debt
under the Prior Agreement. The Company will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Term Loans to purchase or carry
any "margin stock" (as defined in Regulation U).
6.9 Maintenance of Properties, Etc. The Company shall, and shall cause
each of its Subsidiaries to, maintain in all material respects all of its
respective owned and leased Property in good and safe condition and repair to
the same degree as other companies engaged in similar businesses and owning
similar properties, and not permit, commit or suffer any waste or abandonment of
any such Property, and from time to time shall make or cause to be made all
material repairs, renewals and replacements thereof, including, without
limitation, any capital improvements which may be required; provided, however,
that such Property may be altered or renovated in the ordinary course of
Company's or its Subsidiaries' business; and provided, further, that the
foregoing shall not restrict the sale of any asset of the Company or any
Subsidiary to the extent not prohibited by Section 7.2.
6.10 Bonds. Beginning on the Initial Borrowing Date and continuing
until the Commitments have terminated and all Obligations have been paid in
full, cause the aggregate amount of the Bonds outstanding to at all times be
equal to or greater than the sum of the aggregate Commitments plus the aggregate
outstanding Term Loans.
6.11 Post-Closing Opinion. Within ten days after the date hereof, the
Company shall cause to be delivered to the Agent a favorable opinion of Miller,
Canfield, Paddock and Stone, P.L.C., special counsel to the Company, as to the
matters set forth in Exhibit B-3 and as to such other matters as the Agent may
reasonably request. Such opinion shall be addressed to the Agent and the Banks
and shall be satisfactory in form and substance to the Agent.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Obligations shall remain unpaid or any Bank shall have
any Commitment under this Agreement, the Company shall not:
7.1 Liens. Create, incur, assume or suffer to exist any Lien upon or
with respect to any of its properties, now owned or hereafter acquired, except:
(a) Liens created pursuant to the Indenture securing the First Mortgage
Bonds;
(b) Liens securing pollution control bonds, or bonds issued to refund
or refinance pollution control bonds (including Liens securing obligations
(contingent or otherwise) of the Company under letter of credit agreements or
other reimbursement or similar credit enhancement agreements with respect to
pollution control bonds), provided that the aggregate face amount of any such
bonds so issued shall not exceed the aggregate face amount of such pollution
control bonds, as the case may be, so refunded or refinanced;
(c) Liens in (and only in) assets acquired to secure Debt incurred to
finance the acquisition of such assets;
26
(d) Statutory and common law banker's Liens on bank deposits;
(e) Liens in respect of accounts receivable sold, transferred or
assigned by the Company;
(f) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;
(g) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue or
being contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books;
(h) Liens incurred in the ordinary course of business in connection
with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(i) Judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered (subject to a customary deductible) by insurance;
(j) Zoning restrictions, easements, licenses, covenants, reservations,
utility company rights, restrictions on the use of real property or minor
irregularities of title incident thereto which do not in the aggregate
materially detract from the value of the property or assets of the Company or
materially impair the operation of its business;
(k) Liens arising in connection with the financing of the Company's
fuel resources, including, but not limited to, nuclear fuel;
(l) Liens arising pursuant to MCL 324.20138; provided that the
aggregate amount of all obligations secured by such Liens (excluding any such
Liens of which the Company has no knowledge or which are permitted by subsection
(f) above) shall not exceed $20,000,000;
(m) Liens arising in connection with the Securitized Bonds;
(n) Liens on the Facility LC Collateral Account (as defined in the
Credit Agreement) or any funds therein in favor of the agent under the Credit
Agreement; and
(o) Other Liens securing obligations in an aggregate amount not in
excess of $150,000,000.
7.2 Sale of Assets. Sell, lease, assign, transfer or otherwise dispose
of 15% or more of its assets.
27
7.3 Mergers, Etc. Merge with or into or consolidate with or into any
other Person, except that the Company may merge with any other Person, provided
that, in each case, immediately after giving effect thereto, (a) no event shall
occur and be continuing which constitutes a Default or Event of Default, (b) the
Company is the surviving corporation, (c) the Company shall not be liable with
respect to any Debt or allow its property to be subject to any Lien which it
could not become liable with respect to or allow its property to become subject
to under this Agreement on the date of such transaction and (d) the Company's
Net Worth shall be equal to or greater than its Net Worth immediately prior to
such merger.
7.4 Compliance with ERISA. Permit to exist any occurrence of any
Reportable Event, or any other event or condition which presents a material (in
the reasonable opinion of the Majority Banks) risk of a termination by the PBGC
of any Plan of the Company or any ERISA Affiliate,, which termination will
result in any material (in the reasonable opinion of the Majority Banks)
liability of the Company or such ERISA Affiliate to the PBGC.
7.5 Change in Nature of Business. Make any material change in the
nature of its business as carried on as of the date hereof.
7.6 Restricted Payments. The Company: (a) will not declare or pay any
dividends or make any other distributions on its capital stock (other than
dividends payable solely in such capital stock) or redeem any such capital
stock; and (b) will not, and will not permit any Subsidiary to, purchase or
otherwise acquire or retire any of the Company's capital stock or make any loans
or advances to CMS or any Subsidiary thereof (other than the Company or any
Subsidiary thereof); provided that, so long as no Default or Event of Default
exists, the Company may pay dividends in an aggregate amount not to exceed
$300,000,000 during any calendar year.
7.7 Off-Balance Sheet Liabilities. Create, incur, assume or suffer to
exist, or permit any Subsidiary to create, incur, assume or suffer to exist,
Off-Balance Sheet Liabilities (exclusive of obligations pursuant to the
Receivables Sale Agreement and the Building Lease) in the aggregate in excess of
$150,000,000 at any time.
ARTICLE VIII
FINANCIAL COVENANTS
So long as any of the Obligations shall remain unpaid or any Bank shall
have any Commitment under this Agreement, the Company shall:
8.1 Debt to Capital Ratio. At all times, maintain a ratio of Total
Consolidated Debt to Total Consolidated Capitalization of not greater than 0.65
to 1.0.
8.2 Interest Coverage Ratio. Not permit the ratio, determined as of the
end of each of its fiscal quarters for the then most-recently ended four fiscal
quarters, of (i) Consolidated EBIT to (ii) Consolidated Interest Expense to be
less than 2.0 to 1.0.
28
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default":
(a) The Company shall fail to pay (i) any principal of any Term Loan
when due and payable, or (ii) any interest on any Term Loan or any fee or other
Obligation payable hereunder within five (5) days after such interest or fee or
other Obligation becomes due and payable;
(b) Any representation or warranty made by the Company (or any of its
officers) in this Agreement or any other Loan Document or in any certificate,
document, report, financial or other written statement furnished at any time
pursuant to any Loan Document shall prove to have been incorrect in any material
respect on or as of the date made;
(c) The Company shall fail to perform or observe any term, covenant or
agreement contained in Section 6.10, Section 6.11, Article VII or Article VIII:
or the Company shall fail to perform or observe any other term, covenant or
agreement on its part to be performed or observed in this Agreement or in any
other Loan Document and such failure shall continue for 30 consecutive days
after notice thereof by means of facsimile, regular mail or written notice
delivered in person (or telephonic notice thereof confirmed in writing) shall
have been given to the Company by the Agent or the Majority Banks;
(d) The Company shall: (i) fail to pay any Debt (other than the payment
obligations described in subsection (a) above) in excess of $25,000,000, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the instrument or
agreement relating to such Debt; or (ii) fail to perform or observe any term,
covenant or condition on its part to be performed or observed under any
agreement or instrument relating to any such Debt, when required to be performed
or observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, the maturity of such Debt, unless
the obligee under or holder of such Debt shall have waived in writing such
circumstance, or such circumstance has been cured, so that such circumstance is
no longer continuing; or (iii) any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), in each case in accordance with the terms of such agreement or
instrument, prior to the stated maturity thereof; or (iv) generally not, or
shall admit in writing its inability to, pay its debts as such debts become due;
(e) The Company: (i) shall make an assignment for the benefit of
creditors, or petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets, or
(ii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or (iii) shall have had
any such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 consecutive days or more; or (iv) by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition,
29
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (v)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of 30 days or more; or (vi) shall take any corporate
action to authorize any of the actions set forth above in this subsection (e);
(f) One or more judgments, decrees or orders for the payment of money
in excess of $25,000,000 in the aggregate shall be rendered against the Company
and either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (ii) there shall be any period of more than
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
(g) Any Termination Event with respect to a Plan shall have occurred,
and 30 days after notice thereof shall have been given to the Company by the
Agent, (i) such Termination Event (if correctable) shall not have been corrected
and (ii) the then present value of such Plan's vested benefits exceeds the then
current value of the assets accumulated in such Plan by more than the amount of
$25,000,000 (or in the case of a Termination Event involving the withdrawal of a
"substantial employer" (as defined in Section 4001(A)(2) of ERISA), the
withdrawing employer's proportionate share of such excess shall exceed such
amount); or
(h) Any Bond shall cease to be in full force and effect (except for
Bonds surrendered by the Agent pursuant to Section 2.5(b), 2.6 or 2.7(a) or
exchanged for a new series of Bonds pursuant to the Company's exercise of the
Extension Option); or the Company shall deny that it has any liability or
obligation under any Bond or purport to revoke, terminate, rescind or redeem any
Bond (other than in accordance with the terms of the Bonds and the Indenture).
