1
EXHIBIT 4(b)
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 15, 1998
--------------------
This Second Supplemental Indenture, dated as of the 15th day
of June, 1998 between Consumers Energy Company, a corporation duly organized and
existing under the laws of the State of Michigan (hereinafter called the
"Company") and having its principal office at 212 West Michigan Avenue, Jackson,
Michigan 49201, and The Chase Manhattan Bank, a New York banking corporation
(hereinafter called the "Trustee") and having its principal Corporate Trust
Office at 450 W. 33rd Street, 15th Floor, New York, New York, 10001.
WITNESSETH:
WHEREAS, the Company and the Trustee entered into an
Indenture, dated as of February 1, 1998, as previously supplemented by the First
Supplemental Indenture thereto dated May 1, 1998 (the "Original Indenture"),
pursuant to which one or more series of debt of the Company (the "Notes") may be
issued from time to time; and
WHEREAS, Section 2.01 of the Original Indenture permits the
terms of any series of Notes to be established in an indenture supplemental to
the Original Indenture; and
WHEREAS, Section 13.01 of the Original Indenture provides that
a supplemental indenture may be entered into by the Company and the Trustee
without the consent of any Holders of the Notes to establish the form and terms
of the Notes of any series; and
2
2
WHEREAS, the Company has requested the Trustee to join with it
in the execution and delivery of this Second Supplemental Indenture in order to
supplement and amend the Original Indenture by, among other things, establishing
the form and terms of two series of Notes to be known as the Company's "Senior
Remarketed Secured Notes, Series A, Due 2018" (the "Series A Senior Remarketed
Notes") and the Company's "Senior Remarketed Secured Notes, Series B, Due 2018"
(the "Series B Senior Remarketed Notes" and collectively with the Series A
Senior Remarketed Notes, the "Remarketed Notes"); and
WHEREAS, the Company and the Trustee desire to enter into this
Second Supplemental Indenture for the purposes set forth in Sections 2.01 and
13.01 of the Original Indenture as referred to above; and
WHEREAS, the Company has furnished the Trustee with a Board
Resolution authorizing the execution of this Second Supplemental Indenture; and
WHEREAS, all things necessary to make this Second Supplemental
Indenture a valid agreement of the Company and the Trustee and a valid
supplement to the Original Indenture have been done,
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises and the purchase of
the Notes to be issued hereunder by holders thereof, the Company and the Trustee
mutually covenant and agree, for the equal and proportionate benefit of the
respective holders from time to time of the Remarketed
Notes, as follows:
3
3
ARTICLE I
STANDARD PROVISIONS; DEFINITIONS
SECTION 1.01. Standard Provisions. The Original Indenture, as
previously supplemented, together with this Second Supplemental Indenture are
hereinafter sometimes collectively referred to as the "Indenture." All
capitalized terms which are used herein and not otherwise defined herein or in
Exhibits A or B hereto are defined in the Indenture and are used herein with the
same meanings as in the Indenture.
ARTICLE II
DESIGNATION AND TERMS OF THE REMARKETED NOTES; FORMS
SECTION 2.01. Establishment of Series. There are hereby created a
series of Notes to be known and designated as the "Senior Remarketed Secured
Notes, Series A, Due 2018" and "Senior Remarketed Secured Notes, Series B, Due
2018", respectively, each such series limited in aggregate principal amount
(except as contemplated in Section 2.05(c) of the Indenture) to $200,000,000.
The form and terms of the Remarketed Notes are established in the form of Notes
attached hereto as Exhibits A and B.
ARTICLE III
SUPPLEMENTAL INDENTURES
SECTION 3.01. Effect on Original Indenture. This Second Supplemental
Indenture is a supplement to the Original Indenture. As supplemented by this
Second Supplemental Indenture, the Original Indenture is in all respects
ratified, approved and
4
4
confirmed, and the Original Indenture and this Second Supplemental Indenture
shall together constitute one and the same instrument.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Counterparts. This Second Supplemental Indenture
may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
SECTION 4.02. Recitals. The recitals contained herein shall be taken as
the statements of the Company and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Second Supplemental Indenture.
SECTION 4.03. Governing Law. This Second Supplemental Indenture shall
be governed by and construed in accordance with the laws of the jurisdiction
which govern the Original Indenture and its construction.
5
5
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first written
above.
CONSUMERS ENERGY COMPANY
By:
------------------------------------
Name: Doris F. Galvin
Title: Vice President and Treasurer
Attest:
(Corporate Seal)
THE CHASE MANHATTAN BANK,
AS TRUSTEE
By:
------------------------------------
Name:
Title:
Attest:
(Corporate Seal)
6
EXHIBIT A
RULE 144A GLOBAL NOTE
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURI TIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES.
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES
IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TRUST COMPANY ("DTC") TO A NOMINEE OF DTC OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
INITIAL NOTE
No.: $200,000,000
CONSUMERS ENERGY COMPANY
SENIOR REMARKETED SECURED NOTE, SERIES A, DUE 2018
INITIAL FIRST INTEREST
INTEREST DATE OF ORIGINAL RATE ADJUSTMENT
RATE MATURITY ISSUE DATE DATE CUSIP
6.50% June 15, 2018 June 24, 1998 June 15, 2005 210518AX4
CONSUMERS ENERGY COMPANY, a corporation duly organized and existing
under the laws of the State of Michigan (the "Company"), for value received
hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of $200,000,000 on June 15, 2018, upon the presentation and surrender hereof at
the principal corporate trust office of The Chase Manhattan Bank, or its
successor in trust (the "Trustee") or such other office as the Trustee has
designated in writing, and to pay interest on the unpaid principal balance
hereof from the Original Issue Date specified above to the First Interest Rate
Adjustment Date specified above at the rate of 6.50% per annum, computed on the
basis of a year of 360 days consisting of twelve 30-day months, payable on each
June 15
7
and December 15 (each an "Interest Payment Date") commencing December 15, 1998,
to the person in whose name this Note is registered at the close of business on
the Record Date. The Regular Record Date is the June 1 or December 1, as the
case may be, next preceding such June 15 or December 15, respectively.
