<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 1995
REGISTRATION NOS. 33-63949
33-63949-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
CONSUMERS POWER COMPANY CONSUMERS POWER COMPANY FINANCING I
(Exact name of registrant as specified in its (Exact name of registrant as
charter) specified in its charter)
MICHIGAN DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of
organization) incorporation or organization)
38-0442310 38-6660663
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>
212 WEST MICHIGAN AVENUE
JACKSON, MICHIGAN 49201
(517) 788-0550
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
------------------------------
ALAN M. WRIGHT
SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
212 WEST MICHIGAN AVENUE
JACKSON, MICHIGAN 49201
(517) 788-0351
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
It is respectfully requested that the Commission send copies of all notices,
orders and communications to:
DENISE M. STURDY, ESQ. THOMAS J. IGOE, JR., ESQ.
CONSUMERS POWER COMPANY REID & PRIEST LLP
212 WEST MICHIGAN AVENUE 40 WEST 57TH STREET
JACKSON, MICHIGAN 49201 NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS PROPOSED MAXIMUM AGGREGATE
OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(2)(3) PRICE(2)(3) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Preferred Securities of Consumers Power Company
Financing I..................................... 4,000,000 $25.00 $100,000,000 $34,482.76
Subordinated Deferrable Interest Notes of
Consumers Power Company(1)(4)...................
Guarantee of Preferred Securities of Consumers
Power Company Financing I and other back-up
obligations of Consumers Power Company(4).......
Total............................................. $100,000,000 $34,482.76
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</TABLE>
(1) The Subordinated Deferrable Interest Notes will be purchased by, and
constitute assets of, Consumers Power Company Financing I.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) The Registration is deemed to include the rights of the holders of the
Preferred Securities under the Guarantee of Preferred Securities by
Consumers Power Company, the Declaration (as defined herein), the
Subordinated Deferrable Interest Notes and the Indenture (as defined
herein), taken together constituting the back-up undertakings as described
in this Registration Statement. No separate consideration will be received
for Consumers Power Company's Subordinated Deferrable Interest Notes, its
Guarantee of Preferred Securities by Consumers Power Company or its other
back-up obligations with respect to Consumers Power Company Financing I
Preferred Securities.
------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
PRELIMINARY PROSPECTUS DATED DECEMBER 19, 1995
PROSPECTUS (SUBJECT TO COMPLETION)
4,000,000 PREFERRED SECURITIES
CONSUMERS POWER COMPANY FINANCING I
% TRUST ORIGINATED PREFERRED SECURITIESSM ("TOPRSSM")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
CONSUMERS POWER COMPANY
------------------------
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby evidence preferred undivided beneficial interests in the assets
of Consumers Power Company Financing I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"). Consumers Power Company, a
Michigan corporation ("Consumers" or the "Company"), will own all the common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") representing common undivided beneficial interests in
the assets of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in an equivalent principal
amount of % Subordinated Deferrable Interest Notes due 2015 (the
"Subordinated Notes") of Consumers. The Subordinated Notes will be unsecured
obligations of Consumers and will be subordinate and junior in right of payment
to certain other indebtedness of Consumers, as described herein. Upon an event
of default under the Declaration (as defined herein), the holders of the
Preferred Securities will have a preference over the holders of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption and otherwise.
(continued on next page)
SEE "RISK FACTORS" COMMENCING ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
An application will be filed to list the Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If such application
is approved, trading of the Preferred Securities on the New York Stock Exchange
is expected to commence within a 30-day period after the initial delivery of the
Preferred Securities. See "Underwriting."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<S> <C> <C> <C>
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
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Per Preferred Security...................... $ (3) $
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Total....................................... $ (3) $
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</TABLE>
(1) Plus accrued distributions, if any, from , 1996.
(2) Consumers and the Trust have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Subordinated Notes, Consumers has agreed to
pay to the Underwriters as compensation for their arranging the investment
therein of such proceeds, $ per Preferred Security (or $ in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be per Preferred
Security. Therefore, to the extent of such sales, the actual amount of
Underwriters' compensation will be less than the aggregate amount specified
in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Consumers are estimated to be
$ .
------------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company on or about ,
1996.
------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
FIRST OF MICHIGAN CORPORATION
RONEY & CO.
------------------------
The date of this Prospectus is , 1996.
SM "TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
MERRILL LYNCH & CO., INC.
<PAGE> 3
(continued from previous page)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year commencing March 31, 1996 ("distributions"). The payment of distributions
out of moneys held by the Trust, and payments on liquidation of the Trust or the
redemption of Preferred Securities, as set forth below, are guaranteed by
Consumers (the "Preferred Securities Guarantee") to the extent the Trust has
funds available therefor as described under "Description of the Preferred
Securities Guarantee." The obligations of Consumers under the Preferred
Securities Guarantee are subordinate and junior in right of payment to all other
liabilities of Consumers and will rank pari passu with the most senior preferred
stock issued by Consumers. The obligations of Consumers under the Subordinated
Notes are subordinate and junior in right of payment to all present and future
Senior Indebtedness (as defined herein) of Consumers. The Senior Indebtedness of
Consumers aggregated approximately $2,610 million at September 30, 1995.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and interest and other
payment dates on the Subordinated Notes, which will be the sole assets of the
Trust. As a result, if principal or interest is not paid on the Subordinated
Notes, no amounts will be paid on the Preferred Securities. If Consumers does
not make principal or interest payments on the Subordinated Notes, the Trust
will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Preferred Securities Guarantee will not apply to
such distributions until the Trust has sufficient funds available therefor.
Consumers has the right to defer payments of interest on the Subordinated
Notes by extending the interest payment period on the Subordinated Notes, at any
time, for up to 20 consecutive quarters (each, an "Extension Period"). If
interest payments are so deferred, distributions on the Trust Securities will
also be deferred. Despite such deferral, distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at an annual
rate of % per annum, compounded quarterly, and during any Extension Period,
holders of Preferred Securities will be required to include deferred interest
income in their gross income for United States federal income tax purposes in
advance of receipt of the cash interest payments attributable to such deferred
income. There could be multiple Extension Periods of varying lengths throughout
the term of the Subordinated Notes. See "Description of the Subordinated Notes
- -- Option to Extend Interest Payment Period," "Risk Factors -- Option to Extend
Interest Payment Period" and "Certain Federal United States Income Tax
Consequences -- Original Issue Discount, Premium and Market Discount." In the
event of any such deferral, the holders of the Preferred Securities will not
have the right to appoint a special representative or trustee or otherwise act
to protect their interests.
The Subordinated Notes are redeemable by Consumers (in whole or in part)
from time to time, on or after December 31, 2000 or at any time in certain
circumstances upon the occurrence of a Special Event (as defined herein). If
Consumers redeems Subordinated Notes, the Trust must redeem Trust Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Notes so redeemed at $25 per Trust Security plus accrued and
unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities -- Mandatory
Redemption." The Preferred Securities will be redeemed upon maturity of the
Subordinated Notes. The Subordinated Notes mature on December 31, 2015. In
addition, upon the occurrence of a Special Event arising from a change in law or
a change in legal interpretation, unless the Subordinated Notes are redeemed in
the limited circumstances described below, the Trust shall be terminated with
the result that the Subordinated Notes will be distributed to the holders of the
Preferred Securities, on a pro rata basis, in lieu of any cash distribution. In
the case of the occurrence of a Special Event, Consumers will have the right in
certain circumstances to redeem the Subordinated Notes, which would result in
the redemption by the Trust of the Trust Securities in the same amount on a pro
rata basis. If the Subordinated Notes are distributed to the holders of the
Preferred Securities, Consumers will use its best efforts to have the
Subordinated Notes listed on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution" and
"Description of the Subordinated Notes."
In the event of the voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, winding-up or
termination the Subordinated Notes are distributed to the holders of the
Preferred Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Termination."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
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AVAILABLE INFORMATION
Consumers and the Trust have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Subordinated Notes, the Preferred
Securities and the Preferred Securities Guarantee offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement. Statements or extracts presented in this
Prospectus from financial statements, contracts, agreements or other documents
included as exhibits to the Registration Statement are not necessarily complete.
With respect to each such financial statement, contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is hereby
made to the exhibit for a more complete description of the matter involved.
Consumers is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, information statements and other information with the
Commission. Such reports, information statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Such reports, information
statements and other information concerning Consumers may also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, the securities exchange on which certain of Consumers' securities are
listed.
No separate financial statements of the Trust are included herein.
Consumers and the Trust do not consider that such financial statements would be
material to holders of the Preferred Securities because the Trust is a newly
formed special purpose entity, has no operating history and no independent
operations and is not engaged in, and does not propose to engage in, any
activity other than as set forth below. See "Consumers Power Company Financing
I."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Consumers with the Commission (File No.
1-5611) are incorporated in this Prospectus by reference and made a part hereof:
(i) Consumers' Annual Report on Form 10-K for the year ended December
31, 1994;
(ii) Consumers' Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1995, June 30, 1995 and September 30, 1995; and
(iii) Consumers' Current Reports on Form 8-K dated January 10, 1995,
dated February 2, 1995 and dated September 11, 1995.
All documents subsequently filed by Consumers pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act shall be deemed to be incorporated into
this Prospectus by reference and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this Prospectus shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Consumers will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been or
may be incorporated in this Prospectus by reference, other than certain exhibits
to such documents. Such requests should be directed to Consumers Power Company
at its principal executive offices located at 212 West Michigan Avenue, Jackson,
Michigan 49201 Attention: Senior Vice President and Chief Financial Officer;
telephone: (517) 788-0550.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus.
Preferred Securities Offered. 4,000,000 % Trust Originated Preferred
Securities evidencing preferred undivided beneficial interests in the assets of
the Trust are offered hereby. Holders of the Preferred Securities are entitled
to receive cumulative cash distributions at an annual rate of % of the
liquidation amount of $25 per Preferred Security, accruing from the date of
original issuance and payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year commencing on March 31, 1996. The
distribution rate and the distribution and other payment dates for the Preferred
Securities will correspond to the interest rate and interest and other payment
dates on the Subordinated Notes, which will be the sole assets of the Trust. As
a result, if principal or interest is not paid on the Subordinated Notes, no
amounts will be paid on the Preferred Securities. See "Description of the
Preferred Securities."
Subordinated Notes. The Trust will invest the proceeds from the issuance of
the Preferred Securities and Common Securities in an equivalent amount of %
Subordinated Deferrable Interest Notes due 2015 of Consumers. The Subordinated
Notes will be subordinate and junior in right of payment to all Senior
Indebtedness of Consumers. See "Description of Subordinated Notes --
Subordination."
Preferred Securities Guarantee. Payment of distributions out of moneys held
by the Trust, and payments on liquidation of the Trust or the redemption of
Preferred Securities are guaranteed by Consumers to the extent the Trust has
funds available therefor. If Consumers does not make principal or interest
payments on the Subordinated Notes, the Trust will not have sufficient funds to
make distributions on the Preferred Securities, in which event the Preferred
Securities Guarantee will not apply to such distributions until the Trust has
sufficient funds available therefor. See "Description of Preferred Securities
Guarantee" and "Effect of Obligations under the Subordinated Notes and the
Preferred Securities Guarantee" herein. The obligations of Consumers under the
Preferred Securities Guarantee are subordinate and junior in right of payment to
all other liabilities of Consumers and will rank pari passu with the most senior
preferred stock issued by Consumers. See "Risk Factors -- Ranking of Preferred
Securities Guarantee and Subordinated Notes" and "Description of the Preferred
Securities Guarantee."
Interest Deferral. Consumers has the right to defer payments of interest on
the Subordinated Notes by extending the interest payment period on the
Subordinated Notes, at any time, for up to 20 consecutive quarters. If interest
payments on the Subordinated Notes are so deferred, distributions on the
Preferred Securities will also be deferred. During any deferral, distributions
will continue to accrue with interest thereon (to the extent permitted by law)
as described herein. There could be multiple Extension Periods of varying
lengths throughout the term of the Subordinated Notes. During an Extension
Period, holders of Preferred Securities will be required to include deferred
interest income in their gross income in advance of receipt of the cash interest
payments attributable thereto. See "Description of the Subordinated Notes --
Option to Extend Interest Payment Period" and "Certain United States Federal
Income Tax Consequences -- Original Issue Discount, Premium and Market
Discount."
Redemption. The Subordinated Notes are redeemable by Consumers (in whole or
in part) from time to time, on or after December 31, 2000, or at any time in
certain circumstances upon the occurrence of a Special Event. If the
Subordinated Notes are redeemed, the Trust must redeem Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of
Subordinated Notes so redeemed. The Preferred Securities will be redeemed upon
maturity of the Subordinated Notes. See "Description of the Preferred Securities
- -- Mandatory Redemption."
4
<PAGE> 6
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained or incorporated by reference elsewhere in this Prospectus
and should particularly consider the following matters:
RANKING OF PREFERRED SECURITIES GUARANTEE AND SUBORDINATED NOTES
Consumers' obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all liabilities of Consumers and
pari passu with the most senior preferred stock now or hereafter issued by
Consumers and with any guarantee now or hereafter entered into by Consumers in
respect of any preferred stock of any affiliate of Consumers. The obligations of
Consumers under the Subordinated Notes are subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined herein) of
Consumers. No payment of principal of (including redemption payments, if any),
premium, if any, or interest on, the Subordinated Notes may be made if (a) any
Senior Indebtedness of Consumers is not paid when due, or (b) the maturity of
any Senior Indebtedness has been accelerated because of a default. At September
30, 1995, Senior Indebtedness of Consumers aggregated approximately $2,610
million. There are no terms in the Preferred Securities, the Subordinated Notes
or the Preferred Securities Guarantee that limit Consumers' ability to incur
additional indebtedness, including indebtedness that ranks senior to the
Subordinated Notes or the Preferred Securities Guarantee. See "Description of
the Preferred Securities Guarantee" and "Description of the Subordinated Notes
- -- Subordination."
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
which are required to be paid on the Preferred Securities, to the extent the
Trust shall have funds available therefor, (ii) the Redemption Price, including
all accrued and unpaid distributions, to the date of the redemption, to the
extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Subordinated Notes to the holders of
Preferred Securities) the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of payment therefor and (b) the amount of assets of the Trust remaining
available for distribution to holders of Preferred Securities in liquidation of
the Trust. The holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee (as
defined herein) or to direct the exercise of any trust or power conferred upon
the Preferred Guarantee Trustee under the Preferred Securities Guarantee. In
addition, any holder of Preferred Securities may institute a legal proceeding
directly against Consumers to enforce its rights under the Preferred Securities
Guarantee, without first instituting a legal proceeding against the Trust, the
Preferred Guarantee Trustee or any other person or entity. If Consumers were to
default in its obligation to pay amounts payable on the Subordinated Notes, the
Trust would lack available funds for the payment of distributions or amounts
payable on redemption of the Preferred Securities or otherwise, and in such
event holders of the Preferred Securities would not be able to rely upon the
Preferred Securities Guarantee for payment of such amounts. Instead, holders of
the Preferred Securities would either (i) rely on the enforcement by the
Property Trustee (as defined herein) of its rights as registered holder of the
Subordinated Notes against Consumers, pursuant to the terms of the Subordinated
Notes or (ii) enforce the Property Trustees rights directly against Consumers.
See "Description of the Preferred Securities -- Voting Rights," "Description of
the Preferred Securities Guarantee -- Status of the Preferred Securities
Guarantee" and "Description of the Subordinated Notes -- Indenture Events of
Default." The Declaration (as defined herein) provides that each holder of
Preferred Securities by acceptance thereof agrees to the provisions of the
Preferred Securities Guarantee and the Indenture (as defined herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as a holder of the
5
<PAGE> 7
Subordinated Notes against Consumers. In addition, the holders of a majority in
aggregate liquidation amount of the Preferred Securities will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee to exercise the remedies available to it as
a holder of the Subordinated Notes. A holder of Preferred Securities may also
directly institute a proceeding for enforcement of payment to such holder
directly of the principal of or interest on Subordinated Notes having a
principal amount equal to the aggregate liquidation preference amount of the
Preferred Securities of such holder on or after the respective due dates
specified in the Subordinated Notes. With respect to the Property Trustee's
rights other than its rights to receive payment on the Subordinated Notes, if
the Property Trustee fails to enforce its other rights under the Declaration, to
the fullest extent permitted by law, a holder of Preferred Securities may
institute a legal proceeding directly against Consumers to enforce the Property
Trustee's rights under the Declaration, without first instituting any legal
proceeding against the Property Trustee or any other person or entity, including
the Trust. See "Description of the Preferred Securities -- Voting Rights" and
"Description of the Subordinated Notes -- Indenture Events of Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Consumers has the right under the Indenture to defer payments of interest
on the Subordinated Notes by extending the interest payment period at any time,
and from time to time, on the Subordinated Notes. As a consequence of such an
extension, quarterly distributions on the Preferred Securities would be deferred
(but despite such deferral would continue to accrue with interest thereon
compounded quarterly) by the Trust during any such extended interest payment
period. Such right to extend the interest payment period for the Subordinated
Notes is limited to a period not exceeding 20 consecutive quarters for any such
extension. In the event that Consumers exercises this right to defer payments of
interest, then (a) Consumers shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation payment
with respect to, any of its capital stock, (b) Consumers shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Consumers which rank
pari passu with or junior to the Subordinated Notes and (c) Consumers shall not
make any guarantee payments with respect to the foregoing (other than pursuant
to the Preferred Securities Guarantee), provided, however, Consumers may declare
and pay a stock dividend where the dividends stock is the same stock as that on
which the dividend is being paid. Prior to the termination of any such Extension
Period, Consumers may further defer payments of interest by further extending
the interest payment period, provided that such Extension Period, together with
all such previous and further extensions thereof, may not exceed 20 consecutive
quarters or extend beyond the maturity of the Subordinated Notes. Upon the
termination of any Extension Period and the payment of all amounts then due,
Consumers may select a new Extension Period, as if no Extension Period had
previously been declared, subject to the above requirements. See "Description of
the Preferred Securities -- Distributions" and "Description of the Subordinated
Notes -- Option to Extend Interest Payment Period."
Because Consumers has the right to extend the interest payment period for
the Subordinated Notes, the Subordinated Notes will be treated as having been
issued with original issue discount ("OID") for United States federal income tax
purposes. Should Consumers exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue income (as OID) for United States federal income tax purposes
in respect of the deferred interest allocable to its Preferred Securities. As a
result, holders of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash, regardless of the
holders' regular method of accounting, and will not receive cash from the Trust
related to such income if such holder disposes of its Preferred Securities prior
to the record date for the date on which distributions of such amounts are made.
Consumers has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Subordinated Notes.
However, should Consumers determine to exercise such right in the future, the
market price of the Preferred Securities is likely to be affected. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence
6
<PAGE> 8
of Consumers' right to defer interest payments, the market price of the
Preferred Securities (which represent an undivided beneficial interest in the
Subordinated Notes) may be more volatile than other securities on which OID
accrues that are not subject to such rights. In addition, if the issue price of
the Subordinated Notes at the time of the issuance of the Preferred Securities
is less than their stated principal amount, the difference will be additional
OID, a pro rata share of which will be includible in the gross income of the
holders of the Preferred Securities over the term of the Preferred Securities.
See "Certain United States Federal Income Tax Consequences -- Original Issue
Discount, Premium and Market Discount."
SPECIAL EVENT DISTRIBUTION
In the case of a Special Event, in certain circumstances Consumers shall
have the right to redeem the Subordinated Notes, in whole or in part, in which
event the Trust will redeem the Trust Securities on a pro rata basis to the same
extent as the Subordinated Notes are redeemed. Otherwise, upon the occurrence of
a Special Event, the Trust will be terminated, with the result that the
Subordinated Notes would be distributed to the holders of the Trust Securities
in connection with the liquidation of the Trust. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution" and "Certain
United States Federal Income Tax Consequences."
There can be no assurance as to the market prices at such time for the
Preferred Securities or the Subordinated Notes that may be distributed in
exchange for Preferred Securities if a termination or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Subordinated Notes that the investor may receive on termination
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Subordinated Notes upon the
occurrence of a Special Event, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Subordinated Notes and
should carefully review all the information regarding the Subordinated Notes
contained herein. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution" and "Description of the Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Consumers Trustees (as defined herein), which voting
rights are vested exclusively in Consumers as the holder of the Common
Securities. See "Description of the Preferred Securities -- Voting Rights."
TRADING PRICE OF PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Notes. A holder who disposes of his Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest on the Subordinated Notes through the date of
disposition in income as ordinary income (i.e., OID), and to add such amount to
its adjusted tax basis in its pro rata share of the underlying Subordinated
Notes deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include, in the form of OID, all accrued
but unpaid interest), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. See "Certain United States
Federal Income Tax Consequences -- Original Issue Discount, Premium and Market
Discount" and "-- Sale of Preferred Securities."
CONSUMERS POWER COMPANY
Consumers is a public utility serving almost six million of Michigan's nine
million residents in 68 counties in Michigan's Lower Peninsula. Consumers
conducts its principal operations through two business segments: electric
operations and gas operations. The electric operations include the generation,
purchase, transmission and distribution of electricity serving 62 of the 68
counties in the Lower Peninsula of Michigan. The gas operations include the
production, purchase, storage, transmission and distribution of gas serving 45
of the
7
<PAGE> 9
68 counties in the Lower Peninsula of Michigan. Consumers' principal executive
offices are located at 212 West Michigan Avenue, Jackson, Michigan 49201,
telephone (517) 788-0550.
CONSUMERS POWER COMPANY FINANCING I
The Trust is a statutory business trust formed under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
October 30, 1995. The Trust's business is defined in a Declaration of Trust,
executed by Consumers, as sponsor (the "Sponsor"), and the Consumers Trustees.
The Declaration of Trust will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities.
Consumers will acquire all of the Common Securities in an aggregate liquidation
amount equal to not less than 3% of the total capital of the Trust. The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in the Subordinated Notes
and (iii) engaging in only those other activities necessary, appropriate,
convenient or incidental thereto. The Trust has a term of approximately 25
years, but may terminate earlier as provided in the Declaration.
The Trust's business and affairs will be conducted by the trustees (the
"Consumers Trustees") appointed by Consumers, as holder of the Common
Securities. The duties and obligations of the Consumers Trustees shall be
governed by the Declaration. Pursuant to the Declaration, the number of
Consumers Trustees will initially be five. Three of the Consumers Trustees (the
"Regular Trustees") will be persons who are employees or officers of, or
affiliated with, Consumers. The fourth trustee will be a financial institution
unaffiliated with Consumers which maintains a principal place of business in the
State of Delaware (the "Delaware Trustee"). The Bank of New York (Delaware),
will act as the Delaware Trustee until removed or replaced by the holder of the
Common Securities. The fifth trustee will serve as property trustee under the
Declaration and as indenture trustee for purposes of the Trust Indenture Act
(the "Property Trustee"). The Bank of New York will act as the Property Trustee
until removed or replaced by the holder of the Common Securities. The Bank of
New York will also act as indenture trustee under the Preferred Securities
Guarantee (the "Preferred Guarantee Trustee"). See "Description of the Preferred
Securities Guarantee."