9.2 Remedies.
If any Event of Default shall occur and be continuing, the
Agent shall upon the request, or may with the consent, of the Majority Banks, by
notice to the Company, (i) declare the Commitments to be terminated or
suspended, whereupon the same shall forthwith terminate, and/or (ii) declare the
Obligations to be forthwith due and payable, whereupon the Obligations shall
become and be forthwith due and payable, in each case without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Company, provided that in the case of an Event of Default referred
to in Section 9.1(e) above, the Commitments shall automatically terminate and
the Obligations shall automatically become due and payable without notice,
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.
ARTICLE X
WAIVERS. AMENDMENTS AND REMEDIES
10.1 Amendments. Subject to the provisions of this Article X, the
Majority Banks (or the Agent with the consent in writing of the Majority Banks)
and the Company may enter into written agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Banks or the Company hereunder or waiving any
Event of Default hereunder, provided that no such supplemental agreement shall,
without the consent of all of the Banks:
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(a) Extend the maturity of any Term Loan or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest or fees
thereon.
(b) Modify the percentage specified in the definition of Majority
Banks.
(c) Extend the Deferred Draw Period or increase the amount of the
Commitment of any Bank hereunder, or permit the Company to assign its rights
under this Agreement.
(d) Amend Section 6.10 or this Section 10.1.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent.
10.2 Preservation of Rights. No delay or omission of the Banks or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and the making of a Term Loan notwithstanding the
existence of a Default or Event of Default or the inability of the Company to
satisfy the conditions precedent to such Term Loan shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Banks required pursuant to Section 10.1, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent and the Banks until the Obligations have been paid in full.
ARTICLE XI
CONDITIONS PRECEDENT
11.1 Initial Term Loans. The Banks shall not be required to make the
Initial Term Loans hereunder unless the Company has furnished to the Agent with
sufficient copies for the Banks:
(a) Copies of the Restated Articles of Incorporation of the Company,
together with all amendments, certified by the Secretary or an Assistant
Secretary of the Company, and a certificate of good standing, certified by the
appropriate governmental officer in its jurisdiction of incorporation.
(b) Copies, certified by the Secretary or an Assistant Secretary of the
Company, of its bylaws and of its Board of Directors' resolutions (and
resolutions of other bodies, if any are deemed necessary by counsel for any
Bank) authorizing the execution of the Loan Documents.
(c) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of the Company, which shall identify by name and title and
bear the original or facsimile signature of the officers of the Company
authorized to sign the Loan Documents and the officers or other employees
authorized to make borrowings hereunder, upon which certificate the Banks shall
be entitled to rely until informed of any change in writing by the Company.
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(d) A certificate, signed by a Designated Officer of the Company,
stating that on the date hereof no Default or Event of Default has occurred and
is continuing.
(e) Evidence satisfactory to the Agent of the issuance of the Bonds in
the form set forth in the Supplemental Indenture and in an aggregate principal
amount of $300,000,000 pursuant to the Bond Delivery Agreement.
(f) Favorable opinions of:
(i) Michael D. VanHemert, Esq., Deputy General Counsel of CMS,
as to the matters set forth in Exhibit B-1 and as to such other matters
as the Agent may reasonably request; and
(ii) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel
to the Company, as to the matters set forth in Exhibit B-2 and as to
such other matters as the Agent may reasonably request.
Such opinions shall be addressed to the Agent and the Banks and shall be
satisfactory in form and substance to the Agent.
(g) Evidence satisfactory to the Agent that the Prior Agreement shall
have been or shall simultaneously on the Initial Borrowing Date be terminated
(except for those provisions that expressly survive the termination thereof) and
all loans outstanding and other amounts owed to the lenders or agents thereunder
shall have been, or shall simultaneously with the Initial Term Loans hereunder
be, paid in full.
(h) Evidence satisfactory to the Agent that the initial "Credit
Extension" under and as defined in the Credit Agreement shall have been made or
shall be made simultaneously with the Initial Term Loans hereunder.
(i) Evidence, in form and substance satisfactory to the Agent, that the
Company has obtained all governmental approvals, if any, necessary for it to
enter into the Loan Documents.
(j) Such other documents as any Bank or its counsel may have reasonably
requested.
It shall be a further condition precedent to the making of the Initial Term
Loans hereunder that the Company shall have paid (i) to the Agent for the
account of the Banks the fees required to be paid on the Initial Borrowing Date
pursuant to the Fee Letter and (ii) to the Agent and the Arranger the fees
required to be paid to them on the Initial Borrowing Date pursuant to the fee
letter described in Section 13.12.
11.2 Each Term Loan. The Banks shall not be required to make any Term
Loan unless on the applicable Borrowing Date (i) no Default or Event of Default
exists, (ii) the representations and warranties contained in Article V are true
and correct as of such Borrowing Date and (iii) all legal matters incident to
the making of such Term Loan are satisfactory to the Banks and their counsel.
Each Borrowing Notice shall constitute a representation and warranty by the
Company that the conditions contained in subsections (i) and (ii) above will be
satisfied on the relevant Borrowing Date.
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11.3 Extension Option. It shall be a condition precedent to the
extension of the maturity of the Term Loans to the Extended Maturity Date that
the Company shall have furnished to the Agent with sufficient copies for the
Banks:
(a) Evidence satisfactory to the Agent of the issuance of the Bonds in
the form set forth in the Supplemental Indenture and in an aggregate principal
amount equal to the aggregate principal amount of the Term Loans outstanding on
the Maturity Date pursuant to the Bond Delivery Agreement.
(b) Favorable opinions of:
(i) Michael D. VanHemert, Esq., Deputy General Counsel of CMS,
or other counsel satisfactory to the Agent, as to the matters set forth
in Exhibit B-1 (other than paragraphs 4 and 10 thereof) with respect to
the Supplemental Indenture and the Bonds and as to such other matters
as the Agent may reasonably request; and
(ii) Miller, Canfield, Paddock & Stone, P.L.C., special
counsel to the Company, as to the matters set forth in Exhibit B-3 and
as to such other matters as the Agent may reasonably request.
Such opinions shall be addressed to the Agent and the Banks and shall be
satisfactory in form and substance to the Agent.
(c) Evidence, in form and substance satisfactory to the Agent, that the
Company has obtained all governmental approvals, if any, necessary for it to
enter into the Supplemental Indenture and issue the Bonds thereunder.
(d) Such other documents as the Agent may reasonably request.
ARTICLE XII
GENERAL PROVISIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Company and the
Banks and their respective successors and assigns, except that the Company shall
not have the right to assign its rights under the Loan Documents. Any Bank may
sell participations in all or a portion of its rights and obligations under this
Agreement pursuant to subsection (b) below and any Bank may assign all or any
part of its rights and obligations under this Agreement pursuant to subsection
(c) below.
(a) Any Bank may sell participations to one or more banks or other
entities (each a "Participant") in all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments and its outstanding Term Loans), provided that (i)
such Bank's obligations under this Agreement (including, without limitation, its
Commitment to the Company hereunder) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Bank shall remain the holder of the Term Loans
of such Bank for all purposes of this Agreement and (iv) the Company shall
continue to deal solely and directly with such Bank in connection
33
with such Bank's rights and obligations under this Agreement. Each Bank shall
retain the sole right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan Documents other
than any amendment, modification or waiver with respect to any Term Loan or
Commitment in which such Participant has an interest which would require consent
of all of the Banks pursuant to the terms of Section 10.1 or of any other Loan
Document. The Company agrees that each Participant shall be deemed to have the
right of setoff provided in Section 12.11 in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
the Loan Documents, provided that each Bank shall retain the right of setoff
provided in Section 12.11 with respect to the amount of participating interests
sold to each Participant. The Banks agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section 12.11,
agrees to share with each Bank, any amount received pursuant to the exercise of
its right of setoff, such amounts to be shared in accordance with Section 12.11
as if each Participant were a Bank. The Company further agrees that each
Participant shall be entitled to the benefits of Sections 4.1, 4.3, 4.4 and 4.5
to the same extent as if it were a Bank and had acquired its interest by
assignment pursuant to Section 12.1(c). provided that (i) a Participant shall
not be entitled to receive any greater payment under Section.4.1, 4.3, 4.4 or
4.5 than the Bank who sold the participating interest to such Participant would
have received had it retained such interest for its own account, unless the sale
of such interest to such Participant is made with the prior written consent of
the Company, and (ii) any Participant not incorporated under the laws of the
United States of America or any State thereof agrees to comply with the
provisions of Section 4.5 to the same extent as if it were a Bank.
(b) Any Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time assign to one or more financial
institutions all or any part of its rights and obligations under this Agreement,
provided that (i) such Bank has received the Agent's prior written consent to
such assignment, which consent shall not be unreasonably withheld, and (ii) the
minimum principal amount of any such assignment (other than assignments to a
Federal Reserve Bank, or to any other Bank or affiliate of such assigning Bank,
or to any direct or indirect contractual counterparties in swap agreements
relating to the Term Loans to the extent required in connection with the
physical settlement of any Bank's obligations pursuant thereto) shall be
$1,000,000 (or such lesser amount consented to by the Agent); provided that
after giving effect to such assignment the assigning Bank shall have Commitments
and Term Loans in the aggregate of not less than $1,000,000 (unless otherwise
consented to by the Agent). Notwithstanding the foregoing sentence, any Bank may
at any time, without the consent of the Company or the Agent, assign all or any
portion of its rights under this Agreement to (i) a Federal Reserve Bank,
provided that no such assignment shall release the transferor Bank from its
obligations hereunder; (ii) any Bank or any affiliate of such assigning Bank,
provided that the creditworthiness of such affiliate (as determined in
accordance with customary standards of the banking industry) is no less than
that of the assigning Bank; and (iii) any direct or indirect contractual
counterparties in swap agreements relating to the Term Loans to the extent
required in connection with the physical settlement of any Bank's obligations
pursuant thereto.