This Note is one of a duly authorized series of securities of the
Company (herein called the "Notes") issued and to be issued under the Indenture,
dated as of February 1, 1998, as supplemented and further supplemented by the
Second Supplemental Indenture, dated as of June 15, 1998 (together, the
"Indenture"), between the Company and the Trustee, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the registered owners of the Notes and of the terms
upon which the Notes are, and are to be, authenticated and delivered.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
Payments of principal of, and interest and premium, if any, on, this
Note shall be made by wire transfer of immediately available funds to the
account specified by the registered holder of this Note, which shall initially
be a nominee of DTC. Interest on the Notes (other than interest at maturity)
that are in the form of certificated Notes (the "Certificated Notes") will be
paid by check mailed to the person entitled thereto at such person's address as
it appears in the register for the Notes maintained by the Trustee; however, a
holder of Notes of one or more series under the Indenture in the aggregate
principal amount of $10 million or more having the same interest payment dates
will be entitled to receive payments of interest on such series by wire transfer
of immediately available funds to a bank within the continental United States if
appropriate wire transfer instructions have been received by the Trustee on or
prior to the applicable Regular Record Date. The principal of, and interest at
maturity and premium, if any, on Notes in the form of Certificated Notes will be
payable in immediately available funds at the office of the Trustee or at the
authorized office of any paying agent.
UNTIL THE RELEASE DATE (AS DEFINED IN THE INDENTURE), ALL OF THE NOTES
OUTSTANDING UNDER THE INDENTURE WILL BE SECURED BY ONE OR MORE SERIES OF FIRST
MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS") ISSUED AND DELIVERED BY THE COMPANY
TO THE TRUSTEE. ON THE RELEASE DATE, THE NOTES WILL CEASE TO BE SECURED BY FIRST
MORTGAGE BONDS, WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND
WILL RANK ON A PARITY WITH OTHER UNSECURED INDEBTEDNESS OF THE COMPANY.
The First Mortgage Bonds are to be issued by the Company under its Indenture
dated as of September 1, 1945, between the Company and The Chase Manhattan Bank,
as trustee, as amended and supplemented and to be supplemented by various
supplemental indentures.
DEFINITIONS
The following terms, as used herein, have the following meanings unless
the context or use clearly indicates another or different meaning or intent:
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions located in the State of
Michigan or in the state in which the principal corporate trust office of the
Trustee is located, are authorized or obligated by or pursuant to law or
executive order to close.
"Commercial Paper Term Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a
periodic basis which shall not be less than one calendar day nor more than 364
consecutive calendar days.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at
2
8
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations for
such redemption date, or (B) if the Company obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Daily Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a daily
basis.
"Fixed Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is determined and in
effect until the Date of Maturity of such Note.
"Floating Interest Rate Mode or Modes" means any of the following: the
Commercial Paper Term Mode, the Daily Interest Rate Mode, the Long Term Rate
Mode and the Weekly Interest Rate Mode.
"Independent Investment Banker" means Goldman, Sachs & Co. or, if such
firm is unwilling or unable to select the Comparable Treasury Issue, one of the
remaining Reference Treasury Dealers appointed by the Company.
"Interest Rate Adjustment Date" means for a particular Interest Rate
Mode, each date, which shall be a Business Day, on which interest on the Notes
subject thereto is determined and announced by the Remarketing Agent and the
date on which the related Note commences to bear interest at such rate.
"Interest Rate Mode" means the mode in which the Interest Rate on a
Note is being determined, i.e., a Commercial Paper Term Mode, a Daily Interest
Rate Mode, a Weekly Interest Rate Mode, the Long Term Rate Mode, or the Fixed
Interest Rate Mode.
"Long Term Rate Mode" means, with respect to any Note, the Interest
Rate Mode in which the interest rate on such Note is determined by the
Remarketing Agent or otherwise.
"Maximum Rate" means that rate of interest equal to fifteen percent
(15%) per annum or such higher rate as may be established from time to time by
the Board of Directors of the Company.
"Optional Redemption" means the redemption of any Note prior to its
maturity at the option of the Company as described herein.
"Reference Treasury Dealer" means (i) each of Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated and First Chicago Capital Markets, Inc.,
provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer; and (ii) any
other Primary Treasury Dealer selected by The Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company, of the bid and asked prices for the Comparable
3
9
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m.
on the third Business Day preceding such redemption date.
"Remarketing Agent" means such agent as the Company may appoint from
time to time for the purpose of remarketing the Notes.
"Treasury Yield" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Weekly Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a weekly
basis.
INTEREST RATE
INTEREST RATES ON NOTES
(a) Initial Interest Rate. From the Original Issue Date set forth above
to the First Interest Rate Adjustment Date set forth above, this Note will bear
interest at the rate of 6.50% per annum. Thereafter, the Notes will bear
interest in any Floating Interest Rate Mode or may be converted to the Fixed
Interest Rate Mode.
(b) Interest Rates. The interest rate announced by the Remarketing
Agent on the First Interest Rate Adjustment Date will be that rate of interest
per annum announced and confirmed in writing to the Company, the Trustee and DTC
on such Interest Rate Adjustment Date by the Remarketing Agent to be the minimum
interest rate per annum necessary, during the Interest Rate Period commencing on
such Interest Rate Adjustment Date, in the judgment of the Remarketing Agent, to
produce a par bid in the secondary market for this Note on such Interest Rate
Adjustment Date.
(c) Failure of Remarketing Agent to Announce Interest Rates on the
Notes. In the event that (i) the Remarketing Agent has been removed or has
resigned and no successor has been appointed, or (ii) the Remarketing Agent has
failed to announce the appropriate interest rate on the First Interest Rate
Adjustment Date for whatever reason, or (iii) the appropriate interest rate or
Interest Rate Period cannot be determined for whatever reason, the Company shall
have the right to purchase the Notes at a price equal to 100% of the principal
amount. If the Company does not exercise its right to purchase the Notes, all
such Notes shall be automatically converted to the Weekly Interest Rate Mode
with an Interest Rate Period of generally seven days, determined as provided in
the Indenture, and the rate of interest hereon shall be equal to the rate per
annum announced by The Chase Manhattan Bank, or such other nationally recognized
bank located in the United States as the Company may select, as its prime
lending rate.
(d) Maximum Interest Rate on the Notes. The interest rate on the Notes
shall not exceed the Maximum Rate.