The Property Trustee will hold title to the Subordinated Notes for the
benefit of the holders of the Trust Securities and will have the power to
exercise all rights, powers and privileges under the Indenture (as defined
herein) as the holder of the Subordinated Notes. In addition, the Property
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments made in respect of
the Subordinated Notes for the benefit of the holders of the Trust Securities.
The Property Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Preferred Guarantee Trustee will hold
the Preferred Securities Guarantee for the benefit of the holders of the
Preferred Securities. Consumers, as the holder of all the Common Securities,
will have the right to appoint, remove or replace any Consumers Trustee and to
increase the number of Consumers Trustees, provided that the number of Consumers
Trustees shall be at least five, a majority of which shall be Regular Trustees.
Consumers will pay all fees and expenses related to the Trust, the offering of
the Trust Securities and the issuance of the Subordinated Notes. See
"Description of the Subordinated Notes -- Miscellaneous."
The rights of the holders of the Preferred Securities, including rights to
information and voting rights, are as set forth in the Declaration, the Delaware
Business Trust Act, as amended (the "Trust Act"), and the Trust Indenture Act.
See "Description of the Preferred Securities."
The principal place of business of the Trust shall be c/o Consumers Power
Company, 212 West Michigan Avenue, Jackson, Michigan 49201 (telephone number
(517) 788-0550).
8
<PAGE> 10
SELECTED FINANCIAL INFORMATION OF CONSUMERS POWER COMPANY
The following information is qualified in its entirety by the information
appearing elsewhere in this Prospectus and by the information and financial
statements incorporated in this Prospectus by reference.
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ----------------------------------------------
1995 1994 1993 1992 1991 1990
------------- ------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue (in millions).......... $ 3,398 $3,356 $3,243 $2,978 $2,908 $2,968
Net Income (Loss) (in millions)(a)....... $ 245 $ 226 $ 198 $ (244) $ (235) $ (382)
Net Income (Loss) after Preferred
Dividends (in millions)................ $ 217 $ 202 $ 187 $ (255) $ (260) $ (393)
Ratios of Earnings to:
Fixed Charges.......................... 2.89 2.94 2.52 (b) (c) (d)
Fixed Charges & Preferred Dividends.... 2.31 2.40 2.31 (e) (f) (g)
</TABLE>
- -------------------------
(a) 1991 excludes an extraordinary after-tax loss of $14 million.
(b) For the year ended December 31, 1992, fixed charges exceeded earnings by
$360 million. Earnings as defined include a $520 million pre-tax loss on the
settlement of cost recovery issues relating to power purchases from the MCV
Partnership partially offset by $(15) million for potential customer refunds
and other reserves related to 1992 but recorded in 1991. The ratio of
earnings to fixed charges would have been 1.81 excluding these amounts.
(c) For the year ended December 31, 1991, fixed charges exceeded earnings by
$309 million. Earnings as defined include $398 million of pre-tax
write-downs and reserve amounts related to the abandoned Midland project and
$44 million for potential customer refunds and other reserves recorded in
1991 but related to 1992 and 1990. The ratio of earnings to fixed charges
would have been 1.40 excluding these amounts.
(d) For the year ended December 31, 1990, fixed charges exceeded earnings by
$228 million. Earnings as defined include $716 million of pre-tax
write-downs and reserve amounts related to the abandoned Midland project and
$(29) million for potential customer refunds and other reserves related to
1990 but recorded in 1991. The ratio of earnings to fixed charges would have
been 2.46 excluding these amounts.
(e) For the year ended December 31, 1992, fixed charges and preferred dividends
exceeded earnings by $377 million. Earnings as defined include a $520
million pre-tax loss on the settlement of cost recovery issues relating to
power purchases from the MCV Partnership partially offset by $(15) million
for potential customer refunds and other reserves related to 1992 but
recorded in 1991. The ratio of earnings to fixed charges and preferred
dividends would have been 1.65 excluding these amounts.
(f) For the year ended December 31, 1991, fixed charges and preferred dividends
exceeded earnings by $324 million. Earnings as defined include $398 million
of pre-tax write-downs and reserve amounts related to the abandoned Midland
project and $44 million for potential customer refunds and other reserves
recorded in 1991 but related to 1992 and 1990. The ratio of earnings to
fixed charges and preferred dividends would have been 1.34 excluding these
amounts.
(g) For the year ended December 31, 1990, fixed charges and preferred dividends
exceeded earnings by $245 million. Earnings as defined include $716 million
of pre-tax write-downs and reserve amounts related to the abandoned Midland
project and $(29) million for potential customer refunds and other reserves
related to 1990 but recorded in 1991. The ratio of earnings to fixed charges
and preferred dividends would have been 2.33 excluding these amounts.
9
<PAGE> 11
CAPITALIZATION OF CONSUMERS POWER COMPANY
The following table sets forth the unaudited consolidated capitalization of
Consumers at September 30, 1995, and as adjusted to reflect the sale of the
Preferred Securities offered hereby and the application of the estimated net
proceeds from such sale. See "Use of Proceeds." The table should be read in
conjunction with Consumers' consolidated financial statements and notes thereto
included in the documents incorporated by reference herein. See "Incorporation
of Certain Documents by Reference."
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
1995
------------------
AS
ACTUAL ADJUSTED
------ ------
IN MILLIONS
(UNAUDITED)
<S> <C> <C>
Short-term debt (includes notes payable and current portion of long-term
debt and capital leases)............................................... $ 562 $ 462
====== ======
Non-current portion of capital leases.................................... $ 101 $ 101
Long-term debt (excluding current maturities)............................ 1,921.. 1,921
Company-obligated mandatorily redeemable preferred securities of
Consumers Power Company Financing I(1)................................. -- 100
Preferred Stock with no mandatory redemption............................. 356 356
Common stockholders' equity.............................................. 1,545 1,545
------ ------
Total stockholders' equity.......................................... 1,901 1,901
------ ------
Total Capitalization..................................................... $3,923 $4,023
====== ======
</TABLE>
- -------------------------
(1) As described in this Prospectus, the sole assets of the Trust will be the
% Subordinated Deferrable Interest Notes due 2015 of Consumers with a
principal amount of approximately $103,092,800, and upon redemption of such
debt, the Preferred Securities will be mandatorily redeemable.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated with Consumers'
financial statements, with the Preferred Securities shown on Consumers'
consolidated financial statements as Company obligated mandatorily redeemable
preferred securities. Note disclosures will discuss, among other things, the
Consumers' guarantee of Consumers Power Company Financing I Preferred Securities
and that the Subordinated Notes will be the sole asset of Consumers' Power
Company Financing I.
USE OF PROCEEDS
The proceeds of the sale of the Preferred Securities will be invested by
the Trust in the Subordinated Notes of Consumers. Consumers will use the net
proceeds from the sale of such Subordinated Notes to provide a portion of the
funds required for Consumers' capital expenditures (acquiring property,
constructing, completing, extending, and improving facilities) and for general
corporate purposes. Initially, such proceeds will be used to repay a portion of
Consumers' short-term debt, which had an aggregate amount outstanding of
approximately $562 million at September 30, 1995. The short-term debt bears
interest at rates ranging from to .
10
<PAGE> 12
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the principal terms and provisions of the Preferred Securities does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement, of which this Prospectus is a part, the Trust Act and
the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Preferred Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the Common Securities, which represent
common undivided beneficial interests in the assets of the Trust. All of the
Common Securities will be owned by Consumers. The Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with the Preferred
Securities, except that upon the occurrence and during the continuation of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights to payment of the
holders of the Preferred Securities. The Declaration does not permit the
incurrence of any indebtedness by the Trust or the issuance by the Trust of any
securities other than the Trust Securities. Pursuant to the Declaration, the
Property Trustee will hold legal title to the Subordinated Notes for the Trust
and for the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Preferred Securities or liquidation of the Trust, are guaranteed by
Consumers to the extent described under "Description of the Preferred Securities
Guarantee." The Preferred Guarantee Trustee will hold the Preferred Securities
Guarantee for the benefit of the holders of the Preferred Securities. The
Preferred Securities Guarantee does not cover payment of distributions on the
Preferred Securities when the Trust does not have sufficient available funds in
the Property Account to make such distributions.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears will bear interest at such rate per annum (to the
extent permitted by applicable law). The term "distributions" as used herein
includes any such interest payable unless otherwise stated.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1996 and will be payable quarterly in arrears on March 31, June
30, September 30, and December 31 of each year to the holders of record on the
applicable record date, commencing March 31, 1996, as and if available for
payment by the Property Trustee, except as otherwise described below. The amount
of distributions payable for any full quarterly period will be computed on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarter, on the basis of the actual number of days elapsed in such a
90-day quarter.
Consumers has the right under the Indenture to defer payments of interest
on the Subordinated Notes by extending the interest payment period from time to
time on the Subordinated Notes which, if exercised, would defer quarterly
distributions on the Preferred Securities (though such distributions would
continue to accrue interest since interest would continue to accrue on the
Subordinated Notes) during any such extended interest payment period. In the
event that Consumers exercises this right, then (a) Consumers shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (b) Consumers shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by Consumers which rank pari passu with or junior
to the Subordinated Notes, and (c) Consumers shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Preferred
Securities
11
<PAGE> 13
Guarantee), provided, however, Consumers may declare and pay a stock dividend
where the dividend stock is the same stock as that on which the dividend is
being paid. Prior to the termination of any such Extension Period, Consumers may
further extend the interest payment period, provided that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
20 consecutive quarters or extend beyond the maturity of the Subordinated Notes.
Upon the termination of any Extension Period and the payment of all amounts then
due, Consumers may select a new Extension Period as if no Extension Period had
previously been declared, subject to the above requirements. See "Description of
the Subordinated Notes -- Interest" and "-- Option to Extend Interest Payment
Period." If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Preferred Securities,
if funds are available therefor, as they appear on the books and records of the
Trust on the record date next following the termination of such Extension
Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Subordinated Notes. See "Description of the
Subordinated Notes." The payment of distributions out of moneys held by the
Trust is guaranteed by Consumers to the extent set forth under "Description of
the Preferred Securities Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined herein) prior to the relevant
payment dates, which payment dates correspond to the interest payment dates on
the Subordinated Notes. Such distributions will be paid through the Property
Trustee, who will hold amounts received in respect of the Subordinated Notes in
the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "-- Book-Entry
Only Issuance -- The Depository Trust Company" below. In the event the Preferred
Securities shall not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select relevant record dates which shall be at
least one Business Day, but less than 60 Business Days, prior to the relevant
payment dates. In the event that any date on which distributions are to be made
on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than a day on which banking institutions in
Delaware or New York, New York are authorized or required by law to close.
MANDATORY REDEMPTION
The Subordinated Notes will mature on December 31, 2015 and may be
redeemed, in whole or in part, at any time on or after December 31, 2000, or at
any time in certain circumstances upon the occurrence of a Special Event. Upon
the repayment of the Subordinated Notes, whether at maturity or upon
acceleration, redemption or otherwise, the proceeds from such repayment or
payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Notes so repaid or redeemed at the Redemption Price; provided that,
except in the case of payments upon maturity, holders of Trust Securities shall
be given not less than 30 nor more than 60 days' notice of such redemption. See
"Description of the Subordinated Notes." In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities
will be redeemed pro rata as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
12
<PAGE> 14
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of this Prospectus, there is more than an insubstantial risk
that (i) the Trust would be subject to United States federal income tax with
respect to interest accrued or received on the Subordinated Notes, (ii) interest
payable to the Trust on the Subordinated Notes would not be deductible in whole
or in part by Consumers for United States federal income tax purposes or (iii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, which change or amendment becomes
effective on or after the date of this Prospectus.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act") to the effect that,
as a result of the occurrence of a change in law or regulation or a written
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the 1940 Act.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the circumstances described below, be terminated with the
result that, after satisfaction of liabilities to creditors, Subordinated Notes
with an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Trust Securities would be distributed to the holders of the Trust Securities, in
liquidation of such holders' interests in the Trust on a pro rata basis, within
90 days following the occurrence of such Special Event; provided, however, that
in the case of the occurrence of a Tax Event, as a condition of such termination
and distribution, the Regular Trustees shall have received a No Recognition
Opinion (as defined below); and, provided, further, that, if at the time there
is available to the Trust the opportunity to eliminate, within such 90-day
period, the Special Event by taking some ministerial action which has no adverse
effect on the Trust, Consumers or the holders of the Trust Securities, the Trust
will pursue such measure in lieu of dissolution.
Furthermore, (i) if a Tax Event has occurred and, (a) Consumers has
received a Redemption Tax Opinion or (b) the Regular Trustees shall have been
informed by independent tax counsel that a No Recognition Opinion cannot be
delivered, or (ii) if an Investment Company Event has occurred, then Consumers
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Subordinated Notes in whole or in part for cash within 90 days
following the occurrence of such Tax Event or Investment Company Event, as the
case may be, and, following such redemption, Trust Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Notes so redeemed shall be redeemed by the Trust at the Redemption Price on a
pro rata basis; provided, however, that, if at the time there is available to
Consumers or the Trust the opportunity to eliminate, within such 90-day period,
such Tax Event or Investment Company Event by taking some ministerial action
which has no adverse effect on the Trust, Consumers or the holders of the Trust
Securities, Consumers or the Trust will pursue such measure in lieu of
redemption.
"No Recognition Opinion" means an opinion from independent tax counsel
experienced in such matters to the effect that the holders of the Trust
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of a dissolution of the Trust and the distribution of
the Subordinated Notes. "Redemption Tax Opinion" means an opinion from
independent tax counsel experienced in such matters to the effect that, as a
result of a Tax Event, there is more than an insubstantial risk that Consumers
would be precluded from deducting the interest on the Subordinated Notes for
United States income tax purposes even after the Subordinated Notes were
distributed to the holders of the Trust Securities.
13
<PAGE> 15
If Subordinated Notes are distributed to the holders of the Preferred
Securities, Consumers will use its best efforts to have the Subordinated Notes
listed on the New York Stock Exchange or on such other exchange, on which the
Preferred Securities are then listed.
After the date for any distribution of Subordinated Notes upon termination
of the Trust, (i) the Preferred Securities and Preferred Securities Guarantee
will no longer be deemed to be outstanding, (ii) the depositary or its nominee,
as the record holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Subordinated Notes to be
delivered upon such distribution and (iii) any certificates representing
Preferred Securities and Preferred Securities Guarantee not held by the
depositary or its nominee will be deemed to represent Subordinated Notes having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, such Preferred
Securities, until such certificates are presented to Consumers or its agent for
transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Notes that may be distributed in exchange for the
Preferred Securities if a termination and liquidation of the Trust were to
occur. Accordingly, the Preferred Securities that an investor may purchase, or
the Subordinated Notes that the investor may receive on termination and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust Securities for all quarterly distribution periods terminating on or prior
to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Consumers has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Notes, the Trust will irrevocably
deposit with the depositary funds sufficient to pay the applicable Redemption
Price and will give the depositary irrevocable instructions and authority to pay
the Redemption Price to the holders of the Preferred Securities. See "--
Book-Entry Only Issuance -- The Depository Trust Company." If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid either by the Trust or
by Consumers pursuant to the Preferred Securities Guarantee, distributions on
such Preferred Securities will continue to accrue, from the original redemption
date to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company"
below.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Consumers or its affiliates
may, at any time and from time to time, purchase outstanding Preferred
Securities by tender, in the open market or by private agreement.
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LIQUIDATION DISTRIBUTION UPON TERMINATION
In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Preferred Securities at that time
will be entitled to receive out of the assets of the Trust, after satisfaction
of liabilities to creditors, distributions in an amount equal to the aggregate
of the stated liquidation amount of $25 per Preferred Security plus accrued and
unpaid distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, after satisfaction of liabilities to creditors, Subordinated Notes
in an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Preferred Securities have been distributed on a pro rata basis to the holders of
Preferred Securities in exchange for such Preferred Securities.
If, upon any such dissolution, winding-up or termination the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Preferred Securities shall be paid
on a pro rata basis. The holders of the Common Securities will be entitled to
receive distributions upon any such dissolution, winding-up or termination pro
rata with the holders of the Preferred Securities, except that if a Declaration
Event of Default has occurred and is continuing, the Preferred Securities shall
have a preference over the Common Securities.
Pursuant to the Declaration, the Trust shall terminate (i) on January ,
2021, the expiration of the term of the Trust, (ii) upon the bankruptcy of
Consumers, (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to Consumers, or the revocation of the charter of
Consumers and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) upon the distribution of the Subordinated Notes
following the occurrence of a Special Event, (v) upon the entry of a decree of a
judicial dissolution of Consumers or the Trust or (vi) upon the redemption of
all of the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
(see "Description of the Subordinated Notes -- Indenture Events of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities or its
consequences until all Declaration Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until such
Declaration Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities and only
the holders of the Preferred Securities will have the right to direct the
Property Trustee with respect to certain matters under the Declaration, and
therefore the Indenture.
Upon the occurrence of a Declaration Event of Default, the Property
Trustee, as the sole holder of the Subordinated Notes, will have the right under
the Indenture to declare the principal of, and interest on, the Subordinated
Notes to be immediately due and payable. In addition, holders of Preferred
Securities will have certain rights to institute proceedings directly against
Consumers for payment defaults under the Indenture. See "-- Voting Rights."
VOTING RIGHTS
Except as provided below, under the Trust Act, the Trust Indenture Act and
under "Description of the Preferred Securities Guarantee -- Amendments and
Assignment" and as otherwise required by law, the holders of the Preferred
Securities will have no voting rights. In the event Consumers elects to defer
payments of interest on the Subordinated Notes as described above under "--
Distributions," the holders of the Preferred Securities do not have the right to
appoint a special representative or trustee or otherwise act to protect their
interests.
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The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as the holder
of the Subordinated Notes, to (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debt Trustee (as
hereinafter defined) under the Indenture with respect to the Subordinated Notes,
(ii) waive any past Indenture Event of Default which is waivable under the Base
Indenture (as defined herein), or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Notes shall be due and
payable. In addition, a holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder directly of the principal
of or interest on Subordinated Notes having a principal amount equal to the
aggregate liquidation preference amount of the Preferred Securities of such
holder on or after the respective due dates specified in the Subordinated Notes.
With respect to the Property Trustee's rights other than its rights to receive
payment on the Subordinated Notes, if the Property Trustee fails to enforce its
other rights under the Declaration, to the fullest extent permitted by law, a
holder of Preferred Securities may institute a legal proceeding directly against
Consumers to enforce the Property Trustee's rights under the Declaration,
without first instituting any legal proceeding against the Property Trustee or
any other person or entity, including the Trust. The Property Trustee shall
notify all holders of the Preferred Securities of any notice of default received
from the Debt Trustee with respect to the Subordinated Notes; provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Subordinated Notes, the Property Trustee shall be
protected in withholding such notice if the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
holders of the Preferred Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. The Property
Trustee shall not take any action described in clauses (i), (ii) or (iii) above
unless the Property Trustee has obtained an opinion of independent tax counsel
to the effect that, as a result of such action, the Trust will not be classified
as other than a grantor trust for United States federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Notes, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall request the direction of the holders of the Trust Securities with respect
to such amendment, modification or termination. The Property Trustee shall vote
with respect to such amendment, modification or termination as directed by a
majority in liquidation amount of the Preferred Securities and, if no
Declaration Event of Default has occurred and is continuing, a majority in
liquidation amount of the Common Securities, voting together as a single class,
provided that where a consent under the Indenture would require the consent of
more than a majority of the holders in principal amount of Subordinated Notes
affected thereby (a "Super-Majority"), the Property Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Preferred Securities and Common Securities,
respectively, which the relevant Super-Majority represents of the aggregate
principal amount of the Subordinated Notes outstanding. The Property Trustee
shall not take any such action in accordance with the directions of the holders
of the Trust Securities unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or
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consents. No vote or consent of the holders of Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or distribute
Subordinated Notes in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Consumers or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Consumers shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or
remove the Consumers Trustees, who may be appointed, removed or replaced solely
by Consumers, as the direct or indirect holder of all the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees (and in certain circumstances the Property
Trustee or the Delaware Trustee), provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise or (ii) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the Trust
Securities will be entitled to vote as a single class on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby, provided that a reduction of the principal amount or the
distribution rate, or a change in the payment dates or maturity of the Preferred
Securities, shall not be permitted without the consent of each holder of
Preferred Securities. In the event any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any business trust or other business entity (as
defined in the Trust Act), except as described below. The Trust may, with the
consent of a majority of the Regular Trustees and without the consent of the
holders of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by, a trust organized as such under the laws of any State; provided,
that (i) such successor entity either (x) expressly assumes all of the
obligations of the Trust with respect to the Trust Securities or (y) substitutes
for the Trust Securities other securities having substantially the same terms as
the Trust Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Trust Securities rank in priority with respect
to distributions and payments upon liquidation, redemption, maturity and
otherwise, (ii) Consumers expressly acknowledges a trustee of such successor
entity which possesses the same powers and duties as the Property Trustee as the
holder of the Subordinated Notes, (iii) the Preferred Securities or any
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, (iv) such
merger, consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized
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statistical rating organization, (v) such merger, consolidation, amalgamation or
replacement does not adversely affect the material rights, preferences and
privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (vi) such successor entity has a
purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation or replacement, Consumers has received an opinion
from independent counsel to the Trust experienced in such matters to the effect
that (A) such merger, consolidation, amalgamation or replacement does not
adversely affect the material rights, preferences and privileges of the holders
of the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor such successor entity will be required to
register as an investment company under the 1940 Act and (C) following such
merger, consolidation, amalgamation or replacement, the Trust (or the successor
entity) will continue to be classified as a grantor trust for United States
federal income tax purposes, and (viii) Consumers guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified for United States federal income tax purposes as other
than a grantor trust.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depository for
the Preferred Securities. The Preferred Securities will be issued only as fully
registered securities registered in the name of Cede & Co. (DTC's partnership
nominee). One or more fully registered Preferred Securities certificates will be
issued, representing in the aggregate the total number of Preferred Securities,
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global Preferred
Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial
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Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Preferred Securities, except in the event that use of the
book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount of
the interest of each Direct Participant in the Preferred Securities to be
redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will consent or
vote with respect to Preferred Securities. Under its usual procedures, DTC would
mail an Omnibus Proxy to the Trust as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Preferred Securities are credited on
the record date (identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and will be the responsibility of such Participant and not of DTC, the Trust,
any trustee, the Underwriters or Consumers, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided below, a Beneficial Owner in a Preferred Security will
not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depository is not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
Consumers) may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depository) with respect to the Preferred
Securities. In that event, certificates for the Preferred Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources, including DTC, that Consumers and the Trust
believe to be reliable, but Consumers and the Trust take no responsibility for
the accuracy thereof.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of all such defaults that may have
occurred, undertakes to perform only such duties as are
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specifically set forth in the Declaration and, after default, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provisions, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby; but the foregoing shall not relieve the Property Trustee,
upon the occurrence of a Declaration Event of Default, from exercising the
rights and powers vested in it by the Declaration. The Property Trustee also
serves as trustee under the Preferred Securities Guarantee.