(c) Any Bank may, in connection with any sale or participation or
proposed sale or participation pursuant to this Section 12.1. disclose to the
purchaser or participant or proposed purchaser or participant any information
relating to the Company furnished to such Bank by or on behalf of the Company,
provided that prior to any such disclosure of non-public information,
34
the purchaser or participant or proposed purchaser or participant (which
purchaser or participant is not an affiliate of a Bank) shall agree to preserve
the confidentiality of any confidential information (except any such disclosure
as may be required by law or regulatory process) relating to the Company
received by it from such Bank.
(d) Assignments under this Section 12.1 shall be made pursuant to an
agreement (an "Assignment Agreement") substantially in the form of Exhibit D
hereto or in such other form as may be agreed to by the parties thereto and
shall not be effective until a $3,500 fee has been paid to the Agent by the
assignee, which fee shall cover the cost of processing such assignment,
provided, that such fee shall not be incurred in the event of an assignment by
any Bank of all or a portion of its rights under this Agreement to (i) a Federal
Reserve Bank or (ii) a Bank or an affiliate of the assigning Bank or (iii) to
any direct or indirect contractual counterparties in swap agreements relating to
the Term Loans to the extent required in connection with the physical settlement
of any Bank's obligations pursuant thereto.
(e) Notwithstanding anything to the contrary contained herein, any Bank
(a "Granting Bank") may grant to a special purpose funding vehicle (an "SPC"),
identified as such in writing from time to time by the Granting Bank to the
Agent and the Company, the option to provide to the Company all or any part of
any Term Loan that such Granting Bank is obligated to make to the Company
pursuant to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Term Loan, (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Term
Loan, the Granting Bank shall remain obligated to make such Term Loan pursuant
to the terms hereof, (iii) the Company shall not be required to pay any amount
under Section 4.5 that is greater than the amount which it would have been
required to pay had there been no grant to an SPC and (iv) any SPC (or assignee
of an SPC) will comply, if applicable, with the provisions contained in Section
4.5. No grant by any Granting Bank to an SPC agreeing to provide a Term Loan or
the making of such Term Loan by such SPC shall operate to relieve such Granting
Bank of its liabilities and obligations hereunder, except to the extent of the
making of such Term Loan by such SPC. The making of a Term Loan by an SPC
hereunder shall utilize the Commitment of the Granting Bank to the same extent,
and as if, such Term Loan were made by such Granting Bank. Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Bank). In addition, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that any SPC may (i) with
notice to, but without the prior written consent of, the Company and the Agent
and without paying any processing fee therefor, assign all or a portion of its
interests in any Term Loans to the Granting Bank or to any financial
institutions (consented to by the Agent in its sole discretion) providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Term Loans and (ii) disclose on a confidential basis
any non-public information relating to its Term Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This Section 12.1(f) may not be amended
without the written consent of any SPC that holds an option to provide Term
Loans. No recourse under any obligation, covenant, or agreement of the SPC
contained in this Agreement shall be had against any shareholder, officer, agent
or director of the SPC as such, by the enforcement of any assessment or by any
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is a corporate obligation of the SPC and no
personal liability shall attach to or be
35
incurred by any officer, agent or member of the SPC as such, or any of them
under or by reason of any of the obligations, covenants or agreements of the SPC
contained in this Agreement, or implied therefrom, and that any and all personal
liability for breaches by the SPC of any such obligations, covenants or
agreements, either at law or by statute or constitution, of every such
shareholder, officer, agent or director is hereby expressly waived by all
parties to this Agreement as a condition of and consideration for the SPC
entering into this Agreement; provided, however, that the foregoing shall not
relieve any such person or entity of any liability they might otherwise have as
a result of fraudulent actions or omissions taken by them. All parties to this
Agreement acknowledge and agree that the SPC shall only be liable for any claims
that each of them may have against the SPC only to the extent of the SPC's
assets. The provisions of this clause shall survive the termination of this
Agreement.
12.2 Survival of Representations. All representations and warranties of
the Company contained in this Agreement shall survive the making of the Term
Loans herein contemplated.
12.3 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Bank shall be obligated to extend credit to the
Company in violation of any limitation or prohibition provided by any applicable
statute or regulation.
12.4 Taxes. Any taxes (excluding income taxes) payable or ruled payable
by any Federal or State authority in respect of the execution of the Loan
Documents shall be paid by the Company, together with interest and penalties, if
any.
12.5 Choice of Law; Waiver of Jury Trial. THE LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION,
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK, BUT OTHERWISE WITHOUT
REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT AND THE COMPANY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY HEREBY WAIVES ANY
RIGHT TO A JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
HEREUNDER OR UNDER ANY LOAN DOCUMENT.
12.6 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
12.7 Entire Agreement. The Loan Documents embody the entire agreement
and understanding between the Company, the Agent and the Banks and supersede all
prior agreements and understandings between the Company, the Agent and the Banks
relating to the subject matter thereof (other than those contained in the fee
letter described in Section 13.12 which shall survive and remain in full force
and effect during the term of this Agreement).
36
12.8 Expenses; Indemnification. The Company shall reimburse the Agent
and the Arranger for (a) any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent) paid or incurred by the Agent or the Arranger in
connection with the preparation, review, execution, delivery, syndication,
distribution (including, without limitation, via the internet), amendment and
modification of the Loan Documents and (b) any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for the Agent) paid or incurred by the Agent or the
Arranger on its own behalf or on behalf of any Bank in connection with the
collection and enforcement of the Loan Documents. The Company further agrees to
indemnify the Agent, the Arranger and each Bank and their respective directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and reasonable expenses (including, without limitation,
all material expenses of litigation or preparation therefor whether or not the
Agent, the Arranger or any Bank is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other Loan Documents,
the transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Term Loan hereunder, provided that
the Company shall not be liable for any of the foregoing to the extent they
arise from the gross negligence or willful misconduct of the Agent, the Arranger
or any Bank. The obligations of the Company under this Section shall survive the
termination of this Agreement.
12.9 [Intentionally Omitted.]
12.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions in that jurisdiction or the operation,,
enforceability or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
12.11 Setoff. In addition to, and without limitation of, any rights of
the Banks under applicable law, if the Company becomes insolvent, however
evidenced, or any Default or Event of Default occurs, any indebtedness from any
Bank to the Company (including all account balances, whether provisional or
final and whether or not collected or available) may be offset and applied
toward the payment of the Obligations owing to such Bank, whether or not the
Obligations, or any part hereof, shall then be due. The Company agrees that any
purchaser or participant under Section 12.1 may, to the fullest extent permitted
by law, exercise all its rights of payment with respect to such purchase or
participation as if it were the direct creditor of the Company in the amount of
such purchase or participation.
12.12 Ratable Payments. If any Bank, whether by setoff or otherwise,
has payment made to it upon its outstanding Term Loans in a greater proportion
than that received by any other Bank, such Bank agrees, promptly upon demand, to
purchase a portion of the aggregate outstanding Term Loans held by the other
Banks so that after such purchase each Bank will hold its Pro Rata Share of the
aggregate outstanding Term Loans. If any Bank, whether in connection with setoff
or amounts which might be subject to setoff or otherwise, receives collateral or
other protection for its Obligations or such amounts which may be subject to
setoff, such Bank agrees, promptly upon demand, to take such action necessary
such that all Banks share in the benefits of such collateral ratably in
proportion to their respective Pro Rata Share of the aggregate
37
outstanding Term Loans. In case any such payment is disturbed by legal process,
or otherwise, appropriate further adjustments shall be made.
12.13 Nonliability of Banks. The relationship between the Company, on
the one hand, and the Banks and the Agent, on the other hand, shall be solely
that of borrower and lender Neither the Agent, the Arranger nor any Bank shall
have any fiduciary responsibilities to the Company. Neither the Agent, the
Arranger nor any Bank undertakes any responsibility to the Company to review or
inform the Company of any matter in connection with any phase of the Company's
business or operations. The Company shall rely entirely upon its own judgment
with respect to its business, and any review, inspection, supervision or
information supplied to the Company by the Banks is for the protection of the
Banks and neither the Company nor any third party is entitled to rely thereon
The Company agrees that neither the Agent, the Arranger nor any Bank shall have
liability to the Company (whether sounding in tort, contract or otherwise) for
losses suffered by the Company in connection with, arising out of, or in any way
related to, the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Agent, the Arranger nor any Bank shall have any liability with respect to, and
the Company hereby waives, releases and agrees not to sue for, any special,
indirect, consequential or punitive damages suffered by the Company in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.