(e) Notice of Interest Rate, Binding Effect. On the First Interest Rate
Adjustment Date of this Note, the Remarketing Agent will give the Company, the
Trustee and DTC, notice by telephone, confirmed in writing, of the interest rate
to be borne by such Note for the following Interest Rate Period. After such
Interest Rate Adjustment Date any beneficial owner of the Notes may contact the
Trustee or the Remarketing Agent in order to be advised of the applicable
interest rate. Not later than the Business Day following the Trustee's receipt
of such notice, the Trustee shall confirm to DTC the interest rate for the
following Interest Rate Period. No notice of the applicable interest rate will
be sent to the beneficial owners of the Notes.
4
10
The interest rate announced by the Remarketing Agent, absent manifest
error, is binding and conclusive upon the beneficial owners of the Notes, the
Company and the Trustee.
(f) Conversion. The Notes may be converted at the option of the Company
to a Floating Interest Rate Mode or to the Fixed Interest Rate Mode on the First
Interest Rate Adjustment Date for such Notes, and will be subject to mandatory
tender by the beneficial owners hereof as described herein on such Interest Rate
Adjustment Date. The beneficial owners of the Notes will be deemed to have
tendered such Notes as of the First Interest Rate Adjustment Date upon which
such conversion occurs and will not be entitled to further accrual of interest
on the Notes after such date.
TENDER
The Notes will automatically be tendered for purchase, or deemed
tendered for purchase by the beneficial owners hereof, on the First Interest
Rate Adjustment Date set forth above. Notes will be purchased on such Interest
Rate Adjustment Date as described below.
REMARKETING AND SETTLEMENT
By 11:00 a.m., New York City time, on the First Interest Rate
Adjustment Date for this Note, the Remarketing Agent will determine the interest
rate hereon to the nearest one-hundred-thousandth (0.00001) of one percent per
annum for the next Interest Rate Period. In determining the applicable interest
rate for the Notes and other terms, the Remarketing Agent will, after taking
into account market conditions as reflected in the prevailing yields on fixed
and variable rate taxable debt securities, (i) consider the principal amount of
all Notes tendered on such date and the principal amount of such Notes
prospective purchasers are willing to purchase and (ii) contact, by telephone or
otherwise, prospective purchasers and ascertain the interest rates therefor at
which they would be willing to hold or purchase such Notes.
By 12:30 p.m., New York City time, on the First Interest Rate
Adjustment Date, the Remarketing Agent will notify the Company and the Trustee
by telephone and confirmed in writing (which may include facsimile or other
electronic transmission), of (i) the interest rate applicable to this Note for
the next Interest Rate Period, (ii) the Interest Rate Adjustment Date, (iii) the
Interest Payment Dates, for any Notes in the Commercial Paper Term Mode (if
other than the Interest Rate Adjustment Date), the Long Term Rate Mode or the
Fixed Interest Rate Mode, (iv) the optional redemption terms, if any, and early
remarketing terms, if any, in the case of a remarketing into a Long Term Rate
Period, (v) the aggregate principal amount of all Notes tendered for remarketing
on such date and (vi) the aggregate principal amount of such tendered Notes
which the Remarketing Agent was able to remarket, at a price equal to 100% of
the principal amount thereof plus accrued interest, if any.
By telephone at approximately 1:00 p.m., New York City time, on the
First Interest Rate Adjustment Date, the Remarketing Agent will advise the
purchasers of the Notes (or the DTC Participant of each such purchaser who it is
expected in turn will advise such purchaser) of the principal amount of such
Notes that such purchaser is to purchase.
The purchasers of the Notes in a remarketing will be required to give
instructions to their respective DTC Participant to pay the purchase price
therefor in same day funds to the Remarketing Agent against delivery of the
principal amount of such Notes by book-entry through DTC by 1:00 p.m., New York
City time, on the First Interest Rate Adjustment Date.
When tendered, or deemed tendered, the Notes will be automatically
delivered to the account of the Trustee (or such other account meeting the
requirements of DTC's procedures as in effect from time to time), by book-entry
through DTC against payment of the purchase price or redemption price herefor,
on the First Interest Rate Adjustment Date.
5
11
The Remarketing Agent will make, or cause the Trustee to make, payment
to the DTC Participant of the tendering beneficial owners hereof subject to a
remarketing, by book-entry through DTC by the close of business on the First
Interest Rate Adjustment Date against delivery through DTC of the beneficial
owners' tendered Notes, of the purchase price for such Notes, plus accrued
interest, if any, to such date.
The transactions described above for a remarketing of the Notes will be
executed on the First Interest Rate Adjustment Date for this Note through DTC in
accordance with the procedures of DTC, and the accounts of the respective DTC
Participants will be debited and credited and the Notes will be delivered by
book-entry as necessary to effect the purchases and sales hereof, in each case
as determined in the related remarketing.
Except as set forth below, the purchase price for the Notes to the
tendering beneficial owner shall be paid solely out of the proceeds received
from a purchaser of such Notes in such remarketing, and neither the Trustee, the
Remarketing Agent nor the Company (except as set forth below) will be obligated
to provide funds to make payment upon any beneficial owner's tender of the Notes
in a remarketing.
The settlement and remarketing procedures described above, including
provisions for payment by purchasers of the Notes or for payment to the selling
beneficial owners of the Notes, may be modified to the extent required by DTC.
In addition, the Remarketing Agent may, in accordance with the terms of the
Indenture, modify the settlement procedures set forth above in order to
facilitate the settlement and remarketing process.
As long as DTC's nominee holds the certificates representing this Note
in the book-entry system of DTC, no certificates for this Note will be delivered
by any selling beneficial owner to reflect any transfer of the Notes effected in
any remarketing.