REGISTRAR AND TRANSFER AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers of
Preferred Securities will be effected without charge by or on behalf of the
Trust, but upon payment (with the giving of such indemnity as the Regular
Trustees may require) in respect of any tax or other government charges which
may be imposed in relation to it. The Trust will not be required to register or
cause to be registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Consumers is
authorized and directed to conduct its affairs so that the Subordinated Notes
will be treated as indebtedness of Consumers for United States federal income
tax purposes. In this connection, the Regular Trustees and Consumers are
authorized to take any action, not inconsistent with applicable law, and the
restated articles of incorporation of Consumers, that each of the Regular
Trustees and Consumers determines in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Preferred Securities.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Consumers for the
benefit of the holders from time to time of the Preferred Securities. The
Preferred Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as the Preferred Guarantee Trustee.
The terms of the Preferred Securities Guarantee will be those set forth therein
and those made part thereof by the Trust Indenture Act. The following summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Preferred Securities
Guarantee, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Trust Indenture Act. The Preferred
Securities will be held by the Preferred Guarantee Trustee for the benefit of
the holders of the Preferred Securities.
GENERAL
Pursuant to the Preferred Securities Guarantee, Consumers will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full to
the holders of the Preferred Securities the Guarantee Payments (as defined
herein) (without duplication of amounts theretofore paid by the Trust), to the
extent not paid by the Trust, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities to the extent not paid or
made by the Trust (the "Guarantee Payments") will be subject to the Preferred
Securities Guarantee (without
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duplication): (i) any accrued and unpaid distributions that are required to be
paid on the Preferred Securities, to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions to the date of the redemption, to the extent the Trust has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Trust and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Trust (other than in connection with the
distribution of Subordinated Notes to the holders of Preferred Securities in
exchange for Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of payment and (b) the amount of assets of the Trust
remaining available for distribution to holders of Preferred Securities in
liquidation of the Trust. Consumers' obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by Consumers to the
holders of Preferred Securities or by causing the Trust to pay such amounts to
such holders.
The Preferred Securities Guarantee will be a guarantee of the Guarantee
Payments with respect to the Preferred Securities from the time of issuance of
the Preferred Securities, but will not apply to the payment of distributions and
other payments on the Preferred Securities when the Property Trustee does not
have sufficient funds in the Property Account to make such distributions or
other payments. If Consumers does not make interest payments on the Subordinated
Notes held by the Property Trustee, the Trust will not make distributions on the
Preferred Securities issued by the Trust and will not have funds available
therefor. See "Description of the Subordinated Notes -- Certain Covenants."
Consumers will also agree separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Preferred
Securities Guarantee, except that upon the occurrence and during the
continuation of an Indenture Event of Default, holders of Preferred Securities
shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF CONSUMERS
In the Preferred Securities Guarantee, Consumers will covenant that, so
long as the Preferred Securities remain outstanding, if there shall have
occurred and is continuing any event that would constitute an event of default
under the Preferred Securities Guarantee or the Declaration, then (a) Consumers
shall not declare or pay any dividend on, or make any distribution with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock, and (b) Consumers shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by Consumers which rank pari passu
with or junior to the Subordinated Notes or (c) Consumers shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Preferred Securities Guarantee); provided, however, Consumers may declare and
pay a stock dividend where the dividend stock is the same stock as that on which
the dividend is being paid.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Preferred Securities Guarantee may be amended only with the prior approval of
the holders of not less than a majority in liquidation amount of the outstanding
Preferred Securities. The manner of obtaining any such approval of holders of
the Preferred Securities is set forth under "Description of the Preferred
Securities -- Voting Rights." All guarantees and agreements contained in the
Preferred Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Consumers and shall inure to the benefit of the
Preferred Guarantee Trustee and the holders of the Preferred Securities then
outstanding.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities upon full payment of the
Redemption Price of all Preferred Securities, or upon distribution of the
Subordinated Notes to the holders of the Preferred Securities, and will
terminate completely upon full payment of the amounts payable upon liquidation
of the Trust. See "Description of the
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Subordinated Notes -- Indenture Events of Default" for a description of the
events of default and enforcement rights of the holders of Subordinated Notes.
The Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities must repay to the Trust or Consumers, or their successors, any sums
paid to them under such Preferred Securities or the Preferred Securities
Guarantee.
EVENTS OF DEFAULT
An event of default under the Preferred Securities Guarantee will occur
upon the failure of Consumers to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Preferred Guarantee Trustee in respect of the
Preferred Securities Guarantee or to direct the exercise of any trust or power
conferred upon the Preferred Guarantee Trustee under the Preferred Securities
Guarantee. In addition, any holder of Preferred Securities may institute a legal
proceeding directly against Consumers to enforce its rights under the Preferred
Securities Guarantee, without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other person or entity.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
Consumers' obligations under the Preferred Securities Guarantee to make the
Guarantee Payments will constitute an unsecured obligation of Consumers and will
rank (i) subordinate and junior in right of payment to all other liabilities of
Consumers, including the Subordinated Notes, except those liabilities of
Consumers made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred stock now or hereafter issued by Consumers and with
any guarantee now or hereafter entered into by Consumers in respect of any
preferred stock of any affiliate of Consumers, and (iii) senior to Consumers'
common stock. The terms of the Preferred Securities provide that each holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity). The Preferred Securities Guarantee will be deposited with the Preferred
Guarantee Trustee to be held for the benefit of the holders of the Preferred
Securities. Except as otherwise noted herein, the Preferred Guarantee Trustee
has the right to enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. The Preferred Securities Guarantee will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to the Preferred Securities Guarantee and after the curing of all such
defaults that may have occurred, undertakes to perform only such duties as are
specifically set forth in the Preferred Securities Guarantee and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Preferred
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Preferred Securities Guarantee at the request of any holder of
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the foregoing
shall not relieve the Preferred Guarantee Trustee, upon the occurrence of an
event of default under the Preferred Securities Guarantee, from exercising the
rights and powers vested in it by the Preferred Securities Guarantee. The
Preferred Guarantee Trustee also serves as Property Trustee.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of Michigan.
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DESCRIPTION OF THE SUBORDINATED NOTES
Set forth below is a description of the terms of the Subordinated Notes.
The following description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Indenture (the "Base
Indenture"), dated as of January , 1996, between Consumers and Bank of New
York as Trustee (the "Debt Trustee"), as supplemented by a First Supplemental
Indenture, dated as of January , 1996 (the Base Indenture, as so supplemented,
is hereinafter referred to as the "Indenture"), the forms of which are filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The terms of the Subordinated Notes will include those stated in the Indenture
and those made a part of the Indenture by reference to the Trust Indenture Act.
Certain capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the termination of the Trust
following the occurrence of a Special Event, Subordinated Notes may be
distributed to the holders of Trust Securities in liquidation of the Trust. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
If the Subordinated Notes are distributed to the holders of the Trust
Securities, Consumers will use its best efforts to have the Subordinated Notes
listed on the New York Stock Exchange or on such other exchange on which the
Preferred Securities are then listed.
GENERAL
The Subordinated Notes will be issued as a series of unsecured subordinated
debt securities under the Indenture. The Subordinated Notes will be limited in
aggregate principal amount to approximately $103.1 million, such amount being
the sum of the aggregate stated liquidation amount of the Preferred Securities
and the capital contributed by Consumers in exchange for the Common Securities
(the "Payment").
The Subordinated Notes are not entitled to the benefit of any sinking fund.
Unless redeemed earlier, the entire principal amount of the Subordinated Notes
will mature and become due and payable, together with any accrued and unpaid
interest thereon, including Additional Interest (as defined herein), if any, on
December 31, 2015.
If Subordinated Notes are distributed to holders of the Preferred
Securities in liquidation of such holders' interests in the Trust, it is
anticipated that such distribution would occur in book-entry form and that DTC,
or any successor depository for the Preferred Securities, would act as
depository for the Subordinated Notes and that the depository arrangements for
the Subordinated Notes would be substantially identical to those in effect for
the Preferred Securities. For a description of DTC and the terms of the
depository arrangements relating to payments, transfers, voting rights,
redemption and other notices and other matters, see "Description of the
Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company."
Except under certain limited circumstances as described under "Description
of the Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company" for delivery of certificates evidencing beneficial ownership in
Preferred Securities, the Subordinated Notes would not be issuable as, or
exchangeable for, Subordinated Notes in definitive certificated form. In the
event Subordinated Notes are issued in certificated form, such Subordinated
Notes will be in denominations of $25 and integral multiples thereof, and
principal and interest will be payable, the transfer of the Subordinated Notes
will be registrable and Subordinated Notes will be exchangeable for Subordinated
Notes of authorized denominations of a like aggregate principal amount as
described under "Exchange and Transfer" and "Payment" below.
SUBORDINATION
The Indenture provides (and each holder of Subordinated Notes by acceptance
thereof agrees) that the Subordinated Notes will be subordinated and junior in
right of payment to the prior payment in full of all Senior Indebtedness of
Consumers. No payment on account of principal of, premium, if any, or interest
on the Subordinated Notes and no acquisition of, or payment on account of any
sinking fund for, the Subordinated Notes may be made unless full payment of
amounts then due for principal, premium, if any, and interest then due on all
Senior Indebtedness by reason of the maturity thereof (by lapse of time,
acceleration or otherwise) has been made or duly provided for in cash in a
manner satisfactory to the holders of such Senior
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Indebtedness. In addition, the Indenture provides that upon the happening and
during the continuation of any default in payment of the principal of, premium,
if any, 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 Consumers with
respect to the principal of, premium, if any, or interest on Subordinated Notes
or to acquire any Subordinated Notes or on account of any sinking fund provision
applicable to Subordinated Notes. Consumers shall give prompt written notice to
the Debt Trustee of any default under any Senior Indebtedness or under any
agreement pursuant to which Senior Indebtedness may have been issued. The
Indenture provisions described in this paragraph, however, do not prevent
Consumers from making a sinking fund payment with Subordinated Notes acquired
prior to the maturity of Senior Indebtedness. Upon any distribution of its
assets in connection with any dissolution, winding-up, liquidation or
reorganization of Consumers, whether voluntary, or involuntary, in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise, all Senior Indebtedness must be paid in full before the
holders of the Subordinated Notes are entitled to any payments whatsoever. Any
payment or distribution, whether in cash, securities or other property, which
would otherwise (but for the subordination provisions) be payable or deliverable
in respect of the Subordinated Notes shall be paid or delivered directly to the
holders of such Senior Indebtedness (or their representative or trustee) in
accordance with the priorities then existing among such holders until all Senior
Indebtedness shall have been paid in full before any payment or distribution is
made to the holders of Subordinated Notes. In the event that notwithstanding
such subordination provisions any payment or distribution of assets of any kind
or character is made on the Subordinated Notes before all Senior Indebtedness is
paid in full, the Debt Trustee or the holders of Subordinated Notes receiving
such payment will be required to pay over such payment or distribution to the
holders of such Senior Indebtedness. The rights of the holders of the
Subordinated Notes will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Subordinated Notes are paid in full.
As a result of these subordination provisions, in the event of Consumers'
insolvency, holders of the Subordinated Notes may recover ratably less than
senior creditors of Consumers.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Indenture or thereafter incurred, created or assumed: (i) indebtedness of
Consumers for money borrowed by Consumers (including purchase money obligations)
or evidenced by debentures (other than the Subordinated Notes), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
Consumers; (ii) all capital lease obligations of Consumers; (iii) all
obligations of Consumers issued or assumed as the deferred purchase price of
property, all conditional sale obligations of Consumers and all obligations of
Consumers 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 Consumers or in effect guaranteed by Consumers; or; (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 Consumers (whether or
not such obligation is assumed by Consumers), 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
guarantees in respect of those debt securities, issued to any other trusts,
partnerships or other entities affiliated with Consumers which act as a
financing vehicle of Consumers 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
Consumers and its affiliates and (vii) renewals, extensions or refunding 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 Notes.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued. As of September 30, 1995, Senior Indebtedness of Consumers
aggregated approximately $2,610 million.
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CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an
Indenture Event of Default or (ii) Consumers shall be in default with respect to
its payment of any obligations under the Preferred Securities Guarantee or the
Common Securities Guarantee, then (a) Consumers shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of its capital stock, (b) Consumers
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
Consumers which rank pari passu with or junior to the Subordinated Notes and (c)
Consumers shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Preferred Securities Guarantee).
If Consumers shall have given notice of its election of an Extension Period
as provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) Consumers shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (b) Consumers shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities (including guarantees) issued by Consumers which
rank pari passu with or junior to the Subordinated Notes and (c) Consumers shall
not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee) provided, however, Consumers may
declare and pay a stock dividend where the dividend stock is the same stock as
that on which the dividend is being paid. Any Extension Period with respect to
payment of interest on the Subordinated Notes will also apply to distributions
with respect to the Preferred Securities.
For so long as the Trust Securities remain outstanding, Consumers will
covenant (i) to maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of
Consumers under the Indenture may succeed to Consumers' ownership of such Common
Securities, (ii) not to cause, as sponsor of the Trust, or to permit, as holder
of the Common Securities, the dissolution, winding-up or termination of the
Trust, except in connection with a distribution of the Subordinated Notes as
provided in the Declaration and in connection with certain mergers,
consolidations or amalgamations and (iii) to use its reasonable efforts to cause
the Trust (a) to remain a statutory business trust, except in connection with
the distribution of Subordinated Notes to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities of the
Trust, or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration, and (b) to otherwise continue to be classified as a grantor
trust for United States federal income tax purposes.
OPTIONAL REDEMPTION
Consumers shall have the right to redeem the Subordinated Notes, in whole
or in part, from time to time, on or after December 31, 2000, or at any time in
certain circumstances upon the occurrence of a Special Event as described under
"Description of the Preferred Securities -- Special Event Redemption or
Distribution," upon not less than 30 nor more than 60 days' notice, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. If a partial redemption of the Preferred Securities resulting
from a partial redemption of the Subordinated Notes would result in the
delisting of the Preferred Securities, Consumers may only redeem the
Subordinated Notes in whole.
INTEREST
Each Subordinated Note shall bear interest at the rate of % per annum
from the original issue date, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing March 31, 1996, to the person in whose name such Subordinated Note is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. In the event the
Subordinated Notes shall not continue to remain in book-entry only form the
relevant record date shall be the fifteenth day of the month in which the
applicable Interest Payment Date occurs.
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The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis of
the actual number of days elapsed in such 90-day quarter. In the event that any
date on which interest is payable on the Subordinated Notes is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Consumers shall have the right at any time, and from time to time, during
the term of the Subordinated Notes to defer payments of interest by extending
the interest payment period for a period not exceeding 20 consecutive quarters,
at the end of which Extension Period, Consumers shall pay all interest then
accrued and unpaid (including any Additional Interest, together with interest
thereon at the rate specified for the Subordinated Notes to the extent permitted
by applicable law); provided, that, during any such Extension Period, (a)
Consumers shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock, (b) Consumers shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by Consumers which rank pari passu with
or junior to the Subordinated Notes and (c) Consumers shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Preferred Securities Guarantee), provided, however, Consumers may declare and
pay a stock dividend where the dividend stock is the same stock as that on which
the dividend is being paid. Prior to the termination of any such Extension
Period, Consumers may further defer payments of interest by extending the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity of the Subordinated Notes. Upon the
termination of any Extension Period and the payment of all amounts then due,
Consumers may select a new Extension Period, as if no Extension Period had
previously been declared, subject to the above requirements. No interest during
an Extension Period shall be due and payable, except at the end thereof.
Consumers has no present intention of exercising its rights to defer payments of
interest by extending the interest payment period on the Subordinated Notes. If
the Property Trustee shall be the sole registered holder of the Subordinated
Notes, Consumers shall give the Regular Trustees and the Property Trustee notice
of its election of such Extension Period one Business Day prior to the earlier
of (i) the next succeeding date on which distributions on the Preferred
Securities are payable or (ii) the date the Trust is required to give notice to
the New York Stock Exchange or other applicable self-regulatory organization or
to holders of the Preferred Securities of the record date or the date such
distribution is payable, but in any event not less than one Business Day prior
to such record date. The Regular Trustees shall give notice of Consumers'
selection of such Extension Period to the holders of the Preferred Securities.
If the Property Trustee shall not be the sole holder of the Subordinated Notes,
Consumers shall give the holders of the Subordinated Notes notice of its
selection of such Extension Period ten Business Days prior to the earlier of (i)
the Interest Payment Date or (ii) the date Consumers is required to give notice
to the New York Stock Exchange or other applicable self-regulatory organization
or to holders of the Subordinated Notes of the record or payment date of such
related interest payment, but in any event at least two Business Days before
such record date.
ADDITIONAL INTEREST
If at any time the Trust or the Property Trustee shall be required to pay
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, Consumers will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that the
net amounts received and retained by the Trust and the Property Trustee after
paying any such taxes, duties, assessments or other governmental charges will be
equal to the amounts the Trust and the Property Trustee would have received had
no such taxes, duties, assessments or other governmental charges been imposed.
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INDENTURE EVENTS OF DEFAULT
The occurrence of any of the following events will constitute an "Indenture
Event of Default" with respect to the Subordinated Notes: (a) default for 30
days in the payment of any interest on any of the Subordinated Notes (including
any Additional Interest) provided, however, that a valid extension of the
interest payment period as described above shall not constitute a default in the
payment of interest for this purpose; (b) default in the payment when due of any
of the principal of or the premium, if any, on any of the Subordinated Notes,
whether at maturity, upon redemption, acceleration or otherwise; (c) default in
the deposit or payment of any sinking fund or analogous payment in respect of
any Subordinated Notes; (d) default for 60 days by Consumers in the observance
or performance of any other covenant or agreement contained in the Subordinated
Notes or the Indenture after written notice thereof as provided in the
Indenture; (e) certain events of bankruptcy, insolvency or reorganization
relating to Consumers; (f) the voluntary or involuntary dissolution, winding-up
or termination of the Trust, except in connection with the distribution of
Subordinated Notes to the holders of Preferred Securities in liquidation of the
Trust, the redemption of all outstanding Trust Securities of the Trust and
certain mergers, consolidations or amalgamations permitted by the Declaration.
If an Indenture Event of Default on Subordinated Notes shall have occurred
and be continuing, either the Debt Trustee or the holders of not less than 25%
in aggregate principal amount of the Subordinated Notes then outstanding may
declare the principal of all Subordinated Notes and the interest, if any,
accrued thereon to be due and payable immediately. Accordingly, the Property
Trustee, as the holder of the Subordinated Notes, will have the right to declare
the principal of and the interest on the Subordinated Notes (including any
Additional Interest, if any) and any other amounts payable under the Indenture
to be forthwith due and payable and to enforce its other rights as a creditor
with respect to the Subordinated Notes.
Upon certain conditions, any such declarations may be rescinded and
annulled if all Indenture Events of Default, other than the nonpayment of
accelerated principal, with respect to the Subordinated Notes of all such and
Securities of other affected series then outstanding under the Indenture shall
have been cured or waived as provided in the Indenture by the holders of a
majority in aggregate principal amount of the Subordinated Notes and Securities
of other affected series then outstanding under the Indenture.
The Indenture provides that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of the holders of the Subordinated Notes, unless such holders shall
have offered to the Debt Trustee reasonable indemnity. Subject to such
provisions for indemnity and certain other limitations contained in the
Indenture, the holders of a majority in aggregate principal amount of the
Subordinated Notes of each affected series then outstanding (voting as one
class) will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debt Trustee, or exercising any
trust or power conferred on the Debt Trustee, with respect to the Subordinated
Notes of such affected series.
The Indenture provides that no holder of Subordinated Notes may institute
any action against Consumers under the Indenture (except actions for payment of
overdue principal, premium or interest) unless such holder previously shall have
given to the Debt Trustee written notice of default and continuance thereof and
unless the holders of not less than 25% in aggregate principal amount of the
Subordinated Notes and Securities of other affected series then outstanding
under the Indenture (voting as one class) shall have requested the Debt Trustee
to institute such action and shall have offered the Debt Trustee reasonable
indemnity, the Debt Trustee shall not have instituted such action within 60 days
of such request and the Debt Trustee shall not have received direction
inconsistent with such request by the holders of a majority in aggregate
principal amount of the Subordinated Notes and Securities of other affected
series then outstanding under the Indenture (voting as one class).
The Indenture requires Consumers to furnish to the Debt Trustee annually a
statement as to Consumers' compliance with all conditions and covenants under
the Indenture. The Indenture provides that the Debt Trustee may withhold notice
to the holders of the Subordinated Notes of any series of any default affecting
such series (except defaults as to payment of principal, premium or interest on
the Subordinated Notes of
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such series) if it considers such withholding to be in the interests of the
holders of the Subordinated Notes of such series.
EXCHANGE AND TRANSFER
If the book-entry only system is not in effect, Subordinated Notes may be
presented for exchange and registered Subordinated Notes may be presented for
registration of transfer at the office or agency of the Debt Trustee subject to
the restrictions set forth therein, without service charge, but upon payment of
any taxes or other governmental charges due in connection therewith, subject to
any applicable limitations contained in the Indenture.
PAYMENT
If the book-entry only system is not in effect, payment of the principal of
and the premium and interest, if any, on all Subordinated Notes will be made at
the office or agency of the Debt Trustee in the Borough of Manhattan, the City
of New York except that, at the option of Consumers, payment of any interest may
be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (ii) by wire transfer to
an account maintained by the Person entitled thereto as specified in the
Security Register. Payment of any interest due on Subordinated Notes in
registered form will be made to the Persons in whose name such Subordinated
Notes are registered at the close of business on the record date for such
interest payments.
MODIFICATION OF THE INDENTURE
The Indenture permits Consumers and the Debt Trustee to enter into
supplemental indentures thereto without the consent of the holders of the
Subordinated Notes to: (a) secure the Subordinated Notes, (b) evidence the
assumption by a successor corporation of the obligations of Consumers under the
Indenture and the Subordinated Notes then outstanding, (c) add covenants for the
protection of the holders of the Subordinated Notes, (d) cure any ambiguity or
correct any inconsistency in the Indenture, (e) establish the form and terms of
any series of securities under the Indenture and (f) evidence the acceptance of
appointment by a successor Debt Trustee.
The Indenture also permits Consumers and the Debt Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
Subordinated Notes and other Indenture securities of all series then outstanding
and affected (voting as one class), to add any provisions to, or change in any
manner or eliminate any of the provisions of, the Indenture or modify in any
manner the rights of the holders of the Subordinated Notes and other Indenture
securities; provided, however, that Consumers and the Debt Trustee may not,
without the consent of the holder of each such security then outstanding and
affected thereby: (a) change the time of payment of the principal (or any
installment) of any such security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or or impair
the right to institute suit for the enforcement of any payment on any
Subordinated Note when due or (b) reduce the percentage in principal amount of
the Indenture securities, the consent of whose holders is required for any such
modification or for any waiver provided for in the Indenture.