ARTICLE XIII
THE AGENT
13.1 Appointment. Citicorp USA, Inc. is hereby appointed Agent
hereunder, and each of the Banks irrevocably authorizes the Agent to act as the
contractual representative on behalf of such Bank. The Agent agrees to act as
such upon the express conditions contained in this Article XIII. The Agent shall
not have a fiduciary relationship in respect of any Bank by reason of this
Agreement,
13.2 Powers. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. The Agent shall
not have any implied duties to the Banks or any obligation to the Banks to take
any action hereunder except any action specifically provided by this Agreement
to be taken by the Agent.
13.3 General Immunity. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Banks or any Bank for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith except for its or their own gross negligence or willful misconduct.
13.4 No Responsibility for Loans, Recitals, Etc. The Agent shall not be
responsible to the Banks for any recitals, reports, statements, warranties or
representations herein or in any
38
Loan Document or be bound to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement
13.5 Action on Instructions of Banks. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Majority Banks (or all of the Banks if required by Section 10.1), and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks. The Banks hereby acknowledge that the Agent shall
be under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement or any other Loan Document unless
it shall be requested in writing to do so by the Majority Banks, The Agent shall
be fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Banks pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.
13.6 Employment of Agents and Counsel. The Agent may execute any of its
duties as Agent hereunder by or through employees, agents and attorneys-in-fact
and shall not be answerable to the Banks, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder.
13.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
13.8 Agent's Reimbursement and Indemnification. The Banks agree to
reimburse and indemnify the Agent ratably in proportion to their respective Pro
Rata Shares (i) for any amounts not reimbursed by the Company for which the
Agent is entitled to reimbursement by the Company under the Loan Documents, (ii)
for any other expenses reasonably incurred by the Agent on behalf of the Banks,
in connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents, and for which the Agent is not entitled to
reimbursement by the Company under the Loan Documents, and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement or any other document delivered in connection with
this Agreement or the transactions contemplated hereby or the enforcement of any
of the terms hereof or of any such other documents, and for which the Agent is
not entitled to reimbursement by the Company under the Loan Documents, provided
that no Bank shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Agent.
13.9 Rights as a Lender. With respect to its Commitments and any Term
Loan made by it, Citicorp shall have the same rights and powers hereunder as any
Bank and may exercise the same as though it were not the Agent, and the term
"Bank" or "Banks" shall, unless the context 39
otherwise indicates, include Citicorp in its individual capacity. Citicorp may
accept deposits from, lend money to, and generally engage in any kind of banking
or trust business with the Company or any Subsidiary as if it were not the
Agent.
13.10 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements prepared by the Company and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.
13.11 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Banks and the Company, and the Agent may be
removed at any time with or without cause by written notice received by the
Agent from the Majority Banks. Upon any such resignation or removal, the
Majority Banks shall have the right to appoint, on behalf of the Banks, a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within thirty days after
the retiring Agent's giving notice of resignation, then the retiring Agent may
appoint, on behalf of the Banks, a successor Agent. Such successor Agent shall
be a commercial bank having capital and retained earnings of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XIII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder.
13.12 Agent and Arranger Fees. The Company agrees to pay to the Agent
and the Arranger, for their respective accounts, the fees agreed to by the
Company, the Agent and the Arranger pursuant to that certain letter agreement
dated July 12, 2002, or as otherwise agreed from time to time.
ARTICLE XIV
NOTICES
14.1 Giving Notice. Except as otherwise permitted by Section 2.8 with
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party; (x)
in the case of the Company or the Agent, at its address or facsimile number set
forth on the signature pages hereof, except that Borrowing Notices and
Conversion/Continuation Notices shall be sent to the Agent at 2 Penn's Way,
Suite 200, New Castle, DE 19720, Attention: Jason Trala, telephone 302-894-6086,
fax 302-894-6120, (y) in the case of any Bank, at its address or facsimile
number set forth below its signature hereto or (z) in the case of any party, at
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the Agent and the Company in accordance with the
40
provisions of this Section 14.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered (or, in the case
of electronic transmission, received) at the address specified in this Section;
provided that notices to the Agent under Article II shall not be effective until
received.
14.2 Change of Address. The Company, the Agent and any Bank may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
41
ARTICLE XV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Company, the Agent
and the Banks and each party has notified the Agent by facsimile or telephone
that it has taken such action.
IN WITNESS WHEREOF, the Company, the Banks and the Agent have executed
this Agreement as of the date first above written.
CONSUMERS ENERGY COMPANY
By: /s/ Laura L. Mountcastle
--------------------------------------------
Name: Laura L. Mountcastle
Title:Vice President and Treasurer
212 West Michigan Avenue
Jackson, MI 49201
42
CITICORP USA, INC., as Agent
By: /s/ Dale R. Goncher
------------------------------
Name: Dale R. Goncher
Title:Director
390 Greenwich Street
New York, NY 10023
Attention: Dale Goncher
Facsimile No.: (212) 723-8540
Confirmation No: (212) 723-6732
43
EXHIBIT A-1
[FORM OF SUPPLEMENTAL INDENTURE (INITIAL BORROWING DATE)]
EXHIBIT A-2
[FORM OF SUPPLEMENTAL INDENTURE (EXTENSION OPTION)]
EXHIBIT B-1
REQUIRED OPINIONS FROM
MICHAEL D. VANHEMERT, ESQ.
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Michigan.
2. The execution and delivery of the Loan Documents by the Company and
the performance by the Company of the Obligations have been duly authorized by
all necessary corporate action and proceedings on the part of the Company and
will not:
(a) contravene the Company's Restated Articles of
Incorporation, as amended, or bylaws;
(b) contravene any law or any contractual restriction imposed
by any indenture or any other agreement or instrument evidencing or
governing indebtedness for borrowed money of the Company; or
(c) result in or require the creation of any Lien upon or with
respect to any of the Company's properties except the lien of the
Indenture securing the Bonds.
3. The Loan Documents have been duly executed and delivered by the
Company.
4. To the best of my knowledge, there is no pending or threatened
action or proceeding against the Company or any of its Consolidated Subsidiaries
before any court, governmental agency or arbitrator (except (i) to the extent
described in the Company's annual report on Form 10-K for the year ended
December 31, 2001, quarterly report on Form 10-Q for the quarter ended March 31,
2002, and current report on Form 8-K filed by the Company on May 29, 2002, in
each case as filed with the SEC, and (ii) such other similar actions, suits and
proceedings predicated on the occurrence of the same events giving rise to any
actions, suits and proceedings described in the reports filed with the SEC set
forth in clause (i) of this paragraph 4) which might reasonably be expected to
materially adversely affect the financial condition or results of operations of
the Company and its Consolidated Subsidiaries, taken as a whole, or that would
materially adversely affect the Company's ability to perform its obligations
under any Loan Document. To the best of my knowledge, there is no litigation
challenging the validity or the enforceability of any of the Loan Documents.
5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Company of any Loan Document,
except for the authorization to issue, sell or guarantee secured and/or
unsecured short-term debt granted by the Federal Energy Regulatory Commission in
Docket No. ES02-37-000 (hereinafter the "FERC Order"). The FERC Order is in full
force and effect as of the date hereof.
6. The Bonds, assuming due authentication in accordance with the terms
of the Indenture, are in due and proper form and, when delivered to the Agent
pursuant to the Bond Delivery Agreement, will evidence and secure the
Obligations owing under the Agreement and will be valid and enforceable
obligations of the Company in accordance with their terms, secured by the lien
of the Indenture on an equal and ratable basis with all other bonds issued
thereunder and otherwise entitled to the benefits provided by the Indenture.
7. The Indenture has been qualified under the Trust Indenture Act of
1939, as amended, and the execution and delivery of the Supplemental Indenture
will not cause the Indenture to not be so qualified.
8. The Company is not an "investment company" or a company "controlled"
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended.
9. The Company (i) is a "public utility" and a "subsidiary company" of
a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended (the "Holding Company Act"), and (ii) is
currently exempt from all provisions of the Holding Company Act, except Section
9(a)(2) thereof.
10. In a properly presented case, a Michigan court or a federal court
applying Michigan choice of law rules should give effect to the choice of law
provisions of the Agreement and should hold that the Agreement is to be governed
by the laws of the State of New York rather than the laws of the State of
Michigan, except in the case of those provisions set forth in the Agreement the
enforcement of which would contravene a fundamental policy of the State of
Michigan. In the course of our review of the Agreement, nothing has come to my
attention to indicate that any of such provisions would do so. Notwithstanding
the foregoing, even if a Michigan court or a federal court holds that the
Agreement is to be governed by the laws of the State of Michigan, the Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
under Michigan law (including usury provisions) against the Company in
accordance with its terms, subject to (a) the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
EXHIBIT B-2
REQUIRED OPINIONS FROM
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1. The execution and delivery of the Loan Documents by the Company and
the performance by the Company of the Obligations will not:
(a) contravene any contractual restriction imposed by the Company
Indentures; or
(b) result in or require the creation of any Lien upon or with respect
to any of the Company's properties pursuant to either of the Company Indentures.
2. The Agreement constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to (a) the effect of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (b) the application of general principles of equity (regardless of
whether considered in a preceding in equity or at law).
"Company Indentures" means (i) the Indenture dated as of January 1,
1996, as supplemented and amended from time to time, between the Company
(formerly known as Consumers Power Company) and The Bank of New York, as
Trustee, and (ii) the Indenture dated as of February 1, 1998, as supplemented
and amended from time to time, between the Company and JP Morgan Chase Bank
(formerly known as The Chase Manhattan Bank), as Trustee.