Failed Remarketing. Any Notes not successfully remarketed will be
subject to Special Mandatory Purchase. The obligation of the Company to effect a
Special Mandatory Purchase of the Notes (the "Special Mandatory Purchase Right")
can be satisfied either directly by the Company or through a Liquidity Provider
(as hereinafter defined). By 12:00 o'clock noon, New York City time, on the
First Interest Rate Adjustment Date for this Note, the Remarketing Agent will
notify the Liquidity Provider (as hereinafter defined), if any, the Trustee and
the Company by telephone or facsimile, confirmed in writing, if it was unable to
remarket any principal amount of this Note on such date. In the event that the
Company has entered into a Standby Note Purchase Agreement (as hereinafter
defined) which is in effect on such date, such notice will constitute a demand
for the benefit of the Company to the Liquidity Provider to purchase such
unremarketed principal amount of this Note at a price equal to the outstanding
unremarketed principal amount hereof pursuant to the terms of such Standby Note
Purchase Agreement. If a Standby Note Purchase Agreement is not in effect on
such date, or if the Liquidity Provider fails to advance funds under the Standby
Note Purchase Agreement, the Company hereby agrees to purchase such unremarketed
principal amount of this Note. In either case the Company will pay all accrued
and unpaid interest, if any, on this Note to the First Interest Rate Adjustment
Date. Payment of the unremarketed principal amount of this Note under the
circumstances contemplated in this paragraph by the Company or the Liquidity
Provider, as the case may be, and payment of accrued and unpaid interest, if
any, by the Company, shall be made by deposit of same-day funds with the Trustee
(or such other account meeting the requirements of DTC's procedures as in effect
from time to time) irrevocably in trust for the benefit of the beneficial owners
of such unremarketed principal amount of this Note, prior to 3:00 p.m., New York
City time, on the First Interest Rate Adjustment Date. For purposes of this
Note, the term "Liquidity Provider" means any bank or other credit provider
whose obligations such as those under the Standby Note Purchase Agreement are
exempt from registration under the Securities Act of 1933, as amended, with long
term senior debt ratings from Standard & Poor's Corporation and Moody's
Investors Service, Inc. at least equal to those of the highest rated senior debt
ratings of the Company as of the date of the Standby Note Purchase Agreement,
and a minimum combined capital and surplus of at least $50,000,000, that has
entered into a Standby Note Purchase Agreement with the Company for the purpose
of purchasing unremarketed Notes on any Interest Rate Adjustment Date, and the
term "Standby Note Purchase Agreement" means the
6
12
agreement which the Company may, at its option, enter into from time to time
with a Liquidity Provider for the purpose of purchasing unremarketed Notes.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or in part, at the option of the
Company, until 60 days prior to the expiration of the Initial Interest Rate
Period at a redemption price equal to the greater of (i) 100% of their principal
amount or (ii) the sum of the present values of the remaining scheduled payments
of principal and interest (not including the portion of any such payments of
interest accrued as of the redemption date) discounted to the redemption date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Yield plus 20 basis points, plus, in each case, accrued interest
to the date of redemption, such redemption price to be set forth in an Officers'
Certificate delivered to the Trustee before the redemption date and upon which
the Trustee may conclusively rely. The Notes will then be subject, at any time,
subject to certain exceptions, to the optional redemption by the Company
commencing 60 days after the Initial Interest Rate Period.
If less than all of the Notes are to be redeemed, the Trustee shall
select, in such manner as it shall deem appropriate and fair, the particular
Notes or portions thereof to be redeemed. Notice of redemption shall be given by
mail not less than 30 nor more than 60 days prior to the date fixed for
redemption to the holders of Notes to be redeemed (which, as long as the Notes
are held in the book-entry only system, will be DTC (or its nominee) or a
successor Depositary); provided, however, that the failure to duly give such
notice by mail, or any defect therein, shall not affect the validity of any
proceedings for the redemption of Notes as to which there shall have been no
such failure or defect. On and after the date fixed for redemption (unless the
Company shall default in the payment of the Notes or portions thereof to be
redeemed at the applicable redemption price, together with interest accrued
thereon to such date), interest on the Notes or the portions thereof so called
for redemption shall cease to accrue.
No notice of redemption of the Notes will be mailed during the
continuance of any event of default under the Indenture, except that (i) when
notice of redemption of any Notes has been mailed, the Company shall redeem such
Notes but only if funds sufficient for that purpose have prior to the occurrence
of such event of default been deposited with the Trustee or a paying agent for
such purpose, and (ii) notices of redemption of all outstanding Notes may be
given during the continuance of an event of default under the Indenture.
Any notice of redemption given at the option of the Company may state
that such redemption will be conditional upon receipt by the Trustee, on or
prior to the date fixed for such redemption, of money sufficient to pay the
principal of and premium, if any, and interest, if any, on such Notes and that
if such money has not been so received, such notice will be of no force and
effect and the Company will not be required to redeem such Notes.
PURCHASE AND REDEMPTION OF NOTES
Special Mandatory Purchase. Notes which have not been remarketed by
12:00, New York City time, on an Interest Rate Adjustment Date for such Notes
will be purchased by the Company directly or through a Liquidity Provider
pursuant to the Special Mandatory Purchase Right. In such event, either the
Company or, subject to the terms and conditions of a Standby Note Purchase
Agreement, if any, which may be in effect on such date, the Liquidity Provider
will deposit same-day funds in the account of the Trustee (or such other account
meeting the requirements of DTC's procedures as in effect from time to time)
irrevocably in trust for the benefit of the beneficial owners of the Notes
subject to Special Mandatory Purchase prior to 3:00 p.m., New York City time, on
such Interest Rate Adjustment Date. Such funds shall be in an amount sufficient
to pay the aggregate purchase price of such unremarketed Notes, equal to 100% of
the principal amount thereof. In the event a Standby Note Purchase Agreement is
in effect but the Liquidity Provider shall fail to advance funds for whatever
reason thereunder, the Company will be obligated to purchase such unremarketed
Notes on such Interest Rate Adjustment Date. The Company will be responsible for
paying the accrued interest, if any, on such Notes by depositing sufficient
same- day funds therefor with the Trustee (or such other account meeting the
requirements of DTC's
7
13
procedures as in effect from time to time) prior to 3:00 p.m., New York City
time, on such Interest Rate Adjustment Date.
TRANSFER OR EXCHANGE
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of the Notes is registrable in the Security Register,
upon surrender of such Notes for registration of transfer at the office or
agency of the Company in any place where the principal of and premium, if any,
and any interest on the Notes are payable or at such other offices or agencies
as the Company may designate, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to, the Company and the Security
Registrar or any transfer agent duly executed, by the registered owner hereof or
his attorney duly authorized in writing, and thereupon one or more new Notes of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
The Notes are issuable only in fully registered form in a minimum
denomination of $100,000 and increments of $1,000 thereafter. The Notes of any
series will be exchangeable for other Notes of the same series of any authorized
denominations and of a like aggregate principal amount and tenor.