Prior to the acceleration of the maturity of any Subordinated Note or other
securities outstanding under the Indenture, the holders of a majority in
aggregate principal amount of Subordinated Notes and other securities
outstanding under the Indenture with respect to which a default or an Event of
Default shall have occurred and be continuing (voting as one class) may on
behalf of the holders of all such affected securities (including the
Subordinated Notes) waive any past default or Event of Default and its
consequences, except a default or an Event of Default in respect of a covenant
or provision of the Indenture or of any Subordinated Note or other Indenture
security which cannot be modified or amended without the consent of the holder
of each Subordinated Note or other Indenture security affected.
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CONSOLIDATION, MERGER OR SALE OF ASSETS
The Indenture provides that Consumers may consolidate with or merge into,
or sell, lease or convey its property as an entirety or substantially as an
entirety to, any other corporation if such corporation assumes the obligations
of Consumers under the Subordinated Notes and the Indenture and is organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia.
DEFEASANCE AND DISCHARGE
The Indenture provides that, at the option of Consumers: Consumers will be
discharged from any and all obligations in respect of the Subordinated Notes
(except for certain obligations to register the transfer of or exchange the
Subordinated Notes of such series, to replace stolen, lost or mutilated
Subordinated Notes, to maintain paying agencies and to maintain the trust
described below), if Consumers irrevocably deposits in trust with the Debt
Trustee money, and/or securities backed by the full faith and credit of the
United States which, through the payment of the principal thereof and the
interest thereon in accordance with their terms, will provide money in an amount
sufficient to pay all the principal of and premium, if any, and interest on the
Subordinated Notes of such series on the stated maturity of such Subordinated
Notes (which may include one or more redemption dates designated by Consumers)
in accordance with the terms thereof. If such deposit occurs more than one year
prior to the stated maturity or redemption date of such Subordinated Notes,
Consumers is required, among other things, to deliver to the Debt Trustee an
opinion of independent counsel to the effect that the exercise of such option
would not cause the holders of the Subordinated Notes to recognize income, gain
or loss for United States federal income tax purposes as a result of such
defeasance, and such holders will be subject to United States federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred.
Consumers may also obtain a discharge of the Indenture with respect to all
securities then outstanding under the Indenture including Subordinated Notes
(except for certain obligations to register the transfer of or exchange such
Subordinated Notes to replace stolen, lost or mutilated Subordinated Notes, to
maintain paying agencies and to maintain the trust described below) by
irrevocably depositing in trust with the Debt Trustee money, and/or securities
backed by the full faith and credit of the United States which, through the
payment of the principal thereof and the interest thereon in accordance with
their terms, will provide money in an amount sufficient to pay all the principal
of and premium, if any, and interest on the Subordinated Notes on the stated
maturities thereof (including one or more redemption dates), provided that such
Subordinated Notes are by their terms due and payable, or are to be called for
redemption, within one year.
GOVERNING LAW
The Indenture and Subordinated Notes will be governed by, and construed in
accordance with, the laws of the State of Michigan; provided, however, that the
rights, duties and obligations of the Trustee are governed and constructed in
accordance with the laws of the State of New York.
MISCELLANEOUS
The Indenture will provide that Consumers will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Subordinated Notes,
(ii) the organization, maintenance and dissolution of the Trust, (iii) the
retention of the Consumers Trustees and (iv) the enforcement by the Property
Trustee of the rights of holders of Preferred Securities.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED NOTES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purposes of the Trust are to (i)
issue Trust Securities, (ii) invest the proceeds thereof in the Subordinated
Notes and (iii) engage in only those other activities necessary or incidental
thereto.
29
<PAGE> 31
As long as payments of interest and other payments are made when due on the
Subordinated Notes, such payments will be sufficient to cover distributions and
payments due on the Trust Securities primarily because (i) the aggregate
principal amount of Subordinated Notes will be equal to the sum of the aggregate
stated liquidation amount of the Trust Securities; (ii) the interest rate and
interest and other payment dates on the Subordinated Notes will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) Consumers shall pay for all costs and expenses of the Trust;
and (iv) the Declaration provides that the Consumers Trustees shall not cause or
permit the Trust to, among other things, engage in any activity that is not
consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by Consumers as and to the extent set forth under
"Description of the Preferred Securities Guarantee". If Consumers does not make
interest payments on the Subordinated Notes purchased by the Trust, it is
expected that the Trust will not have sufficient funds to pay distributions on
the Preferred Securities. The Preferred Securities Guarantee does not apply to
any payment of distributions unless and until the Trust has sufficient funds for
the payment of such distributions.
If Consumers fails to make interest or other payments on the Subordinated
Notes when due (taking into account any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Voting
Rights," may direct the Property Trustee to enforce its rights under the
Subordinated Notes. In addition, a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder directly of the
principal of or interest on Subordinated Notes having a principal amount equal
to the aggregate liquidation preference amount of the Preferred Securities of
such holder on or after the respective due dates specified in the Subordinated
Notes. If the Property Trustee fails to enforce its other rights under the
Subordinated Notes, to the fullest extent permitted by law, a holder of
Preferred Securities may institute a legal proceeding directly against Consumers
to enforce the Property Trustee's rights under the Subordinated Notes without
first instituting any legal proceeding against the Property Trustee or any other
person or entity, including the Trust.
If Consumers fails to make payments under the Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Preferred Guarantee Trustee
to enforce its rights thereunder. In addition, any holder of Preferred
Securities may institute a legal proceeding directly against Consumers to
enforce the Preferred Guarantee Trustee's rights under the Preferred Securities
Guarantee, without first instituting a legal proceeding against the Trust, the
Preferred Guarantee Trustee or any other person or entity.
The obligations of Consumers with respect to the Preferred Securities under
the Subordinated Notes, the Indenture, the Preferred Securities Guarantee and
the Declaration (including its obligation to pay the expenses of the Trust),
taken together, constitute a full and unconditional guarantee by Consumers of
payments due on the Preferred Securities. See "Description of the Preferred
Securities Guarantees -- General."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary of certain of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities to a holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized under
the laws of the United States or any state thereof or the District of Columbia
or an estate or trust the income of which is subject to United States federal
income taxation regardless of its source (a "Holder") represents the opinion of
Reid & Priest LLP, special tax counsel to Consumers and the Trust. Investors
should be aware that the opinion of Reid & Priest LLP does not address any other
issue and is not binding on the Internal Revenue Service (the "Service") or the
courts. This summary does not address the United States federal income tax
consequences to persons other than Holders.
30
<PAGE> 32
This summary is based on the United States federal income tax laws,
regulations and rulings and decisions now in effect, all of which are subject to
change, possibly on a retroactive basis. This summary does not address the tax
consequences applicable to investors that may be subject to special tax rules
such as banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a Holder. Further, it
does not include any description of any alternative minimum tax consequences or
the tax laws of any state or local government or of any foreign government that
may be applicable to a Holder.
CLASSIFICATION OF THE SUBORDINATED NOTES
In connection with the issuance of the Subordinated Notes, Reid & Priest
LLP, special tax counsel to Consumers and the Trust, will render its opinion
generally to the effect that, although not entirely free from doubt, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Subordinated Notes held by the Trust will be classified for
United States federal income tax purposes as indebtedness of Consumers. On
December 7, 1995, the U.S. Department of Treasury announced a Balanced Budget
Proposal which contained an amendment which would classify a debt instrument
issued on or after December 7, 1995 as equity if the instrument had a term
exceeding 20 years and was not classified as indebtedness on the issuer's
balance sheet. Because the Subordinated Notes issued by Consumers will have a
maximum term not exceeding 20 years, the provisions of the proposed amendment
are not applicable to the Subordinated Notes. Consumers cannot predict whether
this proposed amendment may be modified or other legislation may be enacted
which might affect the character of the Subordinated Notes or otherwise affect
the Preferred Securities offered hereby.
CLASSIFICATION OF CONSUMERS POWER COMPANY FINANCING I
Reid & Priest LLP, special tax counsel to Consumers and to the Trust, is of
the opinion that, under current law and assuming full compliance with the terms
of the Indenture and the Declaration (and certain other documents), the Trust
will be classified as a "grantor trust" for federal income tax purposes and will
not be classified as an association taxable as a corporation. Each Holder will
be treated as owning an undivided beneficial interest in the Subordinated Notes.
Accordingly, each Holder will be required to include in its gross income the OID
accrued with respect to its allocable share of Subordinated Notes.
ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
Because of the option that Consumers has, under the terms of the
Subordinated Notes, to defer payments of interest by extending interest payment
periods for up to not more than 20 consecutive quarters, the Subordinated Notes
will be treated as issued with OID in an amount equal to all of the stated
interest payments on the Subordinated Notes. Holders must include the OID
attributable to the Subordinated Notes in income on an economic accrual basis
before the receipt of cash attributable to the interest, regardless of their
method of tax accounting. The amount of OID that accrues in any month will
approximately equal the amount of the interest that accrues in that month at the
stated interest rate. In the event that the interest payment period is extended,
Holders will continue to accrue OID approximately equal to the amount of the
interest payment due at the end of the extended interest payment period on an
economic accrual basis over the length of the extended interest period.
Corporate Holders will not be entitled to a dividends-received deduction with
respect to any income earned with respect to the Preferred Securities.
In addition, the amount of OID will be increased or decreased if the issue
price of the Subordinated Notes (offering price of the Preferred Securities at
the time of the issuance) is less than or greater than their stated principal
amount. It is anticipated that the issue price of the Subordinated Notes will
equal or exceed their stated principal amount. In the event that the issue price
of the Subordinated Notes is less than their
31
<PAGE> 33
stated principal amount, however, the Treasury Regulations may be read to
require a recalculation of the amount of OID for each period that Consumers does
not exercise its right to extend the interest payment period. This recalculation
could result in minor adjustments to the amount of OID taxable to the Holders
for such period. To the extent a subsequent Holder acquires its Preferred
Securities at a price that is greater or less than the adjusted issue price of
such Holder's share of Subordinated Notes (the offering price of the Preferred
Securities, adjusted for the accrual of OID and interest payments), the Holder
will be deemed to have acquired its interest in the Preferred Securities with
acquisition premium or with market discount, as the case may be. A subsequent
Holder acquiring Preferred Securities at a premium will be permitted to reduce
the amount of OID required to be included in income to reflect the acquisition
premium. A subsequent Holder acquiring Preferred Securities at a market discount
will also include the amount of such discount in income in accordance with the
market discount rules described below.
A subsequent Holder acquiring Preferred Securities at a market discount
generally will be required to recognize ordinary income to the extent of accrued
market discount upon the retirement of the underlying Subordinated Notes or, to
the extent of any gain, upon the disposition of the Preferred Securities. Such
market discount would accrue ratably, or, at the election of the Holder, under a
constant yield method over the remaining term of the Subordinated Notes. A
Holder will also be required to defer the deduction of a portion of the interest
paid or accrued on indebtedness incurred to purchase or carry Preferred
Securities acquired with market discount. In lieu of the foregoing, a Holder may
elect to include market discount in income currently as it accrues on all market
discount instruments acquired by such Holder in the taxable year of the election
or thereafter, in which case the interest deferral rule will not apply. A Holder
may elect, in lieu of applying the market discount or premium rules described
above, to account for all income under the Preferred Securities as if it were
OID.
RECEIPT OF SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution,"
Subordinated Notes may be distributed to Holders in exchange for the Preferred
Securities and in liquidation of the Trust. Such a distribution would be treated
as a non-taxable event to each Holder and each Holder would receive an aggregate
tax basis in the Subordinated Notes equal to such Holder's aggregate tax basis
in the Preferred Securities. A Holder's holding period in the Subordinated Notes
so received in liquidation of the Trust would include the period for which the
Preferred Securities were held by such Holder.
RECEIPT OF CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution," the
Subordinated Notes may be redeemed for cash and the proceeds of such redemption
distributed to Holders in redemption of the Preferred Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the Preferred Securities, and a Holder would
recognize gain or loss as if such Holder had sold such redeemed Preferred
Securities. See "Sale of Preferred Securities."
SALE OF PREFERRED SECURITIES
A Holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale. A Holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price increased by original
issue discount previously includible in such Holder's gross income to the date
of disposition (and the accrual of market discount, if any) and decreased by any
amortized premium, if any, or cash payments received on the Preferred
Securities. Subject to the market discount rules described above, any such gain
or loss generally will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale the Preferred Securities have been held for
more than one year.
32
<PAGE> 34
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Notes. A Holder disposing of its Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest through the date of disposition in income as
ordinary income (i.e. OID), and to add such amount to its adjusted tax basis in
its Preferred Securities. To the extent the selling price is less than the
Holder's adjusted tax basis (which will include, in the form of OID, all accrued
but unpaid interest), a Holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to Holders on Form 1099, which forms should be
mailed to Holders of Preferred Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede & Co., as Holder of
record of the Preferred Securities, the OID with respect to the Preferred
Securities that accrued during that year. The Trust currently intends to report
such information on Form 1099 prior to January 31 following each calendar year
even though the Trust is not legally required to report to record Holders until
April 15 following each calendar year. The Underwriters have indicated to the
Trust that, to the extent that they hold Preferred Securities as nominees for
beneficial Holders, they currently expect to report the OID that accrued during
the calendar year on such Preferred Securities to such beneficial Holders on
Forms 1099 by January 31 following each calendar year. Under current law,
Holders of Preferred Securities who hold as nominees for beneficial Holders will
not have any obligation to report information regarding the beneficial Holders
to the Trust. The Trust, moreover, will not have any obligation to report to
beneficial Holders who are not also record holders. Thus, beneficial Holders of
Preferred Securities who hold their Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their Preferred
Securities from such nominee Holders rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the Holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the Holder's federal income tax, provided that required
information is provided to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as
representative (the "Representative"), has severally agreed to purchase the
number of Preferred Securities set forth opposite its name below. In the
Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Preferred
Securities offered hereby if any of the Preferred Securities are purchased. The
Underwriters are committed to take and pay for all of the Preferred Securities
if any such Preferred Securities are taken, provided that, under certain
circumstances relating to a default of one or more Underwriters, less than all
of such Preferred Securities may be purchased.
33
<PAGE> 35
Default by one or more Underwriters would not relieve the non-defaulting
Underwriters from their several obligations, and in the event of such default,
Consumers would have the right to require the non-defaulting Underwriters to
purchase the respective number of Preferred Securities which they have severally
agreed to purchase and, in addition, to purchase Preferred Securities which the
defaulting Underwriter or Underwriters shall have so failed to purchase up to a
number thereof equal to one-ninth of the respective numbers of Preferred
Securities which such non-defaulting Underwriters have otherwise agreed to
purchase.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
-------------------------------------------------------------- --------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.....................................
Dean Witter Reynolds Inc. ....................................
A.G. Edwards & Sons, Inc. ....................................
First of Michigan Corporation.................................
Roney & Co....................................................
------
Total.............................................
======
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus, and in part to certain securities dealers at such price
less a concession of $ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representative.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Notes of Consumers, the
Underwriting Agreement provides that Consumers will agree to pay as compensation
("Underwriters' Compensation") to the Underwriters for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $ per Preferred Security (or $ in
the aggregate) for the accounts of the several Underwriters, provided that such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $ per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters' Compensation will be less than
the aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the pricing of the Preferred
Securities, neither the Trust nor Consumers will, without the prior written
consent of the Representative, directly or indirectly, sell, offer to sell,
contract to sell, grant any option for the sale of, or otherwise dispose of, any
Preferred Securities, any security convertible into or exchangeable into or
exercisable for Preferred Securities or the Subordinated Notes or any debt
securities substantially similar to the Subordinated Notes or any equity
securities substantially similar to the Preferred Securities (except for the
Subordinated Notes and the Preferred Securities).
An application will be filed with the New York Stock Exchange for the
listing of the Preferred Securities, subject to official notice of issuance. If
approved for listing, trading of the Preferred Securities on the New York Stock
Exchange is expected to commence within a 30 day period after the initial
delivery of the Preferred Securities. The Representative has advised the Trust
that the Underwriters intend to make a market in the Preferred Securities prior
to the commencement of trading on the New York Stock Exchange. The Underwriters
will have no obligation to make a market in the Preferred Securities, however,
and may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell to a minimum of 400 beneficial holders.
34
<PAGE> 36
Consumers and the Trust have agreed to indemnify the Underwriters against,
or to contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Consumers in the ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of Consumers and the Trust by Richards,
Layton & Finger, P.A., special Delaware counsel to Consumers and the Trust. The
validity of the Subordinated Notes, the Preferred Securities Guarantee and
certain matters relating thereto will be passed upon on behalf of Consumers by
Denise M. Sturdy, Esq, Assistant General Counsel for Consumers. Certain legal
matters will be passed upon on behalf of the Underwriters by Reid & Priest LLP.
Certain United States federal income taxation matters will be passed upon for
Consumers and the Trust by Reid & Priest LLP.
EXPERTS
The consolidated financial statements and schedule of Consumers as of
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994 included or incorporated by reference in this Prospectus have
been audited by Arthur Andersen LLP (formerly Arthur Andersen & Co.),
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
With respect to the unaudited interim consolidated financial information
for the periods ended March 31, June 30, and September 30, 1995 and 1994, Arthur
Andersen LLP have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
thereon states that they did not audit and they did not express an opinion on
that interim consolidated financial information. Accordingly, the degree of
reliance on their report on that information should be restricted in light of
the limited nature of the review procedures applied. In addition, the
accountants are not subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim consolidated financial
information because that report is not a "report" or "part" of the registration
statement prepared or certified by the accountants within the meanings of
Sections 7 and 11 of the Securities Act.
35
<PAGE> 37
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CONSUMERS POWER COMPANY,
CONSUMERS POWER COMPANY FINANCING I OR THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CONSUMERS POWER
COMPANY OR CONSUMERS POWER COMPANY FINANCING I, SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 3
Incorporation of Certain Documents by
Reference............................. 3
Prospectus Summary...................... 4
Risk Factors............................ 5
Consumers Power Company................. 7
Consumers Power Company Financing I..... 8
Selected Financial Information of
Consumers Power Company............... 9
Capitalization of Consumers Power
Company............................... 10
Accounting Treatment.................... 10
Use of Proceeds......................... 10
Description of the Preferred
Securities............................ 11
Description of the Preferred Securities
Guarantee............................. 20
Description of the Subordinated Notes... 23
Effect of Obligations Under the
Subordinated Notes and the Preferred
Securities Guarantee.................. 29
Certain United States Federal Income
Tax Consequences...................... 30
Underwriting............................ 33
Legal Matters........................... 35
Experts................................. 35
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
4,000,000
PREFERRED SECURITIES
CONSUMERS POWER COMPANY FINANCING I
% TRUST ORIGINATED
PREFERRED SECURITIES(SM)
("TOPRS(SM)")
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
CONSUMERS POWER COMPANY
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
FIRST OF MICHIGAN CORPORATION
RONEY & CO.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 38
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT
-----------
<S> <C>
Securities and Exchange Commission filing fee.................... $ 34,482.76
New York Stock Exchange listing fee.............................. 22,150.00
Rating Agency fees............................................... 83,000.00
Trustees expenses................................................ 15,000.00
Printing and engraving fees...................................... 200,000.00
Accounting fees and expenses..................................... 5,000.00
Legal fees and expenses.......................................... 35,000.00
Miscellaneous.................................................... 10,500.00
-----------
Total....................................................... $405,132.76
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following resolution was adopted by the Board of Directors of Consumers
on May 6, 1987:
RESOLVED: That effective March 1, 1987 the Company shall indemnify to
the full extent permitted by law every person (including the estate, heirs
and legal representatives of such person in the event of the decease,
incompetency, insolvency or bankruptcy of such person) who is or was a
director, officer, partner, trustee, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer,
partner, trustee, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against all liability, costs,
expenses, including attorneys' fees, judgments, penalties, fines and
amounts paid in settlement, incurred by or imposed upon the person in
connection with or resulting from any claim or any threatened, pending or
completed action, suit or proceeding whether civil, criminal,
administrative, investigative or of whatever nature, arising from the
person's service or capacity as, or by reason of the fact that the person
is or was, a director, officer, partner, trustee, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. Such right of
indemnification shall not be deemed exclusive of any other rights to which
the person may be entitled under statute, bylaw, agreement, vote of
shareholders or otherwise.
Article V of the Restated Articles of Incorporation reads:
A director shall not be personally liable to the Company or its
shareholders for monetary damages for breach of duty as a director except
(i) for a breach of the director's duty of loyalty to the Company or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for a violation
of Section 551(1) of the Michigan Business Corporation Act, and (iv) any
transaction from which the director derived an improper personal benefit.
No amendment to or repeal of this Article V, and no modification to its
provisions by law, shall apply to, or have any effect upon, the liability
or alleged liability of any director of the Company for or with respect to
any acts or omissions of such director occurring prior to such amendment,
repeal or modification.
Article VI of the Restated Articles of Incorporation reads:
Each director and each officer of the Company shall be indemnified by
the Company to the fullest extent permitted by law against expenses
(including attorneys' fees), judgments, penalties, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection
with the defense of any proceeding in which he or she was or is a party or
is threatened to be made a party by reason of being or having been a
director or an officer of the Company. Such right of indemnification is not
exclusive of any other rights to which such director or officer may be
entitled under any now or thereafter existing statute, any other provision
of these Articles, bylaw, agreement, vote of shareholders or otherwise. If
the Business Corporation Act of the State of Michigan is amended after
approval by the
II-1
<PAGE> 39
shareholders of this Article VI to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Company shall be eliminated or limited to
the fullest extent permitted by the Business Corporation Act of the State
of Michigan, as so amended. Any repeal or modification of this Article VI
by the shareholders of the Company shall not adversely affect any right or
protection of a director of the Company existing at the time of such repeal
or modification.
Sections 561 through 571 of the Michigan Business Corporation Act provides as
follows:
Sec. 561. A corporation has the power to indemnify a person who was or
is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal, other than
an action by or in the right of the corporation, by reason of the fact that
he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, or other
enterprise, whether for profit or not, against expenses, including
attorneys' fees, judgments, penalties, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in connection
with the action, suit, or proceeding, if the person acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation or its shareholders, and with respect to
a criminal action or proceeding, if the person had no reasonable cause to
believe his or her conduct was unlawful. The termination of an action,
suit, or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he or she reasonably believed to be in or not opposed to the best interests
of the corporation or its shareholders, and, with respect to a criminal
action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Sec. 562. A corporation has the power to indemnify a person who was or
is a party or is threatened to be made a party to a threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, whether for profit
or not, against expenses, including attorneys' fees, and amounts paid in
settlement actually and reasonably incurred by the person in connection
with the action or suit, if the person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders. Indemnification shall not
be made for a claim, issue, or matter in which the person has been found
liable to the corporation except to the extent authorized in section 564c.