EXHIBIT B-3
REQUIRED OPINIONS FROM
MILLER, CANFIELD, PADDOCK AND STONE, P.L.C.
1. The Bonds, assuming due authentication in accordance with the terms
of the Indenture, are in due and proper form and, when delivered to the Agent
pursuant to the Bond Delivery Agreement, will evidence and secure the
Obligations owing under the Agreement and will be valid and enforceable
obligations of the Company in accordance with their terms, secured by the lien
of the Indenture on an equal and ratable basis with all other bonds issued
thereunder and otherwise entitled to the benefits provided by the Indenture.
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
I, , of Consumers Energy Company, a Michigan
----------- ---------
corporation (the "Company"), DO HEREBY CERTIFY in connection with the Term Loan
Agreement dated as of July 12, 2002 (the "Loan Agreement"; the terms defined
therein being used herein as so defined) among the Company, various financial
institutions and Citicorp USA, Inc., as Agent, that;
I. Section 8.1 of the Loan Agreement provides that the Company shall: "At
all times, maintain a ratio of Total Consolidated Debt to Total
Consolidated Capitalization of not greater than 0.65 to 1.0."
The following calculations are made in accordance with the definitions
of Total Consolidated Debt and Total Consolidated Capitalization in the
Loan Agreement and are correct and accurate as of , :
-------- --
A. Total Consolidated Debt
(a) Indebtedness for borrowed money $
plus (b) Indebtedness for deferred purchase price of property/services
plus (c) Unfunded Vested Liabilities
plus (d) Obligations under acceptance facilities
plus (e) Obligations under Capital Leases
plus (f) Obligations under interest rate swap, "cap", "collar" or other
hedging agreement
minus (g) Guaranties, endorsements and other contingent obligations
minus (h) Principal amount of any Securitized Bonds
minus (i) Junior Subordinated Debt owned by any Hybrid Preferred
Securities Subsidiary
minus (j) Subordinated guaranties by the Company of payments with
respect to
Hybrid Preferred Securities
minus (k) Agreed upon percentage of Net Proceeds from issuance of hybrid
debt/equity securities (other than Junior Subordinated Debt
and Hybrid Preferred Securities
-------------
Total $
B. Total Consolidated Capitalization:
(a) Total Consolidated Debt $
(b) Equity of common stockholders
(c) Equity of preference stockholders
(d) Equity of preferred stockholders
-------------
Total $
C. Debt to Capital Ratio to 1.00
---
(total of A divided by total of B)
II. Section 8.2 of the Loan Agreement provides that the Company shall: "Not
permit the ratio, determined as of the end of each of its fiscal
quarters for the then most-recently ended four fiscal quarters, of (i)
Consolidated EBIT to (ii) Consolidated Interest Expense to be less than
2.0 to 1.0"
The following calculations are made in accordance with the definitions
of Consolidated EBIT and Consolidated Interest Expense in the Loan Agreement and
are correct and accurate as of , :
----------- ---
A. Consolidated EBIT
(a) Consolidated Net Income $
plus (b) Consolidated Interest Expense $
plus (c) Expense for taxes paid or accrued $
plus (d) Non-cash write-offs and write-downs contained $
in the Company's
Consolidated Net Income, including, without limitation,
write-offs or write-downs related to the sale of assets,
impairment of assets and loss on contracts
plus (e) For any fiscal period ending prior to March $
31, 2003, pre-tax write-off for the fiscal
period ending December 31, 2001 in an amount
not to exceed $126,000,000 arising from the
loss on Power Purchase Agreement -- MCV
Partnership
minus (f) Extraordinary gains realized other than in the $
ordinary course of business -----------
Total $
B. Consolidated Interest Expense $
C. Interest Coverage Ratio to 1.00
---
(total of A divided by total of B)
IN WITNESS WHEREOF, I have signed this Certificate this
day of ,
-- --------- ----
EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption (the "Assignment and Assumption") is
dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor], (the "Assignor") and [Insert name of
Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Loan Agreement identified below (as
amended, the "Loan Agreement"), receipt of a copy of which is hereby
acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1
attached hereto are hereby agreed to and incorporated herein by reference and
made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Loan Agreement, as of the Effective Date inserted by the
Agent as contemplated below, the interest in and to all of the Assignor's rights
and obligations in its capacity as a Bank under the Loan Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor's outstanding
rights and obligations under the respective facilities identified below
(including without limitation any letters of credit, guaranties and swingline
loans included in such facilities and, to the extent permitted to be assigned
under applicable law, all claims (including without limitation contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity), suits, causes of action and any other right of the Assignor against
any Person whether known or unknown arising under or in connection with the Loan
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby) (the "Assigned Interest"). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.
1 Assignor:
-----------------------
2. Assignee: [and is an affiliate of Assignor]
-----------------------
3 Borrower: CONSUMERS ENERGY COMPANY
4. Agent: Citicorp USA, Inc., as the Agent under the Loan Agreement.
5. Loan Agreement: The Term Loan Agreement dated as of July 12, 2002 among
Consumers Energy Company, the Banks party thereto, and Citicorp USA, Inc.,
as Agent.
6. Assigned Interest:
Aggregate Amount of Amount of Commitments/ Percentage Assigned of
Facility Assigned Commitments/Outstanding Outstanding Term Loans Commitments/
Term Loans for all Banks* Assigned* Outstanding Term Loans(1)
- ----------------- ------------------------- ---------------------- -------------------------
(2) $ $ %
- --------------- ------------------------ --------------------- -------
$ $ %
- --------------- ------------------------ --------------------- -------
$ $ %
- --------------- ------------------------ --------------------- -------
7. Trade Date: (3)
-------------------------------
Effective Date: 20 TO BE INSERTED BY AGENT AND WHICH SHALL BE
-------------, ----
THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT,]
The terms set forth in this Assignment and Assumption are hereby agreed
to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:
--------------------------------
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:
--------------------------------
Title:
[Consented to and](4) Accepted:
CITICORP USA, INC., as Agent
By:
------------------
Title:
- ---------------------
* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.
(1) Set forth, to at least 9 decimals, as a percentage of the Commitments/Term
Loans of all Banks thereunder.
(2) Fill in the appropriate terminology for the types of facilities under the
Loan Agreement that are being assigned under this Assignment (e.g. "Initial Term
Loan Commitment," "Deferred Draw Term Loan Commitment,", etc.)
(3) Insert if satisfaction of minimum amounts is to be determined as of the
Trade Date.
(4) To be added only if the consent of the Agent is required by the terms of the
Loan Agreement.
ANNEX 1
TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) any statements,
warranties or representations made in or in connection with the Loan Agreement
or any other Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency, perfection, priority, collectibility,
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Company, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document, (iv) the performance or
observance by the Company, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document, (v)
inspecting any of the property, books or records of the Company, or any
guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to
be taken in connection with the Term Loans or the Loan Documents.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Bank under the Loan Agreement, (ii) from and
after the Effective Date, it shall be bound by the provisions of the Loan
Agreement as a Bank thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Bank thereunder, (iii) agrees that its payment
instructions and notice instructions are as set forth in Schedule 1 to this
Assignment and Assumption, (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption hereunder
are "plan assets" as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be "plan assets" under ERISA,
(v) agrees to indemnify and hold the Assignor harmless against all losses, costs
and expenses (including, without limitation, reasonable attorneys' fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the Assignee's non-performance of the obligations assumed under this
Assignment and Assumption, (vi) it has received a copy of the Loan Agreement,
together with copies of financial statements and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on the Agent or any other Bank, and (vii)
attached as Schedule 1 to this Assignment and Assumption is any documentation
required to be delivered by the Assignee with respect to its tax status pursuant
to the terms of the Loan Agreement, duly completed and executed by the Assignee
and (b) agrees that (i) it will, independently and without reliance on the
Agent, the Assignor or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a Bank.
2. Payments. The Assignee shall pay the Assignor, on the Effective
Date, the amount agreed to by the Assignor and the Assignee, From and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.
3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.
SCHEDULE 1
ADMINISTRATIVE DETAILS FORM
- --------------------------------------------------------------------------------
DEAL NAME: CONSUMERS ENERGY COMPANY
- --------------------------------------------------------------------------------
GENERAL INFORMATION
YOUR INSTITUTIONS LEGAL NAME:
- --------------------------------------------------------------------------------
TAX WITHHOLDING:
Note: To avoid the potential of having interest income withheld, all investors
must deliver all current and appropriate tax forms.
Tax ID #:
---------------------
SUB-ALLOCATION: (United States only)
Note: If your institution is sub-allocating its allocation, please fill out the
information below. Additionally, an administrative detail form is required for
each legal entity. Execution copies (e.g. Credit Agreement/Assignment
Agreement) will be sent for signature to the Sub-Allocation Contact below.
Sub-Allocated Amount: $_________________
Signing Credit Agreement? Yes [ ] No [ ]
Coming In Via Assignment? Yes [ ] No [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
SUB-ALLOCATION CONTACT:
- -----------------------------------------------------------------------------------------------------------------------------------
NAME:
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
CONTACT LIST
- -----------------------------------------------------------------------------------------------------------------------------------
BUSINESS/CREDIT MATTERS: (Responsible for trading and credit approval process of the deal)
- -----------------------------------------------------------------------------------------------------------------------------------
Primary:
- -----------------------------------------------------------------------------------------------------------------------------------
NAME:
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
Backup:
- -----------------------------------------------------------------------------------------------------------------------------------
NAME:
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
Admin Details can be submitted online, via Citigroup's Global Loans Web Site.