The Notes may be presented for exchange or registration of transfer
(duly endorsed or accompanied by a duly executed written instrument of
transfer), at the office of the Trustee maintained in the Borough of Manhattan,
The City of New York, for such purpose with respect to any series of Notes,
without service charge but upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the Company and the Trustee being satisfied with the documents of
title and indemnity of the person making the request.
ACCELERATION
If an Event of Default shall occur and be continuing, the principal of
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture and, upon such declaration, the Trustee shall demand
the redemption of the First Mortgage Bonds as provided in the Indenture.
OTHER PROVISIONS
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modifications of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the outstanding Notes. Any such consent or
waiver by the Holder of this Global Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Global Note and of any Note
issued upon the registration of transfer hereof or in exchange therefor or in
lieu thereof whether or not notation of such consent or waiver is made upon the
Note.
As set forth in and subject to the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default
with respect to such Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes affected by such Event of Default shall have
made written request and offered reasonable indemnity to the Trustee to
institute such proceeding as Trustee and the Trustee shall have failed to
institute such proceeding within 60 days; provided that such limitations do not
apply to a suit instituted by the Holder hereof for the enforcement of payment
of the principal of and any premium or interest on this Note on or after the
respective due dates expressed here.
8
14
No reference to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and any interest
including additional amounts, on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of Michigan.
This Note shall not be valid or become obligatory for any purpose until
the Trustee's Certificate of Authentication hereon shall have been executed by
the Trustee.
IN WITNESS WHEREOF, CONSUMERS ENERGY COMPANY has caused this instrument
to be duly executed under its corporate seal.
CONSUMERS ENERGY COMPANY
BY:
--------------------------------
Attest:
BY:
-------------------
SEAL
9
15
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated herein, referred to
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------------
Authorized Officer
Date:
10
16
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
Please insert Social Security or Other Identifying Number of Assignee
- --------------------------------------------------------------------------------
(please print or type name and address of transferee)
the within Note and all rights thereunder and does hereby irrevocably constitute
and appoint attorney to transfer the within Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
--------------
In the presence of:
- --------------------------------------------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever. When assignment is made by a guardian,
trustee, executor or administrator, an officer of a corporation, or anyone in a
representative capacity, proof of his authority to act must accompany the Note.
11
17
EXHIBIT B
GLOBAL NOTE
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES
IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TRUST COMPANY ("DTC") TO A NOMINEE OF DTC OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
INITIAL NOTE
No.: $0.00
CONSUMERS ENERGY COMPANY
SENIOR REMARKETED SECURED NOTE, SERIES B, DUE 2018
INITIAL FIRST INTEREST
INTEREST DATE OF ORIGINAL RATE ADJUSTMENT
RATE MATURITY ISSUE DATE DATE CUSIP
6.50% June 15, 2018 June 24, 1998 June 15, 2005 [ ]
CONSUMERS ENERGY COMPANY, a corporation duly organized and existing
under the laws of the State of Michigan (the "Company"), for value received
hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of $0.00 on June 15, 2018, upon the presentation and surrender hereof at the
principal corporate trust office of The Chase Manhattan Bank, or its successor
in trust (the "Trustee") or such other office as the Trustee has designated in
writing, and to pay interest on the unpaid principal balance hereof from the
Original Issue Date specified above to the First Interest Rate Adjustment Date
specified above at the rate of 6.50% per annum, computed on the basis of a year
of 360 days consisting of twelve 30-day months, payable on each June 15 and
December 15 (each an "Interest Payment Date") commencing December 15, 1998, to
the person in whose name this Note is registered at the close of business on the
Record Date. The Regular Record Date is the June 1 or December 1, as the case
may be, next preceding such June 15 or December 15, respectively.
This Note is one of a duly authorized series of securities of the
Company (herein called the "Notes") issued and to be issued under the Indenture,
dated as of February 1, 1998, as supplemented and further supplemented by the
Second Supplemental Indenture, dated as of June 15, 1998 (together, the
"Indenture"), between the Company and the Trustee, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the registered owners of the Notes and of the terms
upon which the Notes are, and are to be, authenticated and delivered.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
18
Payments of principal of, and interest and premium, if any, on, this
Note shall be made by wire transfer of immediately available funds to the
account specified by the registered holder of this Note, which shall initially
be a nominee of DTC. Interest on the Notes (other than interest at maturity)
that are in the form of certificated Notes (the "Certificated Notes") will be
paid by check mailed to the person entitled thereto at such person's address as
it appears in the register for the Notes maintained by the Trustee; however, a
holder of Notes of one or more series under the Indenture in the aggregate
principal amount of $10 million or more having the same interest payment dates
will be entitled to receive payments of interest on such series by wire transfer
of immediately available funds to a bank within the continental United States if
appropriate wire transfer instructions have been received by the Trustee on or
prior to the applicable Regular Record Date. The principal of, and interest at
maturity and premium, if any, on Notes in the form of Certificated Notes will be
payable in immediately available funds at the office of the Trustee or at the
authorized office of any paying agent.
UNTIL THE RELEASE DATE (AS DEFINED IN THE INDENTURE), ALL OF THE NOTES
OUTSTANDING UNDER THE INDENTURE WILL BE SECURED BY ONE OR MORE SERIES OF FIRST
MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS") ISSUED AND DELIVERED BY THE COMPANY
TO THE TRUSTEE. ON THE RELEASE DATE, THE NOTES WILL CEASE TO BE SECURED BY FIRST
MORTGAGE BONDS, WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY AND
WILL RANK ON A PARITY WITH OTHER UNSECURED INDEBTEDNESS OF THE COMPANY.
The First Mortgage Bonds are to be issued by the Company under its Indenture
dated as of September 1, 1945, between the Company and The Chase Manhattan Bank,
as trustee, as amended and supplemented and to be supplemented by various
supplemental indentures.
DEFINITIONS
The following terms, as used herein, have the following meanings unless
the context or use clearly indicates another or different meaning or intent:
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions located in the State of
Michigan or in the state in which the principal corporate trust office of the
Trustee is located, are authorized or obligated by or pursuant to law or
executive order to close.
"Commercial Paper Term Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a
periodic basis which shall not be less than one calendar day nor more than 364
consecutive calendar days.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations for
such redemption date, or (B) if the Company obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Quotations.
2
19
"Daily Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a daily
basis.
"Fixed Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is determined and in
effect until the Date of Maturity of such Note.