Sec. 563. To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in defense
of an action, suit, or proceeding referred to in section 561 or 562, or in
defense of a claim, issue, or matter in the action, suit, or proceeding, he
or she shall be indemnified against actual and reasonable expenses,
including attorneys' fees, incurred by him or her in connection with the
action, suit, or proceeding and an action, suit, or proceeding brought to
enforce the mandatory indemnification provided in this section.
Sec. 564a. (1) An indemnification under section 561 or 562, unless
ordered by the court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
sections 561 and 562 and upon an evaluation of the reasonableness of
expenses and amounts paid in settlement. This determination and evaluation
shall be made in any of the following ways:
(a) By a majority vote of a quorum of the board consisting of
directors who are not parties or threatened to be made parties to the
action, suit, or proceeding.
II-2
<PAGE> 40
(b) If a quorum cannot be obtained under subdivision (a), by
majority vote of a committee duly designated by the board and consisting
solely of 2 of more directors not at the time parties or threatened to
be made parties to the action, suit, or proceeding.
(c) By independent legal counsel in a written opinion, which
counsel shall be selected in 1 of the following ways:
(i) By the board or its committee in the manner prescribed in
subdivision (a) or (b).
(ii) If a quorum of the board cannot be obtained under
subdivision (a) and a committee cannot be designated under
subdivision (b), by the board.
(d) By all independent directors who are not parties or threatened
to be made parties to the action, suit, or proceeding.
(e) By the shareholders, but shares held by directors, officers,
employees, or agents who are parties or threatened to be made parties of
the action, suit, or proceeding may not be voted.
(2) In the designation of a committee under subsection (1)(b) or in
the selection of independent legal counsel under subsection (1)(c)(ii), all
directors may participate.
(3) If a person is entitled to indemnification under section 561 or
562 for a portion of expenses, including reasonable attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement, but not for
the total amount, the corporation may indemnify the person for the portion
of the expenses, judgments, penalties, fines, or amounts paid in settlement
for which the person is entitled to be indemnified.
Sec. 564b. (1) A corporation may pay or reimburse the reasonable
expenses incurred by a director, officer, employee, or agent who is a party
or threatened to be made a party to an action, suit, or proceeding in
advance of final disposition of the proceeding if all of the following
apply:
(a) The person furnishes the corporation a written affirmation of
his or her good faith belief that he or she has met the applicable
standard of conduct set forth in sections 561 and 562.
(b) The person furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay the advance if it
is ultimately determined that he or she did not meet the standard of
conduct.
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under this
act.
(2) The undertaking required by subsection (1)(b) must be an unlimited
general obligation of the person but need not be secured.
(3) Determinations and evaluations under this section shall be made in
the manner specified in section 564a.
Sec. 564c. A director, officer, employee, or agent of the corporation
who is a party or threatened to be made a party to an action, suit, or
proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice it considers necessary may
order indemnification if it determines that the person is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not he or she met the applicable standard of
conduct set forth in sections 561 and 562 or was adjudged liable as
described in section 562, but if he or she was adjudged liable, his or her
indemnification is limited to reasonable expenses incurred.
Sec. 565. (1) The indemnification or advancement of expenses provided
under sections 561 to 564c is not exclusive of other rights to which a
person seeking indemnification or advancement of expenses may be entitled
under the articles of incorporation, bylaws, or a contractual agreement.
The total amount
II-3
<PAGE> 41
of expenses advanced or indemnified from all sources combined shall not
exceed the amount of actual expenses incurred by the person seeking
indemnification or advancement of expenses.
(2) The indemnification provided for in sections 561 to 565 continues
as to a person who ceases to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, personal representatives, and
administrators of the person.
Sec. 567. A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity or arising out of his or her status as
such, whether or not the corporation would have power to indemnify him or
her against liability under sections 561 to 565.
Sec. 569. For purposes of sections 561 to 567, "corporation" includes
all constituent corporations absorbed in a consolidation or merger and the
resulting or surviving corporation, so that a person who is or was a
director, officer, partner, trustee, employee, or agent of the constituent
corporation or is or was serving at the request of the constituent
corporation as a director, officer, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, or other
enterprise whether for profit or not shall stand in the same position under
the provisions of this section with respect to the resulting or surviving
corporation as the person would if he or she had served the resulting or
surviving corporation in the same capacity.
Sec. 571. For the purposes of sections 561 to 567:
(a) "Fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan.
(b) "Other enterprises" shall include employee benefit plans.
(c) "Serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation
which imposes duties on, or involves services by, the director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or its beneficiaries.
(d) A person who acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be considered to have
acted in a manner "not opposed to the best interests of the corporation
or its shareholders" as referred to in sections 561 and 562.
Officers and directors are covered within specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of Consumers or of Consumers' subsidiaries and
Consumers' officers and directors are indemnified against such losses by reason
of their being or having been directors of officers of another corporation,
partnership, joint venture, trust or other enterprise at Consumers' request. In
addition, Consumers has indemnified each of its present directors by contracts
that contain affirmative provisions essentially similar to those in sections 561
through 571 of the Michigan Business Corporation Act cited above.
Section 10.4 of the Declaration of Trust provides that:
(a)(i) Consumers shall indemnify, to the full extent permitted by law,
any Company Indemnified Person (as defined therein) who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
II-4
<PAGE> 42
of the Trust, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the Company Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) Consumers shall indemnify, to the full extent permitted by law,
any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor by reason of
the fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as
to which such Company Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of Section 10.4(a), or in defense of any claim,
issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of Section
10.4(a) (unless ordered by a court) shall be made by Consumers only as
authorized in the specific case upon a determination that indemnification
of the Company Indemnified Person is proper in the circumstances because he
has met the applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or
(3) by the Common Security Holder of the Trust.
(v) To the fullest extent permitted by applicable law, expenses
(including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit
or proceeding referred to in paragraphs (i) and (ii) of Section 10.4(a)
shall be paid by Consumers in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf
of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
Consumers as authorized in Section 10.4(a). Notwithstanding the foregoing,
no advance shall be made by Consumers if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not obtainable,
or, even if obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion or (iii) the
Common Security Holder of the Trust, that, based upon the facts known to
the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Regular Trustees, independent legal
counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
II-5
<PAGE> 43
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification
and advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of Consumers or Preferred Security
Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
All rights to indemnification under Section 10.4(a) shall be deemed to be
provided by a contract between Consumers and each Company Indemnified
Person who serves in such capacity at any time while Section 10.4(a) is in
effect. Any repeal or modification of Section 10.4(a) shall not affect any
rights or obligations then existing.
(vii) Consumers or the Trust may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not Consumers would have the
power to indemnify him against such liability under the provisions of
Section 10.4(a).
(viii) For purposes of Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of Section 10.4(a) with respect to the
resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) Consumers agrees to indemnify the (i) Property Trustee, (ii) the
Delaware Trustee, (iii) any affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in Section 10.4(b) shall survive the satisfaction
and discharge of this Declaration.
II-6
<PAGE> 44
ITEM 16. EXHIBITS.
The following exhibits are filed herewith.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------- ---------------------------------------------------------------------------------
<S> <C> <C>
(1) -- Form of Underwriting Agreement (to be filed as an Exhibit to a report on Form 8-K
which shall be incorporated herein by reference).
*(4)-1 -- Certificate of Trust of the Trust.
(4)-2 -- Revised Form of Amended and Restated Declaration of Trust.
(4)-3 -- Revised Form of Indenture between Consumers and The Bank of New York, as Trustee.
*(4)-4 -- Form of Supplemental Indenture to Indenture to be used in connection with the
issuance of Subordinated Notes.
(4)-5 -- Form of Preferred Security (included in (4)-2).
*(4)-6 -- Form of Subordinated Note Security (included in (4)-4).
(4)-7 -- Revised Form of Preferred Securities Guarantee Agreement.
*(5)-1 -- Opinion re legality of Preferred Securities.
*(5)-2 -- Opinion re legality of Subordinated Notes and the Preferred Securities Guarantee.
*(8) -- Opinion re tax matters.
(12) -- Statement re Computation of Ratios of Earnings to Fixed Charges and Ratios of
Earnings to Fixed Charges and Preferred and Preference Stock Dividend
Requirements.
(15) -- Letter re unaudited interim financial information
*(23)-1 -- Consent of Richards, Layton & Finger, P.C. (included in (5)-1).
*(23)-2 -- Consent of Denise M. Sturdy, Esq. (included in (5)-2).
*(23)-3 -- Consent of Reid & Priest LLP (included in (8)).
(23)-4 -- Consent of Arthur Andersen LLP.
*(24) -- Powers of attorney of Directors whose names are signed to this registration
statement pursuant to such powers and resolution.
*(25)-1 -- Statement of Eligibility of Property Trustee.
*(25)-2 -- Statement of Eligibility of Debt Trustee.
*(25)-3 -- Statement of Eligibility of Preferred Guarantee Trustee.
</TABLE>
- -------------------------
* Previously filed
Exhibits listed above which have been filed with the Securities and Exchange
Commission are incorporated herein by reference with the same effect as if
filed with this Registration Statement.
ITEM 17. UNDERTAKINGS.
The Undersigned Registrants Hereby Undertake:
(1) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(2) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
(3) That for purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
II-7
<PAGE> 45
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrants pursuant to the provisions described in Item 15
above, or otherwise, the registrants have been advised that in the opinion
of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by a registrant of expenses incurred or paid by a director, officer or
controlling person of such registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, such
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) The undersigned Trust registrant hereby undertakes to provide to
the underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required
by the underwriters to permit prompt delivery to each purchaser.
II-8
<PAGE> 46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Form S-3 Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Jackson, and State of Michigan, on the
18th day of December, 1995.
CONSUMERS POWER COMPANY
By: /s/ A. M. WRIGHT
----------------------------------
A. M. Wright
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Form S-3 Registration Statement has been signed below by the following
persons in the capacities and on the 18th day of December, 1995.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------
<S> <C>
(i) Principal executive officer:
/s/ MICHAEL G. MORRIS President and
- --------------------------------------------- Chief Executive Officer
Michael G. Morris
(ii) Principal financial officer:
/s/ A.M. WRIGHT Senior Vice President and
- --------------------------------------------- Chief Financial Officer
Alan M. Wright
(iii) Controller or principal
accounting officer:
/s/ DENNIS DAPRA Vice President and
- --------------------------------------------- Controller
Dennis DaPra
</TABLE>
II-9
<PAGE> 47
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------
<S> <C>
- --------------------------------------------- Director
(James J. Duderstadt)
* Director
- ---------------------------------------------
(Kathleen R. Flaherty)
* Director
- ---------------------------------------------
(Victor J. Fryling)
* Director
- ---------------------------------------------
(Earl D. Holton)
* Director
- ---------------------------------------------
(Lois A. Lund)
* Director
- ---------------------------------------------
(Frank H. Merlotti)
* Director
- ---------------------------------------------
(William T. McCormick, Jr.)
* Director
- ---------------------------------------------
(William U. Parfet)
* Director
- ---------------------------------------------
(Percy A. Pierre)
* Director
- ---------------------------------------------
(S. Kinnie Smith, Jr.)
* Director
- ---------------------------------------------
(Kenneth Whipple)
* Director
- ---------------------------------------------
(John B. Yasinsky)
</TABLE>
*By /s/ A.M. WRIGHT
-----------------------------------------------------
Alan M. Wright
Attorney-in-fact
II-10
<PAGE> 48
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Consumers Power
Company Financing I certifies that is has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Form S-3 Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Jackson, State of
Michigan, on the 18th day of December, 1995.
CONSUMERS POWER COMPANY FINANCING I
By /s/ A. M. WRIGHT
------------------------------------
Trustee
By /s/ THOMAS A. MCNISH
------------------------------------
Trustee
By /s/ DORIS F. GALVIN
------------------------------------
Trustee
II-11
<PAGE> 49
EXHIBIT INDEX
The following exhibits are filed herewith.
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- -------- ----------------------------------------------------------------------- ----------
<S> <C> <C> <C>
(1) -- Form of Underwriting Agreement (to be filed as an Exhibit to a report
on Form 8-K which shall be incorporated herein by reference).
*(4)-1 -- Certificate of Trust of the Trust.
(4)-2 -- Revised Form of Amended and Restated Declaration of Trust.
(4)-3 -- Revised Form of Indenture between Consumers and The Bank of New York,
as Trustee.
*(4)-4 -- Form of Supplemental Indenture to Indenture to be used in connection
with the issuance of Subordinated Notes.
(4)-5 -- Revised Form of Preferred Security (included in (4)-2).
*(4)-6 -- Form of Subordinated Note Security (included in (4)-4).
(4)-7 -- Form of Preferred Securities Guarantee Agreement.
*(5)-1 -- Opinion re legality of Preferred Securities.
*(5)-2 -- Opinion re legality of Subordinated Notes and the Preferred Securities
Guarantee.
*(8) -- Opinion re tax matters.
(12) -- Statement re Computation of Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Fixed Charges and Preferred and Preference Stock
Dividend Requirements.
(15) -- Letter re unaudited interim financial information.
*(23)-1 -- Consent of Richards, Layton & Finger, P.C. (included in (5)-1).
*(23)-2 -- Consent of Denise M. Sturdy, Esq. (included in (5)-2).
*(23)-3 -- Consent of Reid & Priest LLP (included in (8)).
(23)-4 -- Consent of Arthur Andersen LLP.
*(24) -- Powers of attorney of Directors whose names are signed to this
registration statement pursuant to such powers.
*(25)-1 -- Statement of Eligibility of Property Trustee.
*(25)-2 -- Statement of Eligibility of Debt Trustee.
*(25)-3 -- Statement of Eligibility of Preferred Guarantee Trustee.
</TABLE>
- -------------------------
* Previously filed
Exhibits listed above which have been filed with the Securities and Exchange
Commission are incorporated herein by reference with the same effect as if filed
with this Registration Statement.
<PAGE> 1
Exhibit (4)-2
AMENDED AND RESTATED DECLARATION
OF TRUST
CONSUMERS POWER COMPANY FINANCING I
Dated as of January __, 1996
====================================
<PAGE> 2
TABLE OF CONTENTS 1
<TABLE>
<CAPTION>
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
<S> <C> <C>
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3 Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4 Periodic Reports to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.8 Powers and Duties of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee . . . . . . . . . . . . . . . . . . . 15
SECTION 3.10 Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.3 Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . . . . . . . . . . . . 22
SECTION 5.5 Initial Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
(1) This Table of Contents does not constitute part of the Amended and
Restated Declaration and shall not affect the interpretation of
any of its terms or provisions.
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.6 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.7 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.8 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.9 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.10 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.7 Definitive Preferred Security Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE XII
</TABLE>
ii
<PAGE> 4
AMENDMENTS AND MEETINGS
<TABLE>
<S> <C> <C>
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent . . . . . . . . . . . . . . . . . 37
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 13.2 Representations and Warranties of Delaware Trust . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14.8 Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
<TABLE>
<S> <C> <C>
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
- ---------------
</TABLE>
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CONSUMERS POWER COMPANY FINANCING I
____________, 1996
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration") dated
as of January __, 1996, by the Trustees (as defined herein), the Sponsor (as
defined herein) and by the holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to this Declaration;
WHEREAS, the Regular Trustees, the Delaware Trustee, the Property
Trustee and the Sponsor established Consumers Power Company Financing I (the
"Trust"), a statutory business trust under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated as of October 30, 1995 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on October 30, 1995 (the "Certificate of
Trust"), for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original
Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 7
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections,
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits
to this Declaration unless otherwise specified, and all references in this
Declaration to the "terms of the Securities" are to the terms of the Securities
as set forth in Annex I hereto;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or Delaware are authorized or required by
law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801, et seq., as it may be amended from time to
time, or any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
2
<PAGE> 8
"Closing Date" means ____________, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement to be
dated as of ___________, 1996 of the Sponsor in respect of the Common
Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Preferred Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay, New York, New York
10286.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Consumers Power Company in its capacity as
issuer of the series of Debentures to be acquired by the Trust.
"Debenture Trustee" means The Bank of New York, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Property Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
3
<PAGE> 9
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of _______, 1996, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Section 4(c)
of Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Preferred Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant
class.
"Ministerial Action" has the meaning set forth in Section 4(c) of
Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
4
<PAGE> 10
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(i).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Bank of New York, as trustee
under the Preferred Securities Guarantee until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Preferred Securities Guarantee" means the guarantee agreement to be
dated as of ______, 1996, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Pricing Agreement" means the pricing agreement between the Trust,
the Debenture Issuer, and the underwriters designated by the Regular Trustees
with respect to the offer and sale of the Preferred Securities.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them, or if there is only one Regular
Trustee, such Regular Trustee.
"Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee,
any officer within the Corporate Trust Office of the Property Trustee,
including any vice-president, any assistant vice-president, any assistant
treasurer or other officer of the Corporate Trust Office of the Property
Trustee customarily performing functions similar to those performed by any of
the above designated
5
<PAGE> 11
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time or any successor legislation.
"Special Event" has the meaning set forth in Section 4(c) of Annex I.
"Sponsor" means Consumers Power Company, a Michigan corporation, or
any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Successor Property Trustee" has the meaning set forth in Section
5.6(b).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Section 4(c) of Annex I.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Preferred Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of 10% or more of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement for the
offering and sale of Preferred Securities in the form of Exhibit C including
any Pricing Agreement as contemplated therein.
6
<PAGE> 12
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither
the Sponsor nor the Regular Trustees, on behalf of the Trust, shall be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Property Trustee
by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any
other time, within 30 days of receipt by the Trust of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders
is given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity), provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 1 of each year, the Property Trustee shall
provide to the Holders of the Preferred Securities such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form and in the
manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Property Trustee such documents, reports and
information as required by Section 314 (if any) and the
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compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority") to
be waived under the Indenture, the Event of Default under the Declaration
may only be waived by the vote of the Holders of at least the proportion
in liquidation amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon. Any waiver by the
Holders of the Preferred Securities of an Event of Default with respect to the
Preferred Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section 2.6(b),
the Event of Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default
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under the Declaration as provided below in this Section 2.6(b), the Event
of Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the Common
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated,
and until such Events of Default have been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf
of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of
the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act are hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the
Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be
an Event of Default as defined in the Indenture, not including any periods of
grace provided for therein and irrespective of the giving of any notice
provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in
the payment of any sinking fund installment established for the Debentures, the
Property Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Property Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities. Such notice shall state that such Event of Default also
constitutes a Declaration event of default.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.1(a) and 5.1(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of the Declaration shall have
actual knowledge.
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ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Consumers Power Company Financing I," as such
name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Consumers
Power Company, 212 West Michigan Avenue, Jackson, Michigan 49201. On ten
Business Days' prior written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Property Trustee and shall be administered by the Property Trustee for the
Trust and for the benefit of the Holders in accordance with this Declaration.
The Holders shall not have legal title to any part of the assets of the Trust,
but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, that
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there shall be no interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to a one-time, simultaneous issuance of
both the Preferred Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any amendments
thereto, pertaining to, among other securities, the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary, appropriate,
convenient or advisable in order to qualify or register all or part of the
Preferred Securities in any State in which the Sponsor has determined to
qualify or register such Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange or any other national stock
exchange or the Nasdaq Stock Market for listing upon notice of issuance of
any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by the
Sponsor, relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) execute and enter into the Underwriting Agreement
providing for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate, convenient
or incidental to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment period
under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust
was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary, desirable, convenient or incidental in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not
limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes, provided that such action does
not materially adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular
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Trustees shall not take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be paid by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall cause the Trust not to:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(g) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of exercising any trust or power conferred
upon the Debenture Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise any right to rescind
or annul any declaration that the principal of all the Debentures shall be due
and payable, or (D) consent to any amendment, modification or termination of
the Indenture or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial risk that for United
States federal income tax purposes the Trust will not be classified as a
grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
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(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Debentures held by the Property Trustee, deposit such funds into
the Property Trustee Account and make payments to the Holders of the
Preferred Securities and Holders of the Common Securities from the
Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Property Trustee Account shall be
an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating
assigned to the Preferred Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes of
Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary, appropriate, convenient or incidental to effect the redemption
of the Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders of Securities upon the
occurrence of certain special events (as may be defined in the terms of
the Securities) arising from a change in law or a change in legal
interpretation or other specified circumstances pursuant to the terms of
the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall hold the Preferred Securities
Guarantee and the Common Securities Guarantee, for the benefit of the Holders
of the Preferred Securities and the Common Securities, respectively.
(f) The Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default of which a Responsible Officer
of the Property Trustee has actual knowledge or the Property Trustee's duties
and obligations under this Declaration or the Trust Indenture Act.
(g) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
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(h) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer
of the Property Trustee occurs and is continuing, the Property Trustee shall,
for the benefit of Holders of the Securities, enforce its rights as holder of
the Debentures subject to the rights of the Holders pursuant to the terms of
such Securities.
(i) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities, and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(j) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6) of which a Responsible
Officer of the Property Trustee has actual knowledge, the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
and use the same degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically
set forth in this Declaration, and no implied covenants or
obligations shall be read into this Declaration against the Property
Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee shall be
under a
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duty to examine the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was grossly
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Property Trustee Account shall be to deal with such property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limitations on liability afforded
to the Property Trustee under this Declaration and the Trust Indenture
Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree with
the Sponsor. Money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to Section 3.8(c)(i)
and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Regular Trustees or
the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
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(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently evidenced
by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its
choice or other experts and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion,
such counsel may be counsel to the Sponsor or any of its Affiliates, and
may include any of its employees. The Property Trustee shall have the
right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee provided,
that, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of an Event of Default,
of its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Property Trustee
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be
required to inquire as to the authority of the Property Trustee to so act
or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the Property
Trustee's or its agent's taking such action;
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(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively
relying on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, both Regular Trustees or, if there is only one, such Regular Trustee
is authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for twenty-five (25) years from the Closing
Date.
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SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any business trust or other business entity (as
defined in the Business Trust Act), except as described in Section 3.15(b) and
(c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank with respect to Distributions
and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of
the Successor Entity that possesses the same powers and duties as the
Property Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities
are listed, or any Successor Securities will be listed upon notification
of issuance, on any national securities exchange or with any other
organization on which the Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical
rating organization;
(v) such merger, consolidation, amalgamation or replacement
does not adversely affect the material rights, preferences and privileges
of the Holders of the Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of such
Holders' interests in the Preferred Securities as a result of such merger,
consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of
the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such matters to
the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the material rights,
preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect (other
than with respect to any dilution of the Holders' interest in the
new entity); and
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(B) following such merger, consolidation, amalgamation
or replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation
or replacement, the Trust (or the Successor Entity) will continue to
be classified as a grantor trust for United States federal income
tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to, among other securities, the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing upon notice of issuance of any Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
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(e) to negotiate the terms of the Underwriting Agreement and
Pricing Agreement providing for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities,
provided that, in any case, the number of Trustees shall at least be five (5)
unless the Trustee that acts as the Property Trustee also acts as Delaware
Trustee pursuant to Section 5.2, in which case the number of Trustees, shall be
at least three (3).