Send an e-mail to oploanswebadmin@ssmb.com with your contact information and the
deal name to request a user ID/password to submit/modify Admin Details online.
ADMINISTRATIVE DETAILS FORM
- -----------------------------------------------------------------------------------------------------------------------------------
ADMIN/OPERATIONS MATTERS: (Responsible for interest, fee, principal payment, borrowing & pay-downs)
- -----------------------------------------------------------------------------------------------------------------------------------
Primary:
- -----------------------------------------------------------------------------------------------------------------------------------
NAME:
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
Backup:
- -----------------------------------------------------------------------------------------------------------------------------------
NAME:
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
CLOSING CONTACT: (Responsible for Deal Closing matters)
- -----------------------------------------------------------------------------------------------------------------------------------
NAME:
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
DISCLOSURE CONTACT: (Receives disclosure materials, such as financial reports, via our web site)
- -----------------------------------------------------------------------------------------------------------------------------------
Address:_______________________________________ E-mail:__________________________________
City:__________________________________________ State:_____________ Phone #:_________________________________
Postal Code:___________________________________ Country:___________ Fax #:___________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
Admin Details can be submitted online, via Citigroup's Global Loans Web Site.
Send an e-mail to oploanswebadmin@ssmb.com with your contact information and the
deal name to request a user ID/password to submit/modify Admin Details online.
ADMINISTRATIVE DETAILS FORM
ROUTING INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
ROUTING INSTRUCTIONS FOR THIS DEAL:
- -----------------------------------------------------------------------------------------------------------------------------------
CORRESPONDENT BANK:
- -----------------------------------------------------------------------------------------------------------------------------------
City:__________________________________ State:__________________ ACCOUNT NAME:____________________________
Postal Code:_________________________ ACCOUNT#:________________________________
Payment Type: BENEF. ACCT. NAME:_______________________
[ ] Fed [ ] ABA [ ] CHIPS BENEF. ACCT. #:__________________________
- -----------------------------------------------------------------------------------------------------------------------------------
ABA/CHIPS #:
- -----------------------------------------------------------------------------------------------------------------------------------
REFERENCE:________________________
Attention:________________________
================================================================================
ADMINISTRATIVE AGENT INFORMATION
================================================================================
BANK LOANS SYNDICATION -- AGENT CONTACT AGENT WIRING INSTRUCTIONS
Name: Jason Trala
Telephone: 302-894-6086 Citibank, NA
Fax: 302-894-6120 ABA #: 021-00-0089
Acct Name: Agency Medium
Address: 2 Penn's Way Term Finance
Suite 200 Acct #: 36852248
New Castle, De 19720
INITIAL FUNDING STANDARDS: LIBOR -- Fund 2 days after rates are set.
Admin Details can be submitted online, via Citigroup's Global Loans Web Site.
Send an e-mail to oploanswebadmin@ssmb.com with your contact information and the
deal name to request a user ID/password to submit/modify Admin Details online.
EXHIBIT E
TERMS OF SUBORDINATION
[JUNIOR SUBORDINATED DEBT]
ARTICLE ____
SUBORDINATION
Section __.1 Applicability of Article; Securities Subordinated to
Senior Indebtedness.
(a) This Article __ shall apply only to the Securities of any series
which, pursuant to Section __, are expressly made subject to this Article. Such
Securities are referred to in this Article __ as "Subordinated Securities."
(b) The Issuer covenants and agrees, and each Holder of Subordinated
Securities by his acceptance thereof likewise covenants and agrees, that the
indebtedness represented by the Subordinated Securities and the payment of the
principal and interest, if any, on the Subordinated Securities is subordinated
and subject in right, to the extent and in the manner provided in this Article,
to the prior payment in full of all Senior Indebtedness,
"Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date hereof or thereafter
incurred, created or assumed: (i) indebtedness of the Issuer for money borrowed
by the Issuer (including purchase money obligations) or evidenced by debentures
(other than the Subordinated Securities), notes, bankers' acceptances or other
corporate debt securities, or similar instruments issued by the Issuer; (ii) all
capital lease obligations of the Issuer; (iii) all obligations of the Issuer
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Issuer and all obligations of the Issuer under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) obligations with respect to letters of
credit; (v) all indebtedness of others of the type referred to in the preceding
clauses (i) through (iv) assumed by or guaranteed in any manner by the Issuer or
in effect guaranteed by the Issuer; (vi) all obligations of the type referred to
in clauses (i) through (v) above of other persons secured by any lien on any
property or asset of the Issuer (whether or not such obligation is assumed by
the Issuer), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Subordinated Notes, as the case may be,
including all other debt securities and guaranties in respect of those debt
securities, issued to any other trusts, partnerships or other entities
affiliated with the Issuer which act as a financing vehicle of the Issuer in
connection with the issuance of preferred securities by such entity or other
securities which rank pari passu with, or junior to, the Preferred Securities,
and (2) any indebtedness between or among the Issuer and its affiliates; and/or
(vii) renewals, extensions or refundings of any of the indebtedness referred to
in the preceding clauses unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same or the assumption or guarantee of the same, or
pursuant to which the same is outstanding, such indebtedness or such renewal,
extension or refunding thereof is not superior in right of payment to the
Subordinated Securities.
This Article shall constitute a continuing obligation to all Persons
who, in reliance upon such provisions become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions.
Section __.2 Issuer Not to Make Payments with Respect to Subordinated
Securities in Certain Circumstances.
(a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium and interest
thereon shall first be paid in full, or such payment duly provided for in cash
in a manner satisfactory to the holders of such Senior Indebtedness, before any
payment is made on account of the principal of, or interest on, Subordinated
Securities or to acquire any Subordinated Securities or on account of any
sinking fund provisions of any Subordinated Securities (except payments made in
capital stock of the Issuer or in warrants, rights or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before the maturity of such Senior
Indebtedness, and payments made through the exchange of other debt obligations
of the Issuer for such Subordinated Securities in accordance with the terms of
such Subordinated Securities, provided that such debt obligations are
subordinated to Senior Indebtedness at least to the extent that the Subordinated
Securities for which they are exchanged are so subordinated pursuant to this
Article __),
(b) Upon the happening and during the continuation of any default in
payment of the principal of, or interest on, any Senior Indebtedness when the
same becomes due and payable or in the event any judicial proceeding shall be
pending with respect to any such default, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no payment shall
be made by the Issuer with respect to the principal of, or interest on,
Subordinated Securities or to acquire any Subordinated Securities or on account
of any sinking fund provisions of Subordinated Securities (except payments made
in capital stock of the Issuer or in warrants, rights, or options to purchase or
acquire capital stock of the Issuer, sinking fund payments made in Subordinated
Securities acquired by the Issuer before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Issuer for
such Subordinated Securities in accordance with the terms of such Subordinated
Securities, provided that such debt obligations are subordinated to Senior
Indebtedness at least to the extent that the Subordinated Securities for which
they are exchanged are so subordinated pursuant to this Article __).
(c) In the event that, notwithstanding the provisions of this Section
__.2, the Issuer shall make any payment to the Trustee on account of the
principal of or interest on Subordinated Securities, or on account of any
sinking fund provisions of such Securities, after the maturity of any Senior
Indebtedness as described in Section __,2(a) above or after the happening of a
default in payment of the principal of or interest on any Senior Indebtedness as
described in Section __.2(b) above, then, unless and until all Senior
Indebtedness which shall have matured, and all premium and interest thereon,
shall have been paid in full (or the declaration of acceleration thereof shall
have been rescinded or annulled), or such default shall have been cured or
waived or shall have ceased to exist, such payment (subject to the provisions of
Sections __.6 and __.7) shall be held by the Trustee, in trust for the benefit
of, and shall be
paid forthwith over and delivered to, the holders of such Senior Indebtedness
(pro rata as to each of such holders on the basis of the respective amounts of
Senior Indebtedness held by them) or their representative or the trustee under
the indenture or other agreement (if any) pursuant to which such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of all such Senior Indebtedness remaining unpaid to
the extent necessary to pay the same in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness. The Issuer shall give prompt written notice to the Trustee
of any default in the payment of principal of or interest on any Senior
Indebtedness,
Section __.3 Subordinated Securities Subordinated to Prior Payment of
All Senior Indebtedness on Dissolution. Liquidation or Reorganization of Issuer.