"Floating Interest Rate Mode or Modes" means any of the following: the
Commercial Paper Term Mode, the Daily Interest Rate Mode, the Long Term Rate
Mode and the Weekly Interest Rate Mode.
"Independent Investment Banker" means Goldman, Sachs & Co. or, if such
firm is unwilling or unable to select the Comparable Treasury Issue, one of the
remaining Reference Treasury Dealers appointed by the Company.
"Interest Rate Adjustment Date" means for a particular Interest Rate
Mode, each date, which shall be a Business Day, on which interest on the Notes
subject thereto is determined and announced by the Remarketing Agent and the
date on which the related Note commences to bear interest at such rate.
"Interest Rate Mode" means the mode in which the Interest Rate on a
Note is being determined, i.e., a Commercial Paper Term Mode, a Daily Interest
Rate Mode, a Weekly Interest Rate Mode, the Long Term Rate Mode, or the Fixed
Interest Rate Mode.
"Long Term Rate Mode" means, with respect to any Note, the Interest
Rate Mode in which the interest rate on such Note is determined by the
Remarketing Agent or otherwise.
"Maximum Rate" means that rate of interest equal to fifteen percent
(15%) per annum or such higher rate as may be established from time to time by
the Board of Directors of the Company.
"Optional Redemption" means the redemption of any Note prior to its
maturity at the option of the Company as described herein.
"Reference Treasury Dealer" means (i) each of Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated and First Chicago Capital Markets, Inc.,
provided, however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer; and (ii) any
other Primary Treasury Dealer selected by The Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Remarketing Agent" means such agent as the Company may appoint from
time to time for the purpose of remarketing the Notes.
"Treasury Yield" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Weekly Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a weekly
basis.
3
20
INTEREST RATE
INTEREST RATES ON NOTES
(a) Initial Interest Rate. From the Original Issue Date set forth above
to the First Interest Rate Adjustment Date set forth above, this Note will bear
interest at the rate of 6.50% per annum. Thereafter, the Notes will bear
interest in any Floating Interest Rate Mode or may be converted to the Fixed
Interest Rate Mode.
(b) Interest Rates. The interest rate announced by the Remarketing
Agent on the First Interest Rate Adjustment Date will be that rate of interest
per annum announced and confirmed in writing to the Company, the Trustee and DTC
on such Interest Rate Adjustment Date by the Remarketing Agent to be the minimum
interest rate per annum necessary, during the Interest Rate Period commencing on
such Interest Rate Adjustment Date, in the judgment of the Remarketing Agent, to
produce a par bid in the secondary market for this Note on such Interest Rate
Adjustment Date.
(c) Failure of Remarketing Agent to Announce Interest Rates on the
Notes. In the event that (i) the Remarketing Agent has been removed or has
resigned and no successor has been appointed, or (ii) the Remarketing Agent has
failed to announce the appropriate interest rate on the First Interest Rate
Adjustment Date for whatever reason, or (iii) the appropriate interest rate or
Interest Rate Period cannot be determined for whatever reason, the Company shall
have the right to purchase the Notes at a price equal to 100% of the principal
amount thereof. If the Company does not exercise its right to purchase the
Notes, all such Notes shall be automatically converted to the Weekly Interest
Rate Mode with an Interest Rate Period of generally seven days, determined as
provided in the Indenture, and the rate of interest hereon shall be equal to the
rate per annum announced by The Chase Manhattan Bank, or such other nationally
recognized bank located in the United States as the Company may select, as its
prime lending rate.
(d) Maximum Interest Rate on the Notes. The interest rate on the Notes
shall not exceed the Maximum Rate.
(e) Notice of Interest Rate, Binding Effect. On the First Interest Rate
Adjustment Date of this Note, the Remarketing Agent will give the Company, the
Trustee and DTC, notice by telephone, confirmed in writing, of the interest rate
to be borne by such Note for the following Interest Rate Period. After such
Interest Rate Adjustment Date any beneficial owner of the Notes may contact the
Trustee or the Remarketing Agent in order to be advised of the applicable
interest rate. Not later than the Business Day following the Trustee's receipt
of such notice, the Trustee shall confirm to DTC the interest rate for the
following Interest Rate Period. No notice of the applicable interest rate will
be sent to the beneficial owners of the Notes.
The interest rate announced by the Remarketing Agent, absent manifest
error, is binding and conclusive upon the beneficial owners of the Notes, the
Company and the Trustee.
(f) Conversion. The Notes may be converted at the option of the Company
to a Floating Interest Rate Mode or to the Fixed Interest Rate Mode on the First
Interest Rate Adjustment Date for such Notes, and will be subject to mandatory
tender by the beneficial owners hereof as described herein on such Interest Rate
Adjustment Date. The beneficial owners of the Notes will be deemed to have
tendered such Notes as of the First Interest Rate Adjustment Date upon which
such conversion occurs and will not be entitled to further accrual of interest
on the Notes after such date.
TENDER
4
21
The Notes will automatically be tendered for purchase, or deemed
tendered for purchase by the beneficial owners hereof, on the First Interest
Rate Adjustment Date set forth above. Notes will be purchased on such Interest
Rate Adjustment Date as described below.
REMARKETING AND SETTLEMENT
By 11:00 a.m., New York City time, on the First Interest Rate
Adjustment Date for this Note, the Remarketing Agent will determine the interest
rate hereon to the nearest one-hundred-thousandth (0.00001) of one percent per
annum for the next Interest Rate Period. In determining the applicable interest
rate for the Notes and other terms, the Remarketing Agent will, after taking
into account market conditions as reflected in the prevailing yields on fixed
and variable rate taxable debt securities, (i) consider the principal amount of
all Notes tendered on such date and the principal amount of such Notes
prospective purchasers are willing to purchase and (ii) contact, by telephone or
otherwise, prospective purchasers and ascertain the interest rates therefor at
which they would be willing to hold or purchase such Notes.
By 12:30 p.m., New York City time, on the First Interest Rate
Adjustment Date, the Remarketing Agent will notify the Company and the Trustee
by telephone and confirmed in writing (which may include facsimile or other
electronic transmission), of (i) the interest rate applicable to this Note for
the next Interest Rate Period, (ii) the Interest Rate Adjustment Date, (iii) the
Interest Payment Dates, for any Notes in the Commercial Paper Term Mode (if
other than the Interest Rate Adjustment Date), the Long Term Rate Mode or the
Fixed Interest Rate Mode, (iv) the optional redemption terms, if any, and early
remarketing terms, if any, in the case of a remarketing into a Long Term Rate
Period, (v) the aggregate principal amount of all Notes tendered for remarketing
on such date and (vi) the aggregate principal amount of such tendered Notes
which the Remarketing Agent was able to remarket, at a price equal to 100% of
the principal amount thereof plus accrued interest, if any.