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has a principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, then
the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall
have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or other Person permitted by
the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation or other Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.3(a)(ii), the combined capital and surplus of such corporation
or other
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Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign
in the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Alan M. Wright Thomas A. McNish
212 West Michigan Avenue 212 West Michigan Avenue
Jackson, Michigan 49201 Jackson, Michigan 49201
Doris F. Galvin
212 W. Michigan Avenue
Jackson, Michigan 49201
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
The initial Property Trustee shall be:
The Bank of New York
101 Barclay
New York, New York 10286
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SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Property Trustee under Section 5.3 (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and (ii) the Trustee that acts as
Delaware Trustee shall not be removed in accordance with this Section 5.6(a)
until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the Regular Trustees and the
Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument executed
by such Successor Property Trustee and delivered to the Trust, the
Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor
and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee as the case may be if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and shall have accepted such appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Property Trustee or
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Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustee, if there is
one, or by each of the Regular Trustees, if there are two or, if there are more
than two, a majority of the Regular Trustees, shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee
appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than
48 hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a
brief statement of the time, place and anticipated purposes of the meeting.
The presence (whether in person or by telephone) of a Regular Trustee at a
meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting, by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any
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documents contemplated in Section 3.6, including any registration statement or
amendment thereto filed with the Commission, or making any other governmental
filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such Person shall
be otherwise qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. Distributions shall be
made on the Preferred Securities and the Common Securities in accordance with
the preferences set forth in their respective terms. If and to the extent that
the Debenture Issuer makes a payment of interest (including Compounded Interest
(as defined in the Indenture) and Additional Interest (as defined in the
Indenture)), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust, issue one
class of preferred securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities.") The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by the
Regular Trustee (or, if there are more than two Regular Trustees, by any two of
the Regular Trustees). Any such signature shall be the manual signature of any
present or any future Regular Trustee. In case any
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Regular Trustee of the Trust who shall have signed any of the Securities shall
cease to be such Regular Trustee before the Certificates so signed shall be
delivered by the Trust, such Certificates nevertheless may be delivered as
though the person who signed such Certificates had not ceased to be such
Regular Trustee; and any Certificate may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such Certificate, shall be
the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee.
Certificates shall be printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements
as the Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation of any stock exchange on which the
Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable subject to Section 10.1(b) with respect to the
Common Securities.
(e) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration, the Preferred Securities Guarantee
and the Indenture.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common Securities
or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor or the revocation of the charter of the Holder of the Common
Securities, or the Sponsor's charter and the expiration of 90 days after
the date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Debentures endorsed thereon
shall have been distributed to the Holders of Securities in exchange for
all of the Securities;
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(vi) before the issuance of any Securities, with the consent of
all of the Regular Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust as set
forth in Section 3.14.
(b) After the occurrence of an event referred to in Section 8.1(a)
and upon the completion of winding-up of the Trust and its termination, the
Trustees shall file a certificate of cancellation with the Secretary of State
of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration, and the terms of the
Securities shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be
freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such transfer would not
cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration. In the event that the Preferred Securities do not remain in
book-entry only form, the
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Property Trustee will act as paying agent and may designate an additional or
substitute paying agent at any time.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificate(s)
shall initially be registered on the books and records of the Trust in the name
of Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner
will receive a definitive Preferred Security Certificate representing such
Preferred Security Beneficial Owner's interests in such Global Certificate(s),
except as provided in Section 9.7. Unless and until definitive, fully
registered Preferred Security Certificates (the "Definitive Preferred Security
Certificates") have been issued to the Preferred Security Beneficial Owners
pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificate(s) and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificate(s) and shall have
no notice obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of Distributions on
the Global Certificates to such Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred
Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall
give all such notices and communications specified herein to be given to the
Preferred Security Holders to the Clearing Agency, and shall have no notice
obligations to the Preferred Security Beneficial Owners.
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SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a successor
Clearing Agency is not appointed within 90 days after such discontinuance
pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with respect to
the Preferred Securities,
then:
(i) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to
such Preferred Securities; and
(ii) upon surrender of the Global Certificate(s) by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Preferred Security Certificates to be
delivered to Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust
shall be liable for any delay in delivery of such instructions and each of
them may conclusively rely on and shall be protected in relying on, said
instructions of the Clearing Agency. The Definitive Preferred Security
Certificates shall be printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Regular Trustees,
as evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such legends
or endorsements as the Regular Trustees may deem appropriate, or as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on
which Preferred Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may
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require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate
issued pursuant to this Section 9.8 shall constitute conclusive evidence of an
ownership interest in the relevant Securities, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Preferred Securities Guarantee, the Common Securities Guarantee and the terms
of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person [reasonably] believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
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SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
(a)(i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect
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to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith
and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Company Indemnified Person
shall have been adjudged to be liable to the Trust unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which such Court of Chancery or such other
court shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without admission
of liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1) by
the Regular Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or proceeding,
(2) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Regular Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security Holder of the
Trust.
(v) To the fullest extent permitted by applicable law,
expenses (including attorneys' fees) incurred by a Company Indemnified
Person in defending a civil, criminal, administrative or investigative
action, suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay
such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made (i) by
the Regular Trustees by a majority vote of a quorum of disinterested
Regular Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel
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in a written opinion or (iii) the Common Security Holder of the Trust,
that, based upon the facts known to the Regular Trustees, counsel or the
Common Security Holder at the time such determination is made, such
Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of
the Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct
was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to
the Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 10.4(a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the
Debenture Issuer or Preferred Security Holders of the Trust or otherwise,
both as to action in his official capacity and as to action in another
capacity while holding such office. All rights to indemnification under
this Section 10.4(a) shall be deemed to be provided by a contract between
the Debenture Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any
repeal or modification of this Section 10.4(a) shall not affect any rights
or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such, whether
or not the Debenture Issuer would have the power to indemnify him against
such liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person who
is or was a director, trustee, officer or employee of such constituent
entity, or is or was serving at the request of such constituent entity as
a director, trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section 10.4(a)
with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit
of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
and the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents
of the Property Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without gross negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its
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powers or duties hereunder. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or may
act as depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal Year, and the related
statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the
Code to deliver any
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such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to
each Holder, and any representations and forms as shall reasonably be requested
by the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be deemed
to be a distribution in the amount of the withholding to the Holder. In the
event of any claimed over withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
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(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate from
each of the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee or the Delaware Trustee, the Property Trustee or the
Delaware Trustee as the case may be, shall have first received:
(A) an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of
the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified
for purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
(f) The rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
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(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor; or
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or privileges of the
Holders of the Preferred Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms
of the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of
at least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing
the Certificates held by the Holders of Securities exercising the right to call
a meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days and
not more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or required
under this Declaration or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning
not less than the minimum amount of Securities in liquidation amount that
would be necessary to authorize or take such action at a meeting at which
all Holders of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not consented
in writing. The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time specified
by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating
to the giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
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judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Preferred Securities are then listed or
trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of
any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the United States, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, the
Declaration;
(b) the execution, delivery and performance by the Property Trustee
of the Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. The Declaration has been duly executed
and delivered by the Property Trustee, and it constitutes a legal, valid and
binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) the execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the Declaration.
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SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of Delaware, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, the
Declaration.
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the Declaration.
(d) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
Consumers Power Company Financing I
c/o Consumers Power Company
212 West Michigan Avenue
Jackson, Michigan 49201
Attention: Alan M. Wright, Senior Vice President and
Chief Financial Officer
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of
to the Holders of the Securities):
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The Bank of New York (Delaware)
White Clay Center
Route 473
Newark, Delaware 19711
(c) if given to the Property Trustee, at its Corporate Trust Office
to the attention of the Administrator (or such other address as the
Property Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay
New York, New York 10286
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
Consumers Power Company
212 West Michigan Avenue
Jackson, Michigan 49201
Attention: Thomas A. McNish, Vice President and Secretary
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
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SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each party hereto to one of such counterpart signature pages. All
of such counterpart signature pages shall be read as though one, and they shall
have the same force and effect as though all of the signers had signed a single
signature page.
SECTION 14.8 Recitals.
The recitals contained herein and in the Securities shall be taken
as the statements of the Sponsor and Trust, and the Trustees assume no
responsibility for their correctness. The Trustees make no representations as
to the validity or sufficiency of this Declaration or of the Securities.
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<PAGE> 47
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
__________________________________
Alan M. Wright, as Regular Trustee
__________________________________
Thomas A. McNish, as Regular Trustee
__________________________________
Doris F. Galvin, as Regular Trustee
The Bank of New York (Delaware),
as Delaware Trustee
By:______________________________
Name:
Title:
The Bank of New York, as Property Trustee
By:______________________________
Name:
Title:
Consumers Power Company, as Sponsor
By:______________________________
Name:
Title:
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ANNEX I
TERMS OF
___% TRUST ORIGINATED PREFERRED SECURITIES
___% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of January __, 1996 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. 4,000,000 Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of one hundred million dollars ($100,000,000) and a liquidation amount
with respect to the assets of the Trust of $25 per preferred security, are
hereby designated, for the purposes of identification only, as "_____% Trust
Originated Preferred SecuritiesSM ('TOPrS'SM)" (the "Preferred Securities").
The Preferred Security Certificates evidencing the Preferred Securities shall
be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Preferred Securities are listed.
(b) Common Securities. 123,711 Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
three million, ninety-two thousand seven hundred eighty-four dollars
($3,092,800) and a liquidation amount with respect to the assets of the Trust
of $25 per common security, are hereby designated, for the purposes of
identification only, as "______% Trust Originated Common Securities" (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of ______% (the "Coupon Rate") of the stated liquidation amount of
$25 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which
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Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from ______, 1996, and will be payable quarterly in arrears, on March 31, June
30, September 30 and December 31 of each year, commencing on March 31, 1996,
except as otherwise described below. The Debenture Issuer has the right under
the Indenture to defer payments of interest by extending the interest payment
period from time to time on the Debentures for a period not exceeding 20
consecutive quarters (each an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures, provided that no
Extension Period shall last beyond the date of maturity of the Debentures. As
a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book-entry only form,
the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Preferred
Securities will be made as described under the heading "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus dated __________, 1995 (the "Prospectus"), of the
Trust included in the Registration Statement on Form S-3 of the Sponsor and the
Trust. The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities. If the Preferred Securities shall
not continue to remain in book-entries only form, the relevant record dates for
the Preferred Securities shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least one Business Day but less than
60 Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Debentures. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
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3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities to creditors an amount equal to
the aggregate of the stated liquidation amount of $25 per Security plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"), unless, in connection with such dissolution,
winding-up or termination, after satisfaction of liabilities to creditors of
the Trust, Debentures in an aggregate principal amount equal to the aggregate
stated liquidation amount of such Securities, with an interest rate equal to
the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price of $25 per
Security plus an amount equal to accrued and unpaid Distributions thereon at
the date of the redemption, payable in cash (the "Redemption Price"). Holders
will be given not less than 30 nor more than 60 days notice of such redemption,
except in the case of payments upon maturity.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the Preferred Securities to be redeemed will be as described in
Section 4(f)(ii) below.
(c) If a Tax Event or an Investment Company Event (each as defined
below, and each a "Special Event") shall occur and be continuing the Regular
Trustees shall, except in the case of a redemption described in this Section
4(c), dissolve the Trust and, after satisfaction of creditors, cause Debentures
held by the Property Trustee, having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the
Securities, to be distributed to the Holders of the Securities in liquidation
of such Holders' interests in the Trust on a Pro Rata basis, within 90 days
following the occurrence of such Special Event (the "90 Day Period"); provided,
however, that in the case of the occurrence of a Tax Event, as a condition of
such dissolution and distribution, the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
of the Securities will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and the
distribution of Debentures, and provided, further, that, if at the time there
is available to the Trust the opportunity to eliminate, within the 90 Day
Period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable
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measure that has no adverse effect on the Trust, the Debenture Issuer, the
Sponsor or the Holders of the Securities ("Ministerial Action"), the Trust will
pursue such Ministerial Action in lieu of dissolution.
If (a) a Tax Event has occurred and is continuing, and (i) the
Debenture Issuer has received an opinion (a "Redemption Tax Opinion") of a
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that the
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the Debentures
were distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, or (b) if an Investment Company Event
has occurred and is continuing, then the Debenture Issuer shall have the right
at any time, upon not less than 30 nor more than 60 days notice, to redeem the
Debentures in whole or in part for cash within 90 days following the occurrence
of such Tax Event, or Investment Company Event, as the case may be and,
following such redemption, Securities with an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so redeemed shall be
redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided,
however, that, if at the time there is available to the Trust the opportunity
to eliminate, within such 90 day period, such Special Event by taking some
Ministerial Action, the Trust or the Debenture Issuer will pursue such
Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event Opinion") to the effect that on or after the date of the
Prospectus, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority therefor or
therein, or (b) any amendment to, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of the Prospectus, there is more than an insubstantial risk
that (i) the Trust is or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received
on the Debentures, (ii) the Trust is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable by the Debenture Issuer to the
Trust on the Debentures is not, or within 90 days of the date thereof will not
be, deductible, in whole or in part, by the Debenture Issuer for United States
federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment
Company Event Opinion") that, as a result of the occurrence of a change in law
or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after the date of the Prospectus.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Preferred Securities held by
the Depository or
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<PAGE> 52
its nominee (or any successor Clearing Agency or its nominee), will be deemed
to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures are distributed to holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by the Depository or its nominee (or any successor Clearing Agency
or its nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person on
whose behalf such nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry
only form, with respect to the Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided that the Debenture Issuer
has paid the Property Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the Property
Trustee will deposit irrevocably with the Depository or its nominee (or
successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and
will give the Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities, and (B) with
respect to Preferred Securities issued in definitive form and Common
Securities, provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in
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connection with the related redemption or maturity of the Debentures, the
Property Trustee will pay the relevant Redemption Price to the Holders of
such Securities by check mailed to the address of the relevant Holder
appearing on the books and records of the Trust on the redemption date.
If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Securities so called
for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that
have been so called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to
accrue from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, the Depository or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificate(s) have been issued or,
if Definitive Preferred Security Certificates have been issued, to the
Holder thereof, and (B) in respect of the Common Securities to the Holder
thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the acquiror
is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Preferred Securities, voting
separately as a class may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding
for any remedy available to the Debenture Trustee, or exercising any trust or
power conferred on the Debenture Trustee with respect to the Debentures, (ii)
waive any past default and its consequences that is waivable under Section 5.10
of the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable. The
Property Trustee shall not revoke any action previously authorized or approved
by a vote of the Holders of the Preferred Securities. Other than with respect
to directing the time, method and place of conducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth above, the Property
Trustee shall not take any action in accordance with
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the directions of the Holders of the Preferred Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel, at the
reasonable expense of the Trust, to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. In addition, a Holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder directly of the principal of or interest on Subordinated Notes
having a principal amount equal to the aggregate liquidation preference amount
of the Preferred Securities of such holder on or after the respective due dates
specified in the Subordinated Notes. With respect to the Property Trustee's
rights other than its rights to receive payment on the Debentures as holder of
the Debentures, if the Property Trustee fails to enforce its rights under the
Declaration, to the fullest extent permitted by law, any Holder of Preferred
Securities may, institute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Declaration without first
instituting a legal proceeding against the Property Trustee or any other
Person.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of record of Preferred Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Event of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second
to last sentence of this paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class, may direct the
time, method, and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 5.10 of the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due
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and payable, provided that, where a consent or action under the Indenture would
require the consent or act of the Holders of greater than a majority in
principal amount of Debentures affected thereby (a "Super Majority"), the
Property Trustee may only give such consent or take such action at the written
direction of the Holders of at least the proportion in liquidation amount of
the Common Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. Pursuant to this
Section 6(c), the Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall not take any action in accordance with
the directions of the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel, at the
reasonable expense of the Trust, to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. In addition, a Holder of Common
Securities may directly institute a proceeding for enforcement of payment to
such Holder directly of the principal of or interest on Subordinated Notes
having a principal amount equal to the aggregate liquidation preference amount
of the Common Securities of such Holder on or after the respective due dates
specified in the Subordinated Notes. With respect to the Property Trustees
rights other than its rights to receive payment on the Debentures as holder of
the Debentures, if the Property Trustee fails to enforce its rights under the
Declaration, to the fullest extent permitted by applicable law, any Holder of
Common Securities may, institute a legal proceeding directly against any Person
to enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other
Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities; and provided further, that no such amendment or proposal which
would reduce the
8
<PAGE> 56
principal amount or the distribution rate or change the payment dates or
maturity of the Preferred Securities shall be permitted without the consent of
each holder of Preferred Securities.
(b) In the event the consent of the Property Trustee as the holder
of the Debentures is required under the Indenture with respect to any
amendment, modification or termination on the Indenture or the Debentures, the
Property Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
aggregate principal amount of the Debentures (a "Super Majority"), the Property
Trustee may only give such consent at the direction of the Holders of at least
the proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture,
including the subordination provisions therein.
9
<PAGE> 57
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
10
<PAGE> 58
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Preferred Securities
of
Consumers Power Company Financing I
____% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
Consumers Power Company Financing I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that ______________ (the "Holder") is the registered owner of preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the _____% Trust Originated Preferred
SecuritiesSM (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities represented hereby are issued and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of _______, 1996, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Preferred Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Preferred
Securities Guarantee to
A1-1
<PAGE> 59
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _______,199__.
___________________________________
[Name of Regular Trustee]
___________________________________
[Name of Regular Trustee]
___________________________________
[Name of Regular Trustee]
A1-2
<PAGE> 60
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
______________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date: _______________________
Signature: ___________________________________________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-3
<PAGE> 61
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
Consumers Power Company Financing I
______% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
Consumers Power Company Financing I, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that _________________ (the "Holder") is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the ______% Trust Originated Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of _______, 1996, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the Common
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Common Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of
business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities
as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 62
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of _______, 199__.
___________________________________
[Name of Regular Trustee]
___________________________________
[Name of Regular Trustee]
___________________________________
[Name of Regular Trustee]
A2-2
<PAGE> 63
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
______________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
______________________________________
(Insert address and zip code of assignee)
and irrevocably appoints_______________________________________________________
________________________________________________________________________________
agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: _______________________
Signature: ___________________________________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-3
<PAGE> 64
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 65
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
Exhibit (4)-3
=================================================================
Consumers Power Company, Issuer
and
The Bank of New York, Trustee
INDENTURE
Dated as of January ___, 1996
Subordinated Debt Securities
=================================================================
<PAGE> 2
CROSS REFERENCE SHEET
_____________
Provisions of Trust Indenture Act of 1939 and Indenture to be dated as of
____________, 1996 between Consumers Power Company and The Bank of New York:
Section of the Act Section of Indenture
- ------------------ --------------------
310(a)(1) and (2)............. 6.9
310(a)(3) and (4)............. Inapplicable
310(b)........................ 6.8 and 6.10(a), (b) and (d)
310(c)........................ Inapplicable
311(a)........................ 6.13(a) and (c)(1) and (2)
311(b)........................ 6.13(b)
311(c)........................ Inapplicable
312(a)........................ 4.1 and 4.2(a)
312(b)........................ 4.2(a) and (b)(i) and (ii)
312(c)........................ 4.2(c)
313(a)........................ 4.4(a)
313(b)(1)..................... Inapplicable
313(b)(2)..................... 4.4(b)
313(c)........................ 4.4(c)
313(d)........................ 4.4(d)
314(a)........................ 4.3
314(b)........................ Inapplicable
314(c)(1) and (2)............. 13.5
314(c)(3)..................... Inapplicable
314(d)........................ Inapplicable
314(e)........................ 13.5
314(f)........................ Inapplicable
315(a), (c) and (d)........... 6.1
315(b)........................ 5.11
315(e)........................ 5.12
316(a)(1)..................... 5.9
316(a)(2)..................... Not required
316(a) (last sentence)........ 7.4
316(b)........................ 5.7
316(c)........................ Not required
317(a)........................ 5.2
317(b)........................ 3.4(a) and (b)
318(a)........................ 13.7
________________
* This Cross Reference Sheet is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
_____________
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PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS
Authorization of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Compliance with Legal Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of and Consideration for Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consumers Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Holder", "Holder of Securities", "Securityholder" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Security" or "Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Security Register" and "Security Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Trust Indenture Act of 1939" or "Trust Indenture Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE TWO
SECURITIES . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.3 Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4 Authentication and Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.5 Execution of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.6 Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.7 Denomination of Securities; Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.8 Registration, Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.10 Cancellation of Securities; Destruction Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.12 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE THREE
COVENANTS OF THE ISSUER . . . . . . . . . . . . . . . . . . . 21
Section 3.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.2 Offices for Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.3 Appointment to Fill a Vacancy in Office of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.4 Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Section 3.5 Limitation on Dividends; Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.6 Covenants as to Consumers Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE . . . . 25
Section 4.1 Issuer to Furnish Trustee Names and Addresses of Securityholders . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.2 Preservation and Disclosure of Securityholders Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.3 Reports by the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.4 Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT . . . . 30
Section 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of Default. . . . . . . . . . . . . . . . . . . . . 30
Section 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.3 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.4 Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.5 Restoration of Rights on Abandonment of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.6 Limitations on Suits by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.7 Unconditional Right of Securityholders to Receive Principal and Interest and to Institute Certain Suits . . . 37
Section 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default . . . . . . . . . . . . . . . . . . . 38
Section 5.9 Control by Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.10 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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Section 5.11 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances . . . . . . . . . . . . . . . . 39
Section 5.12 Right of Court to Require Filing of Undertaking to Pay Costs . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.13 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE SIX
CONCERNING THE TRUSTEE . . . . . . . . . . . . . . . . . . . 40
Section 6.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default . . . . . . . . . . . . . . . . . 40
Section 6.2 Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof . . . . . 43
Section 6.4 Trustee and Agents May Hold Securities; Collections, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.6 Compensation and Indemnification of Trustee and Its Prior Claim . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.7 Right of Trustee to Rely on Officers' Certificate, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.8 Qualification of Trustee; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.9 Persons Eligible for Appointment as Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.10 Resignation and Removal; Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.11 Acceptance of Appointment by Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee . . . . . . . . . . . . . . . . . . . . 48
Section 6.13 Preferential Collection of Claims Against the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.14 Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS . . . . . . . . . . . . . . . . . 50
Section 7.1 Evidence of Action Taken by Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.2 Proof of Execution of Instruments and of Holding of Securities . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 7.3 Holders to Be Treated as Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.4 Securities Owned by Issuer Deemed Not Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.5 Right of Revocation of Action Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . 53
Section 8.1 Supplemental Indentures Without Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 8.2 Supplemental Indentures With Consent of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.3 Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.4 Documents to Be Given to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.5 Notation on Securities in Respect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE . . . . . . . . . . . . . . . 57
Section 9.1 Covenant of Issuer Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions . . . . 57
Section 9.2 Successor Corporation Substituted for Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 9.3 Opinion of Counsel Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS . . . . . . . . . . . 59
Section 10.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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Section 10.2 Application by Trustee of Funds Deposited for Payment of Securities . . . . . . . . . . . . . . . . . . . . 62
Section 10.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years . . . . . . . . . . . . . . . . 62
Section 10.5 Indemnity for Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE ELEVEN
REDEMPTION OF SECURITIES AND SINKING FUNDS . . . . . . . . . . . . . . 63
Section 11.1 Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.2 Notice of Redemption; Partial Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 11.3 Payment of Securities Called for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11.4 Exclusion of Certain Securities from Eligibility for Selection for Redemption . . . . . . . . . . . . . . . 65
Section 11.5 Mandatory and Optional Sinking Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE TWELVE
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.1 Applicability of Article; Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . 68
Section 12.2 Issuer Not to Make Payments with Respect to Subordinated Securities in Certain Circumstances . . . . . . . . 69
Section 12.3 Subordinated Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation
Reorganization of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.4 Holders of Subordinated Securities to be Subrogated to Right of Holders of Senior Indebtedness . . . . . . . 73
Section 12.5 Obligation of the Issuer Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.6 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . . . . . . . . . . . . . . . . . . . 75
Section 12.7 Application by Trustee of Monies or Government Obligations Deposited with It . . . . . . . . . . . . . . . . 75
</TABLE>
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Section 12.8 Subordination Rights Not Impaired by Acts or Omissions of Issuer or Holders of Senior Indebtedness . . . . . 76
Section 12.9 Securityholders Authorize Trustee to Effectuate Subordination of Securities . . . . . . . . . . . . . . . . . 76
Section 12.10 Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.11 Article Twelve Not to Prevent Events of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 78
Section 13.1 Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual Liability . . . . . . . 78
Section 13.2 Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities . . . . . . . . . . . . . . 78
Section 13.3 Successors and Assigns of Issuer Bound by Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.4 Notices and Demands on Issuer, Trustee and Holders of Securities . . . . . . . . . . . . . . . . . . . . . . 78
Section 13.5 Officers' Certificates and Opinions of Counsel; Statements to be Contained Therein . . . . . . . . . . . . . 79
Section 13.6 Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 13.7 Conflict of any Provision of Indenture with Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . 81
Section 13.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13.10 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13.11 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
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<PAGE> 10
THIS INDENTURE dated as of January ___, 1996 between Consumers Power
Company, a Michigan corporation (the "Issuer"), and The Bank of New York,
organized under the laws of the United States, as trustee (the "Trustee").