Upon any distribution of assets of the Issuer in any dissolution, winding up,
liquidation or reorganization of the Issuer (whether voluntary or involuntary,
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payments in full of the principal thereof and premium and interest due
thereon, or provision shall be made for such payment, before the Holders of
Subordinated Securities are entitled to receive any payment on account of the
principal of or interest on such Securities;
(b) any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article __ with
respect to Subordinated Securities, to the payment in full without diminution or
modification by such plan of all Senior Indebtedness), to which the Holders of
Subordinated Securities or the Trustee on behalf of the Holders of Subordinated
Securities would be entitled except for the provisions of this Article __ shall
be paid or delivered by the liquidating trustee or agent or other person making
such payment or distribution directly to the holders of Senior Indebtedness or
their representative, or to the trustee under any indenture under which Senior
Indebtedness may have been issued (pro rata as to each such holder,
representative or trustee on the basis of the respective amounts of unpaid
Senior Indebtedness held or represented by each), to the extent necessary to
make payment in full of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution or provision thereof to the
holders of such Senior Indebtedness; and
(c) in the event that notwithstanding the foregoing provisions of this
Section __.3, any payment or distribution of assets of the Issuer of any kind or
character, whether in cash* property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article __ with
respect to Subordinated Securities, to the payment in full without diminution or
modification by such plan of all Senior Indebtedness shall be received by the
Trustee or the Holders of the Subordinated Securities on account of principal of
or interest on the Subordinated Securities before all Senior Indebtedness is
paid in full, or effective provision made for its payment, such payment or
distribution (subject to the provisions of Section _.6 and _.7) shall be
received and held in trust for and shall be paid over to the holders of the
Senior Indebtedness remaining unpaid or unprovided for or their representative,
or to the trustee under any indenture under which such Senior Indebtedness may
have been issued (pro rata as provided in subsection (b) above), for application
to the payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Indebtedness,
The Issuer shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Issuer.
The consolidation of the Issuer with, or the merger of the Issuer into,
another corporation or the liquidation or dissolution of the Issuer following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided for
in Article __ hereof shall not be deemed a dissolution, winding up, liquidation
or reorganization for the purposes of this Section __.3 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated such in Article __.
Section __.4 Holders of Subordinated Securities to be Subrogated to
Right of Holders of Senior Indebtedness. Subject to the payment in full of all
Senior Indebtedness, the Holders of Subordinated Securities shall be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Issuer applicable to the Senior Indebtedness
until all amounts owing on Subordinated Securities shall be paid in full, and
for the purposes of such subrogation no payments or distributions to the holders
of the Senior Indebtedness by or on behalf of the Issuer or by or on behalf of
the Holders of Subordinated Securities by virtue of this Article __ which
otherwise would have been made to the Holders of Subordinated Securities shall,
as between the Issuer, its creditors other than holders of Senior Indebtedness
and the Holders of Subordinated Securities, be deemed to be payment by the
Issuer to or on account of the Senior Indebtedness, it being understood that the
provisions of this Article __ are and are intended solely for the purpose of
defining the relative rights of the Holders of the Subordinated Securities, on
the one hand, and the holders of the Senior Indebtedness, on the other hand.
Section __.5 Obligation of the Issuer Unconditional. Nothing contained
in this Article __ or elsewhere in this Indenture or in any Subordinated
Security is intended to or shall impair, as among the Issuer, its creditors
other than holders of Senior Indebtedness and the Holders of Subordinated
Securities, the obligation of the Issuer, which is absolute and unconditional,
to pay to the Holders of Subordinated Securities the principal of, and interest
on, Subordinated Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of Subordinated Securities and creditors of the Issuer
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Subordinated Security from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article __ of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Issuer received upon the exercise of any such remedy. Upon any payment or
distribution of assets of the Issuer referred to in this Article __, the Trustee
and Holders of Subordinated Securities shall be entitled to rely upon any order
or decree made by
any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or, subject to the
provisions of Section __ and __, a certificate of the receiver, trustee in
bankruptcy, liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or the Holders of Subordinated Securities, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Issuer, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article __.
Nothing contained in this Article __ or elsewhere in this Indenture or
in any Subordinated Security is intended to or shall affect the obligation of
the Issuer to make, or prevent the Issuer from making, at any time except during
the pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and, except as provided in subsections (a) and (b) of Section __.2,
payments at any time of the principal of, or interest on, Subordinated
Securities.
Section __.6 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice. The Issuer shall give prompt written notice to the Trustee of
any fact known to the Issuer which would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Subordinated Securities.
Notwithstanding the provisions of this Article __ or any provision of this
Indenture, the Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution to or by the Trustee, unless at least two Business Days prior to
the making of any such payment, the Trustee shall have received written notice
thereof from the Issuer or from one or more holders of Senior Indebtedness or
from any representative thereof or from any trustee therefor, together with
proof satisfactory to the Trustee of such holding of Senior Indebtedness or of
the authority of such representative or trustee; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections __
and __, shall be entitled to assume conclusively that no such facts exist. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a
representative or trustee on behalf of the holder) to establish that such notice
has been given by a holder of Senior Indebtedness (or a representative of or
trustee on behalf of any such holder). In the event that the Trustee determines,
in good faith, that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payments or
distribution pursuant of this Article __, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, as to the extent to which such
Person is entitled to participate in such payment or distribution, and as to
other facts pertinent to the rights of such Person under this Article __, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and nothing in this Article __ shall apply to
claims of, or payments to, the Trustee under or pursuant to Section __.
Section __.7 Application by Trustee of Monies or Government Obligations
Deposited with It. Money or Government Obligations deposited in trust with the
Trustee pursuant to and in accordance with Section __ shall be for the sole
benefit of Securityholders
and, to the extent allocated for the payment of Subordinated Securities, shall
not be subject to the subordination provisions of this Article __, if the same
are deposited in trust prior to the happening of any event specified in Section
__.2. Otherwise, any deposit of monies or Government Obligations by the Issuer
with the Trustee or any paying agent (whether or not in trust) for the payment
of the principal of, or interest on, any Subordinated Securities shall be
subject to the provisions of Section __.1, __.2 and __.3 except that, if prior
to the date on which by the terms of this Indenture any such monies may become
payable for any purposes (including, without limitation, the payment of the
principal of, or the interest, if any, on any Subordinated Security) the Trustee
shall not have received with respect to such monies the notice provided for in
Section __.6, then the Trustee or the paying agent shall have full power and
authority to receive such monies and Government Obligations and to apply the
same to the purpose for which they were received, and shall not be affected by
any notice to the contrary which may be received by it on or after such date,
This Section __.7 shall be construed solely for the benefit of the Trustee and
paying agent and, as to the first sentence hereof, the Securityholders, and
shall not otherwise effect the rights of holders of Senior Indebtedness.
Section __.8 Subordination Rights Not Impaired by Acts or Omissions of
Issuer or Holders of Senior Indebtedness. No rights of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Issuer or by any act or failure to act, in good faith, by
any such holders or by any noncompliance by the Issuer with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Issuer may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Subordinated Securities, without incurring responsibility to the Holders of the
Subordinated Securities and without impairing or releasing the subordination
provided in this Article __ or the obligations hereunder of the Holders of the
Subordinated Securities to the holders of such Senior Indebtedness, do any one
or more of the following; (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Senior Indebtedness, or
otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection for such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Issuer, as the case may be, and any other Person.
Section __.9 Securityholders Authorize Trustee to Effectuate
Subordination of Securities. Each Holder of Subordinated Securities by his
acceptance thereof authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article __ and appoints the Trustee his
attorney-in-fact for such purpose, including in the event of any dissolution,
winding up, liquidation or reorganization of the Issuer (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) the immediate filing of a claim for the unpaid balance
of his Subordinated Securities in the form required in said proceedings and
causing said claim to be approved. If the Trustee does not file a proper claim
or proof of debt in
the form required in such proceeding prior to 30 days before the expiration of
the time to file such claim or claims, then the holders of Senior Indebtedness
have the right to file and are hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Securities.
Section __.10 Right of Trustee to Hold Senior Indebtedness. The Trustee
in its individual capacity shall be entitled to all of the rights set forth in
this Article __ in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness of the Issuer, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article __, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee, The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Sections __.2 and __.3, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Holders of Subordinated Securities, the Issuer or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article __ or otherwise.
Section __.11 Article Not to Prevent Events of Defaults. The failure to
make a payment on account of principal or interest by reason of any provision in
this Article __ shall not be construed as preventing the occurrence of an Event
of Default under Section ____.
EXHIBIT F
TERMS OF SUBORDINATION
[GUARANTY OF HYBRID PREFERRED SECURITIES]
SECTION __. This Guarantee will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
other liabilities of the Guarantor and pari passu with any guarantee now or
hereafter entered into by the Guarantor in respect of the securities
representing common beneficial interests in the assets of the Issuer or of any
preferred or preference stock of any affiliate of the Guarantor.
EXHIBIT G-1
FORM OF BOND DELIVERY AGREEMENT (INITIAL BORROWING DATE)
BOND DELIVERY AGREEMENT
CONSUMERS ENERGY COMPANY
TO
CITICORP USA, INC., AS AGENT
Dated as of July 12, 2002
-------------------
Relating to
First Mortgage Bonds, Collateral Series due July 11, 2003
------------------
THIS BOND DELIVERY AGREEMENT (this "Agreement"), dated as of July 12,
2002, is between Consumers Energy Company (the "Company"), and Citicorp USA,
Inc., as agent (the "Agent") under the Term Loan Agreement (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement")
dated as of July 12, 2002, among the Company, the financial institutions parties
thereto (the "Banks"), and the Agent. Capitalized terms used but not otherwise
defined herein have the respective meanings assigned to such terms in the Loan
Agreement,
Whereas, the Company has entered into the Loan Agreement and may from
time to time make borrowings thereunder in accordance with the provisions
thereof;
Whereas, the Company has established its First Mortgage Bonds,
Collateral Series due 2003, in the aggregate principal amount of $300,000,000
(the "Bonds"), to be issued under and in accordance with the Eighty-second
Supplemental Indenture dated as of July 12, 2002 (the "Supplemental Indenture"),
to the Indenture of the Company to JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank) dated as of September 1, 1945 (as amended and
supplemented, the "Indenture"); and
Whereas, the Company proposes to issue and deliver to the Agent, for
the benefit of the Banks, the Bonds in order to provide the Bonds as evidence of
(and the benefit of the lien of the Indenture with respect to the Bonds for) the
Obligations of the Company arising under the Loan Agreement,
Now, therefore, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Company and the Agent hereby agree as follows:
ARTICLE I
THE BONDS
Section 1.1 Delivery of Bonds.