By telephone at approximately 1:00 p.m., New York City time, on the
First Interest Rate Adjustment Date, the Remarketing Agent will advise the
purchasers of the Notes (or the DTC Participant of each such purchaser who it is
expected in turn will advise such purchaser) of the principal amount of such
Notes that such purchaser is to purchase.
The purchasers of the Notes in a remarketing will be required to give
instructions to their respective DTC Participant to pay the purchase price
therefor in same day funds to the Remarketing Agent against delivery of the
principal amount of such Notes by book-entry through DTC prior to 3:00 p.m., New
York City time, on the First Interest Rate Adjustment Date.
When tendered, or deemed tendered, the Notes will be automatically
delivered to the account of the Trustee (or such other account meeting the
requirements of DTC's procedures as in effect from time to time), by book-entry
through DTC against payment of the purchase price or redemption price herefor,
on the First Interest Rate Adjustment Date.
The Remarketing Agent will make, or cause the Trustee to make, payment
to the DTC Participant of the tendering beneficial owners hereof subject to a
remarketing, by book-entry through DTC by the close of business on the First
Interest Rate Adjustment Date against delivery through DTC of the beneficial
owners' tendered Notes, of the purchase price for such Notes, plus accrued
interest, if any, to such date.
The transactions described above for a remarketing of the Notes will be
executed on the First Interest Rate Adjustment Date for this Note through DTC in
accordance with the procedures of DTC, and the accounts of the respective DTC
Participants will be debited and credited and the Notes will be delivered by
book-entry as necessary to effect the purchases and sales hereof, in each case
as determined in the related remarketing.
5
22
Except as set forth below, the purchase price for the Notes to the
tendering beneficial owner shall be paid solely out of the proceeds received
from a purchaser of such Notes in such remarketing, and neither the Trustee, the
Remarketing Agent nor the Company (except as set forth below) will be obligated
to provide funds to make payment upon any beneficial owner's tender of the Notes
in a remarketing.
The settlement and remarketing procedures described above, including
provisions for payment by purchasers of the Notes or for payment to the selling
beneficial owners of the Notes, may be modified to the extent required by DTC.
In addition, the Remarketing Agent may, in accordance with the terms of the
Indenture, modify the settlement procedures set forth above in order to
facilitate the settlement and remarketing process.
As long as DTC's nominee holds the certificates representing this Note
in the book-entry system of DTC, no certificates for this Note will be delivered
by any selling beneficial owner to reflect any transfer of the Notes effected in
any remarketing.
Failed Remarketing. Any Notes not successfully remarketed will be
subject to Special Mandatory Purchase. The obligation of the Company to effect a
Special Mandatory Purchase of the Notes (the "Special Mandatory Purchase Right")
can be satisfied either directly by the Company or through a Liquidity Provider
(as hereinafter defined). By 12:00 o'clock noon, New York City time, on the
First Interest Rate Adjustment Date for this Note, the Remarketing Agent will
notify the Liquidity Provider (as hereinafter defined), if any, the Trustee and
the Company by telephone or facsimile, confirmed in writing, if it was unable to
remarket any principal amount of this Note on such date. In the event that the
Company has entered into a Standby Note Purchase Agreement (as hereinafter
defined) which is in effect on such date, such notice will constitute a demand
for the benefit of the Company to the Liquidity Provider to purchase such
unremarketed principal amount of this Note at a price equal to the outstanding
unremarketed principal amount hereof pursuant to the terms of such Standby Note
Purchase Agreement. If a Standby Note Purchase Agreement is not in effect on
such date, or if the Liquidity Provider fails to advance funds under the Standby
Note Purchase Agreement, the Company hereby agrees to purchase such unremarketed
principal amount of this Note. In either case the Company will pay all accrued
and unpaid interest, if any, on this Note to the First Interest Rate Adjustment
Date. Payment of the unremarketed principal amount of this Note under the
circumstances contemplated in this paragraph by the Company or the Liquidity
Provider, as the case may be, and payment of accrued and unpaid interest, if
any, by the Company, shall be made by deposit of same-day funds with the Trustee
(or such other account meeting the requirements of DTC's procedures as in effect
from time to time) irrevocably in trust for the benefit of the beneficial owners
of such unremarketed principal amount of this Note, prior to 3:00 p.m., New York
City time, on the First Interest Rate Adjustment Date. For purposes of this
Note, the term "Liquidity Provider" means any bank or other credit provider
whose obligations such as those under the Standby Note Purchase Agreement are
exempt from registration under the Securities Act of 1933, as amended, with long
term senior debt ratings from Standard & Poor's Corporation and Moody's
Investors Service, Inc. at least equal to those of the highest rated senior debt
ratings of the Company as of the date of the Standby Note Purchase Agreement,
and a minimum combined capital and surplus of at least $50,000,000, that has
entered into a Standby Note Purchase Agreement with the Company for the purpose
of purchasing unremarketed Notes on any Interest Rate Adjustment Date, and the
term "Standby Note Purchase Agreement" means the agreement which the Company
may, at its option, enter into from time to time with a Liquidity Provider for
the purpose of purchasing unremarketed Notes.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or in part, at the option of the
Company, until 60 days prior to the expiration of the Initial Interest Rate
Period at a redemption price equal to the greater of (i) 100% of their principal
amount or (ii) the sum of the present values of the remaining scheduled payments
of principal and interest (not including the portion of any such payments of
interest accrued as of the redemption date) discounted to the redemption date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Yield plus 20 basis points, plus, in each case, accrued interest
to the date of redemption, such redemption
6
23
price to be set forth in an Officers' Certificate delivered to the Trustee
before the redemption date and upon which the Trustee may conclusively rely. The
Notes will then be subject, at any time, subject to certain exceptions, to the
optional redemption by the Company commencing 60 days after the Initial Interest
Rate Period.