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the issue from time to time
of its debentures, notes, bonds or other evidences of indebtedness to be issued
in one or more series (the "Securities") up to such principal amount or amounts
as may from time to time be authorized in accordance with the terms of this
Indenture;
WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication, delivery
and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities
by the holders thereof, the Issuer and the Trustee mutually covenant and agree
for the equal and proportionate benefit of the respective holders from time to
time of the Securities as follows:
ARTICLE ONE
DEFINITIONS
Section 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture that are defined in the Trust Indenture Act of 1939,
including terms defined therein by reference to the Securities Act of 1933, as
amended (except as herein otherwise expressly provided or unless the context
otherwise requires), shall have the meanings assigned to such terms in said
Trust Indenture Act and in said Securities Act as in force at the date of this
Indenture. All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such
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<PAGE> 11
accounting principles as are generally accepted in the United States of America
at the time of any computation. References to any statute mean such statute as
amended at the time and includes any successor legislation. The words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision. The terms defined in this Article include the plural as well as
the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Board of Directors" means either the Board of Directors of the
Issuer or any committee of such Board duly authorized to act on its behalf.
"Board Resolution" means a copy of one or more resolutions, certified
by the secretary or an assistant secretary of the Issuer to have been duly
adopted or consented to by the Board of Directors and to be in full force and
effect, and delivered to the Trustee.
"Business Day" means a day on which banking institutions in New York,
New York or Delaware are not authorized or required by law or regulation to
close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution and delivery of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act of 1939, then the body performing such duties at such
time.
"Common Securities" means undivided beneficial interests in the
assets of a Consumers Trust which rank pari passu with Preferred Securities
issued by such trust; provided, however, that upon the occurrence of an Event
of Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and maturity are
subordinated to the rights of holders of Preferred Securities.
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"Common Securities Guarantee" means any guarantee that the Issuer
may enter into that operates directly or indirectly for the benefit of holders
of Common Securities of Consumers Trust.
"Consumers Trust" means a Delaware business trust formed by the
Issuer for the purpose of purchasing the Securities of the Issuer.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is dated, located at 101 Barclay St., New York, New York 10286.
"Declaration" means, in respect of a Consumers Trust, the amended
and restated declaration of trust of such Consumers Trust or any other
governing instrument of such Trust.
"Depository" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depository by the Issuer pursuant to Section 2.3, which must be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation, until a successor
Depository shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Depository" shall mean each Person who is then a
Depository hereunder; and if at any time there is more than one such Person,
"Depository" as used with respect to the Securities of any such series shall
mean each Depository with respect to the Global Securities of such series.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depository, or its nominee, for such series
in accordance with Section 2.4, and bearing the legend prescribed in Section
2.4.
"Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is
unconditionally guaranteed by the United States, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the
account of a holder of a depository receipt; provided that (except as required
by law)
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<PAGE> 13
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean the Person in whose name such Security is registered in the Security
Register kept by the Issuer for that purpose in accordance with the terms
hereof.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as provided hereunder.
"Interest Payment Date" means (a) the date or dates, if any, on which
interest is to be paid on any Security as established pursuant to Section
2.3(f), (b) the date of maturity or redemption of such Security, and (c) only
with respect to defaulted interest on such Security, the date established for
the payment of such defaulted interest pursuant to Section 2.7 hereof.
"Issuer" means (except as otherwise provided in Article Six)
Consumers Power Company, a Michigan corporation, and, subject to Article Nine,
its successors and assigns.
"Issuer Order" means a written statement, request or order of the
Issuer signed in its name by the Chairman, the President or any Vice President
(whether or not designated by a number or numbers or a word or words added
before or after the title "Vice President") or by the Treasurer of the Issuer.
"Maturity" means, when used with respect to any Security, the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman,
the President or any Vice President (whether or not designated by a number or
numbers or a word or words added before or after the title "Vice President"),
and by the Chief Financial Officer, Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary, of the Issuer and delivered to the
Trustee. Except as otherwise provided herein, each such certificate shall
include the statements provided for in Section 14.5.
"Opinion of Counsel" means an opinion in writing signed by the
counsel of the Issuer as designated by the Board of
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<PAGE> 14
Directors or by such other legal counsel who may be an employee of or regular
counsel to the Issuer and who shall be satisfactory to the Trustee. Each such
opinion shall include the statements provided for in Section 13.5, if and to
the extent required thereby.
"Outstanding" (except as otherwise provided in Section 6.8), when
used with reference to Securities, shall, subject to the provisions of Section
7.4, mean, as of any particular time, all Securities theretofore authenticated
and delivered by the Trustee under this Indenture, except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys or Government Obligations (as provided for in Section
10.1) in the necessary amount shall have been theretofore deposited in
trust with the Trustee or with any paying agent (other than the Issuer) or
shall have been set aside, segregated and held in trust by the Issuer for
the Holders of such Securities (if the Issuer shall act as its own paying
agent), provided that if such Securities, or portions thereof, are to be
redeemed prior to the Maturity thereof, notice of such redemption shall
have been given as herein provided, or provision satisfactory to the
Trustee shall have been made for giving such notice; and
(c) Securities which shall have been paid or in substitution for
which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that
such Security is held by a Person in whose hands such Security is a legal,
valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite principal amount
of Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder Securities owned
by the Issuer or any other obligor upon the Securities of any Affiliate of the
Issuer or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act
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<PAGE> 15
with respect to such Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or an Affiliate of the Issuer or of such
other obligor.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Securities" means undivided beneficial interests in the
assets of a Consumers Trust which rank pari passu with Common Securities issued
by such trust; provided however, that upon the occurrence of an Event of
Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Issuer
may enter into that operates directly or indirectly for the benefit of holders
of Preferred Securities of a Consumers Trust.
"principal" means the amount (including, without limitation, if and
to the extent applicable, any premium) that is payable with respect to a
Security as of any date and for any purpose (including, without limitation, in
connection with any sinking fund, upon any redemption at the option of the
Issuer, upon any purchase or exchange at the option of the Issuer or the Holder
of such Security and upon any acceleration of the Maturity of such Security).
"Property Trustee" means the entity performing the functions of the
Property Trustee of a Consumers Trust under the applicable Declaration of such
Consumers Trust.
"Record Date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee, means
the chairman of the board of directors, any vice chairman of the board of
directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any
vice president (whether or not designated by numbers or words added before or
after the title "vice president"), the cashier, the secretary, the treasurer,
any trust officer, any assistant trust officer, any assistant vice president,
any assistant cashier, any assistant secretary, any assistant treasurer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any
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<PAGE> 16
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Security" or "Securities" (except as otherwise provided in Section
6.8) shall have the meaning stated in the first recital of this Indenture and,
more particularly, any Securities that have been authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" shall have the
respective meanings set forth in Section 2.8.
"Senior Indebtedness" shall have the meaning set forth in Section
12.1(b).
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Issuer or by one
or more other Subsidiaries. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.
"Stated Maturity" means, when used with respect to any Security or
any installment of principal thereof or interest thereon, the date specified in
such Security as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.
"Trust Indenture Act of 1939" or "Trust Indenture Act" (except as
otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of
1939 as in force at the date as of which this Indenture was originally
executed.
"Trust Securities" means Common Securities and Preferred Securities.
"Trustee" means the Person identified as the "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder; and if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any series
shall mean the trustee with respect to the Securities of such series.
ARTICLE TWO
SECURITIES
Section 2.1 Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with
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<PAGE> 17
this Indenture) as shall be established by or pursuant to one or more Board
Resolutions (as set forth in a Board Resolution or, to the extent established
pursuant to rather than set forth in a Board Resolution, an Officers'
Certificate detailing such establishment) or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have imprinted or otherwise reproduced thereon such letters,
numbers or other marks of identification and such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
Section 2.2 Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
"This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
__________________________________,
as Trustee
By_______________________
Authorized Officer"
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Trustee's certificate of
authentication to be borne by the Securities of each such series shall be
substantially as follows:
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"This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
_________________________,
as Authenticating Agent
By_______________________
Authorized Officer"
Section 2.3 Amount Unlimited; Issuable in Series.
(a) The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
(b) The Securities may be issued in one or more series and shall be
direct obligations of the Issuer.
(c) Each Security shall be dated and issued as of the date of its
authentication by the Trustee.
(d) Each Security shall bear interest from the later of its original
date of authentication or the most recent Interest Payment Date to which
interest has been paid or duly provided for with respect to such Security until
the principal of such Security is paid or made available for payment, and
interest on each Security shall be payable on each Interest Payment Date after
the date of such Security.
(e) Each Security shall mature on a date specified in the Security
and the principal amount of each outstanding Security shall be payable on the
Maturity specified therein.
(f) There shall be established in or pursuant to one or more Board
Resolutions (and, to the extent established pursuant to rather than set forth
in a Board Resolution, in an Officers' Certificate detailing such
establishment) or established in one or more indentures supplemental hereto,
prior to the initial issuance of Securities of any series:
(1) the designation of the Securities of such series, which shall
distinguish the Securities of such series from the Securities of all other
series;
(2) any limit upon the aggregate principal amount of the Securities
of such series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
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registration of transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 2.8, 2.9, 2.11, 8.5 or
11.3);
(3) subject to Section 2.3(e), the date or dates (and whether fixed
or extendible) on which the principal of the Securities of such series is
payable;
(4) the date from which interest on the Securities of such series
shall begin to accrue, the rate or rates at which the Securities of such
series shall bear interest, if any, the Interest Payment Date or Dates for
the Securities of such series and the Record Date for interest payable on
any Interest Payment Date;
(5) the place or places where the principal of and any interest on
Securities of such series shall be payable and where such Securities may
be registered or transferred (if in addition to, or other than, as
provided in Section 3.2);
(6) the right, if any, of the Issuer to redeem or purchase
Securities of such series, in whole or in part, at its option and the
period or periods within which, the price or prices at which and any terms
and conditions upon which Securities of such series may be so redeemed;
(7) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of such series pursuant to any mandatory redemption,
sinking fund or analogous provisions or at the option of a Holder thereof
and the price or prices at which and the period or periods within which
and any terms and conditions upon which Securities of such series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $25 and any integral multiple
thereof, the denominations in which Securities of such series shall be
issuable;
(9) whether the Securities of such series will be subordinated to
the payment of Senior Indebtedness on the terms and conditions set forth
in Article Twelve and whether such subordination shall be subject to any
provisions in addition to or in lieu of those set forth in Article Twelve;
(10) whether the Securities of such series will be issuable as
Global Securities;
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(11) whether and under what circumstances the Issuer will pay
additional amounts on the Securities of such series held by a person who
is not a U.S. Person in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Issuer will have the
option to redeem such Securities rather than pay such additional amounts;
(12) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, and
the form and terms of any such certificates, documents or conditions;
(13) any trustees, depositaries, authenticating or paying agents,
transfer agents, conversion agents or registrars or any other agents with
respect to the Securities of such series;
(14) any events of default or covenants with respect to the
Securities of such series other than those specified herein;
(15) the Person to whom any interest on a Security of such series
shall be payable, if other than the Person in whose name the Security (or
one or more predecessor Securities) is registered at the close of business
on the Record Date for such interest;
(16) if the Securities of such series shall be issued in whole or in
part in the form of one or more Global Securities, whether beneficial
owners of interests in any such Global Security may exchange such
interests for Securities of such series of like tenor and of authorized
form and denomination and the circumstances under which any such changes
may occur, if other than in the manner provided in Section 2.8;
(17) the right of the Issuer, if any, to defer any payment of
principal of or interest on the Securities of such series, and the maximum
length of any such deferral period;
(18) whether any property will be pledged to secure the Securities;
and
(19) any other terms of such series (which terms shall not be
inconsistent with the provisions of this Indenture).
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All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any indenture supplemental hereto referred to above. All
Securities of any one series need not be issued at the same time and may be
issued from time to time, consistent with the terms of this Indenture, if so
provided by or pursuant to such Board Resolution, such Officers' Certificate or
in any such indenture supplemental hereto.
Section 2.4 Authentication and Delivery of Securities. The Issuer
may from time to time deliver Securities of any series, executed by the Issuer
to the Trustee for authentication, together with the applicable documents
referred to below in this Section, and the Trustee shall thereupon authenticate
and deliver such Securities to or upon the order of the Issuer (contained in
the Issuer Order referred to below in this Section) or pursuant to such
procedures acceptable to the Trustee and to such recipients as may be specified
from time to time by an Issuer Order. If so provided in the Board Resolution,
Officers' Certificate or supplemental indenture establishing the Securities of
any series, the maturity date, interest accrual date, interest rate, Interest
Payment Date or Dates and any other terms of any or all of the Securities of
such series may be determined by or pursuant to such Issuer Order and
procedures. If provided for in such procedures, such Issuer Order may
authorize authentication and delivery pursuant to instructions (from the Issuer
or its duly authorized agent) in writing, by facsimile or any other method
mutually agreed upon by the Issuer and Trustee. In authenticating the
Securities of a series and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive (but, in the case of subparagraphs 2, 3 and 4 below, only at or before
the time of the first request of the Issuer to the Trustee to authenticate
Securities of such series, however, any request after the first shall be deemed
to include the representation of the Issuer that the document previously
delivered pursuant to subparagraphs 2, 3 and 4 below are still true and in
effect) and (subject to Section 6.1) shall be fully protected in relying upon,
unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting forth
delivery instructions if the Securities are not to be delivered to the
Issuer.
(2) any Board Resolution, Officers' Certificate and/or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant
to which the forms and terms of the Securities of such series were
established;
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(3) an Officers' Certificate setting forth the form or forms and
terms of the Securities of such series stating (a) that such form or forms
and terms have been established pursuant to Sections 2.1 and 2.3 and
comply with this Indenture, (b) the aggregate principal amount of all of
the Securities outstanding under this Indenture and (c) covering such
other matters as the Trustee may reasonably request; and
(4) at the option of the Issuer, either an Opinion of Counsel, or a
letter addressed to the Trustee permitting it to rely on an Opinion of
Counsel, substantially to the effect that:
(a) the forms of the Securities of such series have been duly
authorized and established in conformity with the provisions of this
Indenture;
(b) the terms of the Securities of such series have been duly
authorized and established in conformity with the provisions of this
Indenture;
(c) when the Securities of such series have been executed by
the Issuer and authenticated by the Trustee in accordance with the
provisions of this Indenture and delivered to and duly paid for by
the purchasers thereof, they will have been duly issued under this
Indenture and will be valid and legally binding obligations of the
Issuer, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting the enforcement of
creditors' rights and to general principles of equity, and will be
entitled to the benefits of this Indenture;
(d) the Indenture has been duly authorized, executed and
delivered by the Issuer and constitutes a legal, valid and binding
agreement of the Issuer, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating
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to or affecting the enforcement of creditors' rights and to general
principles of equity;
(e) the issuance of the Securities will not result in any
default under this Indenture, or any other contract, indenture, loan
agreement or other instrument to which the Issuer is a party or by
which it or any of its property is bound; and
(f) no consent, approval, authorization, order, registration or
qualification of or with any governmental agency or body having
jurisdiction over the Issuer is required for the execution and
delivery of the Securities of such series by the Issuer, except such
as have been obtained (except that no opinion need be expressed as to
state securities or Blue Sky laws).
The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section (other than Securities
the forms and terms of which shall have been established by supplemental
indenture) if the Trustee, being advised by counsel, determines that such
action may not lawfully be taken by the Issuer or if the Trustee in good faith
by its board of directors or board of trustees, executive committee or a trust
committee of directors, trustees or Responsible Officers shall determine that
such action would expose the Trustee to personal liability to existing Holders
or would affect the Trustee's rights, duties or immunities under the Securities
of any such series, this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall be in an
aggregate amount equal to the aggregate principal amount specified in such
Issuer Order, (ii) shall be registered in the name of the Depository therefor
or its nominee, (iii) shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instructions and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Securities in definitive registered form, this Security
may not be transferred except as a whole by the Depository to the nominee of
the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository."
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Section 2.5 Execution of Securities. The Securities shall be signed
on behalf of the Issuer by both (a) its Chairman, its President or any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President"), under its corporate seal
reproduced thereon, which need not be attested and (b) by its Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary. Such signatures may be the manual or facsimile signatures of such
officers. Typographical and other minor errors or defects in any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have so signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Issuer; and any Security may be so signed on behalf of the Issuer by such
persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
Section 2.6 Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one of
its authorized officers, shall be entitled to the benefits of this Indenture or
be valid or obligatory for any purpose. The execution of such certificate by
the Trustee upon any Security executed by the Issuer shall be conclusive
evidence that the Security so authenticated has been duly authenticated and
delivered hereunder and that the Holder is entitled to the benefits of this
Indenture. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Issuer,
and the Issuer shall deliver such Security to the Trustee for cancellation as
provided in Section 2.10, together with a written statement (which need not
comply with Section 14.5 and need not be accompanied by an Opinion of Counsel)
stating that such Security has never been issued and sold by the Issuer, for
all purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 2.7 Denomination of Securities; Payments of Interest. The
Securities of each series shall be issuable in registered form in denominations
established as contemplated by Section 2.3. The Securities of each series
shall be numbered,
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lettered or otherwise distinguished in such manner or in accordance with such
plan as the officers of the Issuer executing the same may determine with the
approval of the Trustee, as evidenced by the execution and authentication
thereof.
The Securities of each series shall bear interest from the date, and
such interest shall be payable on the Interest Payment Dates, established as
contemplated by Section 2.3.
The Person in whose name any Security of any series is registered at
the close of business on any Record Date applicable to such series with respect
to any Interest Payment Date for such series shall be entitled to receive the
interest, if any, payable on such Interest Payment Date notwithstanding any
transfer or exchange of such Security subsequent to the Record Date and prior
to such Interest Payment Date, except if and to the extent the Issuer shall
default in the payment of the interest due on such Interest Payment Date, in
which case such defaulted interest shall be paid to the Persons in whose names
Outstanding Securities of such series are registered at the close of business
on a subsequent Record Date (which shall be not less than five Business Days
prior to the date of payment of such defaulted interest) established by notice
given by mail by or on behalf of the Issuer to the Holders of Securities of
such series not less than 15 days preceding such subsequent Record Date. The
term "Record Date", as used with respect to any Interest Payment Date (except a
date for payment of defaulted interest) for the Securities of any series, shall
mean the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 2.8 Registration, Transfer and Exchange. The Issuer will
keep, or cause to be kept, at the Corporate Trust Office and at each other
office or agency to be maintained for the purpose as provided in Section 3.2
for each series of Securities a register or registers (collectively, the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, it will provide for the registration of Securities of such series
and the registration of transfer of Securities of such series. The Security
Register shall be in written form in the English language or in any other form
capable of being converted into such form within a reasonable time. At all
reasonable times such register or registers not maintained by the Trustee shall
be open for inspection by the Trustee. Unless and until otherwise determined
by the Issuer pursuant to Section 2.3, the Security Register with respect to
each series of Securities
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shall be kept solely at the Corporate Trust Office and, for this purpose, the
Trustee shall be designated the "Security Registrar."
Upon due presentation for registration of transfer of any Security of
any series at any such office or agency, the Issuer shall execute and the
Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Security or Securities of the same series, maturity date and
interest rate in authorized denominations for a like aggregate principal
amount.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for one or
more Securities of such series in authorized denominations for a like aggregate
principal amount, upon surrender of such Securities to be exchanged at the
office or agency to be maintained for such purpose in accordance with Section
3.2 and upon payment, if the Issuer shall so require, of the charges
hereinafter provided. Whenever any Securities are so surrendered for exchange,
the Issuer shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive. All
Securities surrendered upon any exchange or transfer provided for in this
Indenture shall be promptly cancelled and disposed of by the Trustee and the
Trustee will deliver a certificate of disposition thereof to the Issuer.
All Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer and the Trustee duly executed by,
the Holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities, other than exchanges
pursuant to Sections 2.11, 8.5 and 11.2 not involving any transfer. No service
charge shall be made for any such transaction.
The Issuer shall not be required to (a) issue, exchange or register a
transfer of any Securities of any series for a period of 15 days next preceding
the first mailing or publication of notice of redemption of Securities of such
series to be redeemed or (b) exchange or register the transfer of any
Securities selected, called or being called for redemption, in whole or in
part, except, in the case of any Security to be redeemed in part, the portion
thereof not so to be redeemed.
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Notwithstanding any other provision of this Section, unless and until
it is exchanged in whole or in part for Securities in definitive registered
form, a Global Security representing all or a portion of the Securities of a
series may not be transferred except as a whole by the Depository for such
Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor Depository for such Global
Security or a nominee of such successor Depository.