In order to provide the Bonds as evidence of (and through the Bonds the
benefit of the Lien of the Indenture for) the Obligations of the Company under
the Loan Agreement as aforesaid, the Company hereby delivers to the Agent the
Bonds in the aggregate principal amount of $300,000,000, maturing on July 11,
2003 and bearing interest as provided in the Supplemental Indenture. The
obligation of the Company to pay the principal of and interest on the Bonds
shall be deemed to have been satisfied and discharged in full or in part, as the
case may be, to the extent of payment by the Company of the Obligations, all as
set forth in the Bonds and in Section 1 of the Supplemental Indenture.
The Bonds are registered in the name of the Agent and shall be owned
and held by the Agent, subject to the provisions of this Agreement, for the
benefit of the Banks, and the Company shall have no interest therein. The Agent
shall be entitled to exercise all rights of bondholders under the Indenture with
respect to the Bonds.
The Agent hereby acknowledges receipt of the Bonds.
Section 1.2 Payments on the Bonds.
Any payments received by the Agent on account of the principal of or
interest on the Bonds shall be deemed to be and treated in all respects as
payments of the Obligations, and such payments shall be distributed by the Agent
to the Banks in accordance with the provisions of the Loan Agreement applicable
to payments received by the Agent in respect of the Obligations (and the Company
hereby consents to such distributions).
ARTICLE II
NO TRANSFER OF BONDS; SURRENDER OF BONDS
Section 2.1 No Transfer of the Bonds.
The Agent shall not sell, assign or otherwise transfer any Bonds
delivered to it under this Agreement except to a successor administrative agent
under the Loan Agreement. The Company may take such actions as it shall deem
necessary, desirable or appropriate to effect compliance with such restrictions
on transfer, including the issuance of stop-transfer instructions to the trustee
under the Indenture or any other transfer agent thereunder.
Section 2.2 Surrender of Bonds.
(a) The Agent shall forthwith surrender to or upon the order of the
Company all Bonds held by it at the first time at which the Commitments shall
have been terminated and all Obligations shall have been paid in full.
(b) Upon any permanent reduction in the Commitments and/or prepayments
of Term Loans pursuant to the terms of the Loan Agreement, the Agent shall
forthwith surrender to or upon the order of the Company Bonds in an aggregate
principal amount equal to the excess of the aggregate principal amount of Bonds
held by the Agent over the sum of the total Commitments and the aggregate
outstanding Term Loans.
ARTICLE III
GOVERNING LAW
This Agreement shall construed in accordance with and governed by the
internal laws (without regard to the conflict of laws provisions) of the State
of New York, but giving effect to Federal laws applicable to national banks.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company and the Agent have caused this
Agreement to be executed and delivered as of the date first above written.
CONSUMERS ENERGY COMPANY
- -------------------------------
Name:
Title:
CITICORP USA, INC., as Agent
- -------------------------------
Name:
Title:
EXHIBIT G-2
FORM OF BOND DELIVERY AGREEMENT
BOND DELIVERY AGREEMENT
CONSUMERS ENERGY COMPANY
TO
CITICORP USA, INC., AS AGENT
Dated as of July 11, 2003
-------------------
Relating to
First Mortgage Bonds, Collateral Series due July 11, 2004
------------------
THIS BOND DELIVERY AGREEMENT (this "Agreement"), dated as of July _,
2003, is between Consumers Energy Company (the "Company"), and Citicorp USA,
Inc., as agent (the "Agent") under the Term Loan Agreement (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement")
dated as of July 12, 2002, among the Company, the financial institutions parties
thereto (the "Banks"), and the Agent. Capitalized terms used but not otherwise
defined herein have the respective meanings assigned to such terms in the Loan
Agreement,
Whereas, the Company has entered into the Loan Agreement and made
borrowings thereunder in accordance with the provisions thereof, and pursuant to
such Loan Agreement the Company issued to the Agent, as evidence of and security
for the Obligations its First Mortgage Bonds, Collateral Series due 2003
(collectively, the "2003 Collateral Series Bonds") issued pursuant to that
certain Eighty-Second Supplemental Indenture dated as of July 12, 2002, to the
Indenture of the Company to JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank) dated as of September 1, 1945 (as amended and supplemented, the
"Indenture");
Whereas, the Company has elected to request the extension of the
Maturity Date to the Extended Maturity Date pursuant to the terms and conditions
of Section 2.4 of the Loan Agreement;
Whereas, it is a condition to such extension of the Maturity Date to
the Extended Maturity Date that the Company issue to the Agent, as evidence of
and security for the Obligations, a new series of bonds under the Indenture in
replacement of and substitution for the 2003 Collateral Series Bonds;
Whereas, the Company has established its First Mortgage Bonds,
Collateral Series due 2004, in the aggregate principal amount of $[insert
aggregate principal amount of Term Loans outstanding on the Maturity Date] (the
"Bonds"), to be issued under and in accordance with the [__________]
Supplemental Indenture dated as of July _, 2003 (the "Supplemental Indenture")
to the Indenture; and
Whereas, the Company proposes to issue and deliver to the Agent, for
the benefit of the Banks, the Bonds in order to provide the Bonds as evidence of
(and the benefit of the lien of the Indenture with respect to the Bonds for) the
Obligations of the Company arising under the Loan Agreement,
Now, therefore, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the Company and the Agent hereby agree as follows:
ARTICLE I
THE BONDS
Section 1.1 Delivery of Bonds.
In order to provide the Bonds as evidence of (and through the Bonds the benefit
of the Lien of the Indenture for) the Obligations of the Company under the Loan
Agreement as aforesaid, the Company hereby delivers to the Agent the Bonds in
the aggregate principal
amount of $[insert aggregate principal amount of Term Loans outstanding on the
Maturity Date], maturing on July 11, 2004 and bearing interest as provided in
the Supplemental Indenture. The obligation of the Company to pay the principal
of and interest on the Bonds shall be deemed to have been satisfied and
discharged in full or in part, as the case may be, to the extent of payment by
the Company of the Obligations, all as set forth in the Bonds and in Section 1
of the Supplemental Indenture.
The Bonds are registered in the name of the Agent and shall be owned
and held by the Agent, subject to the provisions of this Agreement, for the
benefit of the Banks, and the Company shall have no interest therein. The Agent
shall be entitled to exercise all rights of bondholders under the Indenture with
respect to the Bonds.
The Agent hereby surrenders the outstanding 2003 Collateral Series
Bonds and acknowledges receipt of the Bonds.
Section 1.2 Payments on the Bonds.
Any payments received by the Agent on account of the principal of or
interest on the Bonds shall be deemed to be and treated in all respects as
payments of the Obligations, and such payments shall be distributed by the Agent
to the Banks in accordance with the provisions of the Loan Agreement applicable
to payments received by the Agent in respect of the Obligations (and the Company
hereby consents to such distributions).
ARTICLE II
NO TRANSFER OF BONDS; SURRENDER OF BONDS
Section 2.1 No Transfer of the Bonds.
The Agent shall not sell, assign or otherwise transfer any Bonds
delivered to it under this Agreement except to a successor administrative agent
under the Loan Agreement. The Company may take such actions as it shall deem
necessary, desirable or appropriate to effect compliance with such restrictions
on transfer, including the issuance of stop-transfer instructions to the trustee
under the Indenture or any other transfer agent thereunder.
Section 2.2 Surrender of Bonds.
(a) The Agent shall forthwith surrender to or upon the order of the
Company all Bonds held by it at the first time at which the Commitments shall
have been terminated and all Obligations shall have been paid in full.
(b) Upon any permanent reduction in the Commitments and/or prepayments
of Term Loans pursuant to the terms of the Loan Agreement, the Agent shall
forthwith surrender to or upon the order of the Company Bonds in an aggregate
principal amount equal to the excess of the aggregate principal amount of Bonds
held by the Agent over the sum of the total Commitments and the aggregate
outstanding Term Loans.
ARTICLE III
GOVERNING LAW
This Agreement shall construed in accordance with and governed by the
internal laws (without regard to the conflict of laws provisions) of the State
of New York, but giving effect to Federal laws applicable to national banks.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company and the Agent have caused this
Agreement to be executed and delivered as of the date first above written.
CONSUMERS ENERGY COMPANY
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Name:
Title:
CITICORP USA, INC., as Agent
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Name:
Title:
COMMITMENT SCHEDULE
BANK INITIAL TERM
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LOAN DEFERRED DRAW TERM
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COMMITMENT LOAN COMMITMENTS
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Citicorp North America, Inc. $200,000,000 $100,000,000
AGGREGATE $200,000,000 $100,000,000
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COMMITMENTS
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