If less than all of the Notes are to be redeemed, the Trustee shall
select, in such manner as it shall deem appropriate and fair, the particular
Notes or portions thereof to be redeemed. Notice of redemption shall be given by
mail not less than 30 nor more than 60 days prior to the date fixed for
redemption to the holders of Notes to be redeemed (which, as long as the Notes
are held in the book-entry only system, will be DTC (or its nominee) or a
successor Depositary); provided, however, that the failure to duly give such
notice by mail, or any defect therein, shall not affect the validity of any
proceedings for the redemption of Notes as to which there shall have been no
such failure or defect. On and after the date fixed for redemption (unless the
Company shall default in the payment of the Notes or portions thereof to be
redeemed at the applicable redemption price, together with interest accrued
thereon to such date), interest on the Notes or the portions thereof so called
for redemption shall cease to accrue.
No notice of redemption of the Notes will be mailed during the
continuance of any event of default under the Indenture, except that (i) when
notice of redemption of any Notes has been mailed, the Company shall redeem such
Notes but only if funds sufficient for that purpose have prior to the occurrence
of such event of default been deposited with the Trustee or a paying agent for
such purpose, and (ii) notices of redemption of all outstanding Notes may be
given during the continuance of an event of default under the Indenture.
Any notice of redemption given at the option of the Company may state
that such redemption will be conditional upon receipt by the Trustee, on or
prior to the date fixed for such redemption, of money sufficient to pay the
principal of and premium, if any, and interest, if any, on such Notes and that
if such money has not been so received, such notice will be of no force and
effect and the Company will not be required to redeem such Notes.
PURCHASE AND REDEMPTION OF NOTES
Special Mandatory Purchase. Notes which have not been remarketed by
12:00 noon, New York City time, on an Interest Rate Adjustment Date for such
Notes will be purchased by the Company directly or through a Liquidity Provider
pursuant to the Special Mandatory Purchase Right. In such event, either the
Company or, subject to the terms and conditions of a Standby Note Purchase
Agreement, if any, which may be in effect on such date, the Liquidity Provider
will deposit same-day funds in the account of the Trustee (or such other account
meeting the requirements of DTC's procedures as in effect from time to time)
irrevocably in trust for the benefit of the beneficial owners of the Notes
subject to Special Mandatory Purchase prior to 3:00 p.m., New York City time, on
such Interest Rate Adjustment Date. Such funds shall be in an amount sufficient
to pay the aggregate purchase price of such unremarketed Notes, equal to 100% of
the principal amount thereof. In the event a Standby Note Purchase Agreement is
in effect but the Liquidity Provider shall fail to advance funds for whatever
reason thereunder, the Company will be obligated to purchase such unremarketed
Notes on such Interest Rate Adjustment Date. The Company will be responsible for
paying the accrued interest, if any, on such Notes by depositing sufficient
same- day funds therefor with the Trustee (or such other account meeting the
requirements of DTC's procedures as in effect from time to time) prior to 3:00
p.m., New York City time, on such Interest Rate Adjustment Date.
TRANSFER OR EXCHANGE
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of the Notes is registrable in the Security Register,
upon surrender of such Notes for registration of transfer at the office or
agency of the Company in any place where the principal of and premium, if any,
and any interest on the Notes are payable or at such other offices or agencies
as the Company may designate, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to, the Company and the Security
Registrar or any transfer agent duly executed, by the registered owner hereof or
his attorney duly authorized in writing, and thereupon one or more new
7
24
Notes of this series and of like tenor, of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees.
The Notes are issuable only in fully registered form in a minimum
denomination of $100,000 and increments of $1,000 thereafter. The Notes of any
series will be exchangeable for other Notes of the same series of any authorized
denominations and of a like aggregate principal amount and tenor.
The Notes may be presented for exchange or registration of transfer
(duly endorsed or accompanied by a duly executed written instrument of
transfer), at the office of the Trustee maintained in the Borough of Manhattan,
The City of New York, for such purpose with respect to any series of Notes,
without service charge but upon payment of any taxes and other governmental
charges as described in the Indenture. Such transfer or exchange will be
effected upon the Company and the Trustee being satisfied with the documents of
title and indemnity of the person making the request.
ACCELERATION
If an Event of Default shall occur and be continuing, the principal of
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture and, upon such declaration, the Trustee shall demand
the redemption of the First Mortgage Bonds as provided in the Indenture.
OTHER PROVISIONS
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modifications of the rights and obligations of the
Company and the rights of the Noteholders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the outstanding Notes. Any such consent or
waiver by the Holder of this Global Note shall be conclusive and binding upon
such Holder and upon all future Holders of this Global Note and of any Note
issued upon the registration of transfer hereof or in exchange therefor or in
lieu thereof whether or not notation of such consent or waiver is made upon the
Note.
As set forth in and subject to the provisions of the Indenture, no
Holder of any Notes will have any right to institute any proceeding with respect
to the Indenture or for any remedy thereunder unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of Default
with respect to such Notes, the Holders of not less than a majority in principal
amount of the outstanding Notes affected by such Event of Default shall have
made written request and offered reasonable indemnity to the Trustee to
institute such proceeding as Trustee and the Trustee shall have failed to
institute such proceeding within 60 days; provided that such limitations do not
apply to a suit instituted by the Holder hereof for the enforcement of payment
of the principal of and any premium or interest on this Note on or after the
respective due dates expressed here.
No reference to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and any interest
including additional amounts, on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of Michigan.
This Note shall not be valid or become obligatory for any purpose until
the Trustee's Certificate of Authentication hereon shall have been executed by
the Trustee.
8
25
IN WITNESS WHEREOF, CONSUMERS ENERGY COMPANY has caused this instrument
to be duly executed under its corporate seal.
CONSUMERS ENERGY COMPANY
BY:
----------------------------------
Attest:
BY:
------------------------
SEAL
9
26
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series designated herein, referred to
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-------------------------------------
Authorized Officer
Date:
10
27
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
Please insert Social Security or Other Identifying Number of Assignee
- --------------------------------------------------------------------------------
(please print or type name and address of transferee)
the within Note and all rights thereunder and does hereby irrevocably constitute
and appoint attorney to transfer the within Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated:
----------------
In the presence of:
- --------------------------------------------------------------------------------
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever. When assignment is made by a guardian,
trustee, executor or administrator, an officer of a corporation, or anyone in a
representative capacity, proof of his authority to act must accompany the Note.
11