If at any time a Depository for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depository for such Securities or if at any
time any such Depository shall no longer be eligible as a Depository, the
Issuer shall appoint a successor Depository with respect to the Securities held
by such Depository. If a successor Depository is not appointed by the Issuer
within 90 days after the Issuer receives such notice or becomes aware of such
ineligibility, the Securities of such series shall no longer be represented by
one or more Global Securities held by such Depository, and the Issuer shall
execute, and the Trustee, upon receipt of an Issuer Order for the
authentication and delivery of definitive Securities of such series, shall
authenticate and deliver Securities of such series in definitive registered
form without coupons, in any authorized denominations and in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities held by such Depository in exchange for such Global Security or
Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of a particular series shall no longer be represented by a
Global Security or Securities. In such event, the Issuer shall execute, and
the Trustee, upon receipt of an Issuer Order for the authentication and
delivery of definitive Securities of such series, shall authenticate and
deliver, Securities of such series in definitive registered form in any
authorized denominations and in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing Securities
of such series in exchange for such Global Security or Securities.
If so specified by the Issuer pursuant to Section 2.3 with respect to
Securities of a particular series represented by a Global Security, the
Depository for such Global Security may surrender such Global Security in
exchange in whole or in part for Securities of such series in definitive
registered form on such terms as are acceptable to the Issuer and such
Depository. Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and deliver:
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(i) to each Person specified by such Depository a new Security or
Securities of such series, in any authorized denominations requested by
such Person, in an aggregate principal amount equal to, and in exchange
for, such Person's beneficial interest in the Global Security; and
(ii) to such Depository a new Global Security in a denomination
equal to the difference between the principal amount of the surrendered
Global Security and the aggregate principal amount of Securities
authenticated and delivered pursuant to clause (i) above.
Upon the exchange of any Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Issuer or the Trustee. Securities
in definitive registered form without coupons issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depository for such Global Security, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Issuer or the Trustee. The Trustee or
such agent shall deliver such Securities to or as directed by the Persons in
whose names such Securities are so registered.
All Securities issued upon any registration of transfer or exchange
of Securities shall be valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Section 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon receipt of an Issuer Order, the Trustee shall
authenticate and deliver a new Security of the same series, maturity date and
interest rate, bearing a number or other distinguishing symbol not
contemporaneously outstanding, in exchange and substitution for the mutilated
or defaced Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen. In every case the applicant for a substitute
Security shall furnish to the Issuer and to the Trustee or any agent of the
Issuer or the Trustee such security or indemnity as may be required by them to
indemnify and defend and to save each of them and any agent of either of them
harmless and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security and of the
ownership thereof and, in the case of mutilation or defacement, shall surrender
the Security to the Trustee or such agent.
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Upon the issuance of any substitute Security the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Issuer and to the Trustee or any agent of the Issuer or the
Trustee such security or indemnity as may be required by them to save each of
them harmless, and, in every case of destruction, loss or theft, evidence to
their satisfaction of the destruction, loss or theft of such Security and of
the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the Issuer, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone and shall be entitled to all the benefits of
(but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities of such
series duly authenticated and delivered hereunder. All Securities shall be
held and owned upon the express condition that, to the extent permitted by law,
the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, defaced, destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
Section 2.10 Cancellation of Securities; Destruction Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or any
agent of the Trustee, shall be delivered to the Trustee or its agent for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and
no Securities shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. The Trustee or its agent shall
dispose of cancelled Securities held by it and deliver a certificate of
disposition to the Issuer. If the Issuer or its agent shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented
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by such Securities unless and until the same are delivered to the Trustee or
its agent for cancellation.
Section 2.11 Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable as registered Securities of any authorized denomination, and
substantially in the form of the definitive Securities of such series but with
such omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer with the concurrence of the
Trustee as evidenced by the execution and authentication thereof. Temporary
Securities may contain such references to any provisions of this Indenture as
may be appropriate. Every temporary Security shall be executed by the Issuer
and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Securities. Without unreasonable delay the Issuer shall execute and shall
furnish definitive Securities of such series and thereupon temporary Securities
of such series may be surrendered in exchange for such definitive Securities in
registered form without charge at each office or agency to be maintained for
such purpose in accordance with Section 3.2 and the Trustee shall authenticate
and deliver in exchange for such temporary Securities of such series an equal
aggregate principal amount of definitive Securities of the same series in
authorized denominations. Until so exchanged, the temporary Securities of any
series shall be entitled to the same benefits under this Indenture as
definitive Securities of such series, unless otherwise established pursuant to
Section 2.3. The provisions of this Section are subject to any restrictions or
limitations on the issue and delivery of temporary Securities of any series
that may be established pursuant to Section 2.3.
Section 2.12 Computation of Interest. Except as otherwise specified
as contemplated by Section 2.3 for Securities of any series, interest, if any,
on the Securities of each series shall be computed on the basis of a 360-day
year of twelve 30-day months.
ARTICLE THREE
COVENANTS OF THE ISSUER
Section 3.1 Payment of Principal and Interest. The Issuer covenants
and agrees for the benefit of each series of Securities that it will duly and
punctually pay or cause to be paid the principal of, and interest, if any, on,
each of the Securities of such series (together with any additional
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amounts payable pursuant to the terms of such Securities) at the place or
places, at the respective times and in the manner provided in such Securities
and in this Indenture. The interest on Securities (together with any
additional amounts payable pursuant to the terms of such Securities) shall be
payable only to or upon the written order of the Holders thereof and, at the
option of the Issuer, may be paid by wire transfer or by mailing checks for
such interest payable to or upon the written order of such Holders at their
last addresses as they appear on the registry books of the Issuer.
Section 3.2 Offices for Payments, etc. So long as any Securities
are outstanding hereunder, the Issuer will maintain in The City of New York,
State of New York an office or agency where the Securities of each series may
be presented for payment, where the Securities of each series may be presented
for exchange as in this Indenture provided, and where the Securities of each
series may be presented for registration of transfer as in this Indenture
provided.
The Issuer will maintain in The City of New York an office or agency
where notices and demands to or upon the Issuer in respect of the Securities of
any series, or this Indenture may be served.
The Issuer will give to the Trustee prompt written notice of the
location of each such office or agency and of any change of location thereof.
In case the Issuer shall fail to maintain any office or agency required by this
Section to be located in The City of New York, State of New York or shall fail
to give such notice of the location or of any change in the location of any of
the above offices or agencies, presentations and demands may be made and
notices may be served at the Corporate Trust Office of the Trustee, and, in
such event, the Trustee shall act as the Issuer's agent to receive all such
presentations, surrenders, notices and demands.
The Issuer may from time to time designate one or more additional
offices or agencies where the Securities of any series may be presented for
payment, where the Securities of such series may be presented for exchange as
in this Indenture provided, where the Securities of such series may be
presented for registration of transfer as in this Indenture provided and the
Issuer may from time to time rescind any such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Issuer
of its obligation to maintain any office or agency provided for in this
Section. The Issuer will give to the Trustee prompt written notice of any such
designation or rescission thereof and of change in the location of any such
other office or agency.
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Section 3.3 Appointment to Fill a Vacancy in Office of Trustee. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.10, a Trustee, so that there
shall at all times be a Trustee with respect to each series of Securities
hereunder.
Section 3.4 Paying Agents. Whenever the Issuer shall appoint a
paying agent other than the Trustee with respect to the Securities of any
series, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:
(a) that such paying agent will hold all sums received by it as such
agent for the payment of the principal of or interest, if any, on the
Securities of such series (whether such sums have been paid to it by the
Issuer or by any other obligor on the Securities of such series) in trust
for the benefit of the Holders of the Securities of such series entitled
thereto or of the Trustee until such sums shall be paid to such Holders or
otherwise disposed of as herein provided;
(b) that such paying agent will give the Trustee notice of any
failure by the Issuer (or by any other obligor on the Securities of such
series) to make any payment of the principal of or interest on the
Securities of such series when the same shall be due and payable; and
(c) at any time during the continuance of any such failure, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such paying agent.
The Issuer will, on or prior to each due date of the principal of or
interest, if any, on the Securities of any series, deposit with the paying
agent a sum sufficient to pay such principal or interest so becoming due, such
sum to be held in trust for the benefit of the Holders of the Securities of
such series entitled to such principal or interest, and (unless such paying
agent is the Trustee) the Issuer will promptly notify the Trustee of any
failure to take such action.
If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest, if any, on the Securities of such series, set aside, segregate
and hold in trust for the benefit of the Holders of the Securities of such
series a sum sufficient to pay such principal or interest, if any, so becoming
due until such sums shall be paid to such Holders or
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otherwise disposed of as herein provided. The Issuer will promptly notify the
Trustee of any failure to take such action.
Anything in this section to the contrary notwithstanding, but subject
to Section 10.1, the Issuer may at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Issuer or any paying
agent hereunder, as required by this Section, such sums to be held by the
Trustee upon the trusts herein contained, and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.
Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 10.3 and 10.4.
Section 3.5 Limitation on Dividends; Transactions with Affiliates. (a)
If Securities are issued to a Consumer's Trust or a trustee of such trust in
connection with the issuance of Trust Securities by such Consumers Trust and
(i) there shall have occurred any event that would constitute an Event of
Default or (ii) the Company shall be in default with respect to its payment or
any obligations under the Preferred Securities Guarantee or Common Securities
Guarantee relating to such Trust Securities, then (x) the Company shall not
declare or pay any dividend on , make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock, (y) the Company shall not make any payment of interest or
principal or premium, if any, on, or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company which rank pari passu
with or junior to such Securities and (z) the Company shall not make guarantee
payments with respect to the foregoing (other than pursuant to the Preferred
Securities Guarantee).
(b) If Securities are issued to a Consumers Trust or a trustee of
such trust in connection with the issuance of Trust Securities by such
Consumers Trust and the Company shall have given notice of its election to
defer payments of interest on such Securities by extending the interest payment
period as provided in any indenture supplemental hereto and such period, or any
extension thereof, shall be continuing, then (i) the Company shall not declare
or pay any dividend, or make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (ii) the Company shall not make any payment of interest, or principal or
premium, if any, on, or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company which
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rank pari passu with or junior to such Securities and (iii) the Company shall
not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee), provided, however, the Company
may declare and pay a stock dividend where the dividend stock is the same stock
as that on which the dividend is being paid.
Section 3.6 Covenants as to Consumers Trust. In the event
Securities are issued to a Consumers Trust or a trustee of such trust, in
connection with the issuance of Trust Securities by such trust, for so long as
such Trust Securities remain outstanding, the Company will (i) maintain 100%
direct or indirect ownership of the Common Securities of such trust; provided,
however, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of the Common Securities, (ii) not cause, as
sponsor of such trust, or permit, as holder of Common Securities of such trust,
the dissolution, winding-up or termination of such trust, except in connection
with a distribution of Securities as provided in the Declaration and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration and (iii) use its reasonable efforts to cause such trust (a) to
remain a business trust, except in connection with a distribution of
Securities, the redemption of all of the Trust Securities of such Consumers
Trust or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration of such Consumers Trust, and (b) to otherwise continue to be
classified for United States federal income tax purposes as a grantor trust.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
Section 4.1 Issuer to Furnish Trustee Names and Addresses of
Securityholders. The Issuer and any other obligor on the Securities covenant
and agree that they will furnish or cause to be furnished to the Trustee a list
in such form as the Trustee may reasonably require of the names and addresses
of the Holders of the Securities of each series:
(a) semi-annually and not more than 15 days after each Record Date
for the payment of interest on such Securities, as of such Record Date and
on dates to be determined pursuant to Section 2.3 for non-interest bearing
Securities, in each year; and
(b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, as of a
date not more than
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15 days prior to the time such information is furnished; provided that if
and so long as the Trustee shall be the Security Registrar for such series
such list shall not be required to be furnished.
Section 4.2 Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to it
as provided in Section 4.1, (ii) received by it in the capacity of Security
Registrar for such series, if so acting, and (iii) filed with it within the two
preceding years pursuant to Section 4.4(c)(ii). The Trustee may destroy any
list furnished to it as provided in Section 4.1 upon receipt of a new list so
furnished.
(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Securities of a particular series (in which case the applicants must all
hold Securities of such series) or with Holders of all Securities with respect
to their rights under this Indenture or under such Securities and such
application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection
(a) of this Section; or
(ii) inform such applicants as to the approximate number of Holders
of Securities of such series or of all Securities, as the case may be,
whose names and addresses appear in the information preserved at the time
by the Trustee, in accordance with the provisions of such subsection (a)
and as to the approximate cost of mailing to such Holders the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of such series or all Holders of Securities,
whose name and address
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appears in the information preserved at the time by the Trustee in accordance
with the provisions of such subsection (a) a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of the Holders of Securities of
such series or of all Securities, as the case may be, or would be in violation
of applicable law. Such written statement shall specify the basis of such
opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met, and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Holders with reasonable promptness after the entry
of such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and every Holder of Securities by receiving and holding the
same, agrees with the Issuer and the Trustee that neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders of Securities in accordance with the provisions of subsection
(b) of this Section, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under such subsection (b).
Section 4.3 Reports by the Issuer. The Issuer covenants:
(a) to file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or if the Issuer is not required to file
information, documents or reports pursuant to either of such Sections,
then to file with the Trustee and the
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Commission, in accordance with rules and regulations prescribed from time
to time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a debt
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Issuer with the conditions and covenants provided for in this
Indenture as may be required from time to time by such rules and
regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 4.4(c), such summaries of any information, documents
and reports required to be filed by the Issuer pursuant to subsections (a)
and (b) of this Section as may be required to be transmitted to such
Holders by rules and regulations prescribed from time to time by the
Commission; and
(d) to furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Issuer's compliance with all conditions and covenants under this Indenture
(such compliance to be determined without regard to any period of grace or
requirement of notice provided under this Indenture).
Section 4.4 Reports by the Trustee. (a) Annually, not later than
60 days after May 15 of each year, the Trustee shall transmit to the Holders
and the Commission a report with respect to events described in Section 313(a)
of the Trust Indenture Act, in such manner and to the extent revised
thereunder.
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(b) The Trustee shall transmit to the Holders of each series, as
provided in subsection (c) of this Section, a brief report with respect to the
character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee, as such,
since the date of the last report transmitted pursuant to the provisions of
subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of this Indenture) for the reimbursement of which
it claims or may claim a lien or charge, prior to that of the Securities of
such series, on property or funds held or collected by it as Trustee and which
it has not previously reported pursuant to this subsection (b), except that the
Trustee shall not be required (but may elect) to report such advances if such
advances remaining unpaid at any time aggregate 10% or less of the principal
amount of the Securities of such series outstanding at such time, such report
to be transmitted within 90 days after such time.
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(c) Reports pursuant to this Section shall be transmitted by mail to
all Holders of Securities, as the names and addresses of such Holders appear
upon the Security Register;
(d) A copy of each such report shall, at the time of such
transmission to the Holders, be furnished to the Issuer and be filed by the
Trustee with each stock exchange, if any, upon which the Securities of any
series are listed and also with the Commission. The Issuer agrees to notify
the Trustee when and as the Securities of such series become admitted to
trading on any national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
Section 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default. "Event of Default" with respect to Securities of any
series, wherever used herein, means each of the following events which shall
have occurred and be continuing (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(a) default in the payment of any installment of interest upon any
of the Securities of such series as and when the same shall become due and
payable, (whether or not payment is prohibited by the provisions of
Article 12 hereof), and continuance of such default for a period of 30
days; provided, however, that if the Issuer is permitted by the terms of
the Securities of such series to defer the payment in question, the date
on which such payment is due and payable shall be the date on which the
Issuer is required to make payment following such deferral, if such
deferral has been elected pursuant to the terms of the Securities; or
(b) default in the payment of all or any part of the principal of
the Securities of such series as and when the same shall become due and
payable (whether or not payment is prohibited by the provisions of Article
12 hereof), whether at Maturity, upon purchase by the Issuer at the option
of the Holder, upon any redemption, by declaration or otherwise; or
(c) default in the deposit or payment of any sinking fund or
analogous payment (whether or not
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payment is prohibited by the provisions of Article 12 hereof) for the
benefit of the Securities of such series as and when the same shall become
due and payable; or
(d) failure on the part of the Issuer duly to observe or perform any
other of the covenants or agreements on the part of the Issuer in the
Securities of such series or in this Indenture contained (other than a
covenant or agreement expressly included herein solely for the benefit of
Securities of other series) for a period of 60 days after the date on
which written notice specifying such failure, stating that such notice is
a "Notice of Default" hereunder and demanding that the Issuer remedy the
same, shall have been given by registered or certified mail, return
receipt requested, to the Issuer by the Trustee, or to the Issuer and the
Trustee by the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities of all series affected thereby; or
(e) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Issuer in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, adjudging the Issuer a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Issuer
under any applicable law, or appointing a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or similar official) of the Issuer or
for any substantial part of the property of the Issuer, or ordering the
winding up or liquidation of the affairs of the Issuer, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(f) the Issuer shall commence a voluntary case or proceeding under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or any other case or proceeding to be adjudicated a
bankrupt or insolvent, or consent to the entry of a decree or order for
relief in an involuntary case under any such law, or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable law, or consent to the filing of such petition
or to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of the
Issuer or for any substantial part of the property of the Issuer, or
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make any general assignment for the benefit of creditors, or the notice by
it in writing of its inability to pay its debts generally as they become
due, or the taking of any corporate action by the Issuer in furtherance of
any such action; or
(i) in the event Securities are issued to a Consumers Trust or the
trustee of such trust of the Company in connection with the issuance of
Trust Securities by such trust, such trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated its
existence except in connection with (i) the distribution of Securities to
holders of Trust Securities in liquidation of their interests in such
trust, (ii) the redemption of all outstanding Trust Securities of such
trust, and (iii) mergers, consolidations or amalgamations, each as
permitted by the Declaration of such trust;
then, unless the principal of all the Securities shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of all the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given by
such Holders), may declare the entire principal of all the Securities of such
series then Outstanding and interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable.
The foregoing paragraph, however, is subject to the condition that
if, at any time after the principal of the Securities of one or more series
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the
Securities of such series and the principal of all Securities of such series
which shall have become due otherwise than by acceleration (with interest upon
such principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest at the same rate as
the rate of interest specified in the Securities of such series, to the date of
such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee except as a result of negligence or bad faith, and if any and all
Events of Default under this Indenture with respect to such series, other than
the non-payment of the principal of Securities of such series which shall have
become due by acceleration, shall have been cured, waived or otherwise remedied
as provided herein - then, and in every such case, the Holders of a majority in
aggregate principal amount of all the Securities of
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such affected series then Outstanding by written notice to the Issuer and to
the Trustee, may direct the Trustee to waive all defaults with respect to such
series and rescind and annul such declaration and its consequences, but no such
waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
Section 5.2 Collection of Indebtedness by Trustee; Trustee May Prove
Debt. The Issuer covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Securities of any series
when such interest shall have become due and payable, and such default shall
have continued for a period of 30 days, or (b) in case default shall be made in
the payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether at Maturity,
upon redemption, by declaration or otherwise -- then, upon demand of the
Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of
the Securities of such series the whole amount that then shall have become due
and payable on all Securities of such series for principal or interest, as the
case may be (with interest to the date of such payment upon the overdue
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest at the same rate as the
rate of interest specified in the Securities of such series); and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses and liabilities incurred by
such parties, and all advances made by the Trustee except as a result of its
negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the Securities of such series to the Holders,
whether or not the Securities of such series be overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or other obligor upon the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or other obligor upon the Securities of such series,
wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or
any other obligor upon the Securities of any series under Title 11 of the
United States Code or any other applicable
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Federal or state bankruptcy, insolvency or other similar law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor, or in case of
any other comparable judicial proceedings relative to the Issuer or such other
obligor, or to the creditors or property of the Issuer or such other obligor,
the Trustee, irrespective of whether the principal of the Securities of any
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of the
principal and interest owing and unpaid in respect of the Securities of
each series, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and its
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee, except as a
result of negligence or bad faith) and of the Securityholders allowed in
any judicial proceedings relative to the Issuer or such other obligor, or
to the creditors or property of the Issuer or such other obligor;
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of the Securities of each series in any election of
a trustee or a standby trustee in arrangement, reorganization, liquidation
or other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings; and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Securityholders and of the Trustee on
their behalf; and any trustee, receiver, liquidator, custodian or other
similar official is hereby authorized by each of the Securityholders to
make payments to the Trustee, and, in the event that the Trustee shall
consent to the making of payments directly to the Securityholders, to pay
to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, and its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee except, in each case, as a result of negligence or bad faith.
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Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities of any series or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities of any series may be prosecuted and enforced by the
Trustee without the possession of any of the Securities of such series or the
production thereof at any trial or other proceedings relative thereto, and any
such action or proceedings instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment, subject
to the payment of the expenses, disbursements and compensation of the Trustee
and its agents, attorneys and counsel, shall be for the ratable benefit of the
Holders of the Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Securities in respect to which action was taken, and it shall
not be necessary to make any Holders of such Securities parties to any such
proceedings.
Section 5.3 Application of Proceeds. Any moneys collected by the
Trustee pursuant to this Article in respect of the Securities of any series
shall be applied in the following order at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of principal
or interest, upon presentation of the several Securities in respect of which
moneys have been collected and stamping (or otherwise noting) thereon the
payment, and upon surrender thereof if fully paid, or issuing Securities of the
same series in reduced principal amounts in exchange for the presented
Securities if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection applicable
to such series, including reasonable compensation to the Trustee and its
agents, attorneys and counsel and of all expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of
negligence or bad faith;
SECOND: In case the principal of the Securities of such series in
respect of which moneys have been collected shall not have become and be
then due and
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payable, to the payment of interest, if any, on the Securities of such
series in default in the order of the maturity of the installments of such
interest, with interest (to the extent that such interest has been
collected by the Trustee and to the extent permitted by law) upon the
overdue installments of interest at the same rate as the rate of interest
specified in such Securities, such payments to be made ratably to the
Persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in
respect of which moneys have been collected shall have become and be then
due and payable, to the payment of the whole amount then owing and unpaid
upon all the Securities of such series for principal and interest, if any,
with interest upon the overdue principal, and (to the extent that such
interest has been collected by the Trustee and to the extent permitted by
law) upon overdue installments of interest at the same rate as the rate of
interest specified in the Securities of such series; and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Securities of such series, then to the payment of such
principal and interest, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest
over any other installment of interest, or of any Security of such series
over any other Security of such series, ratably to the aggregate of such
principal and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to the Issuer or
any other Person lawfully entitled thereto.
Section 5.4 Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Section 5.5 Restoration of Rights on Abandonment of Proceedings. In
case the Trustee or any Holder shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
for any
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reason, or shall have been determined adversely to the Trustee or to such
Holder, then, and in every such case, the Issuer, the Trustee and the Holders
shall be restored respectively to their former positions and rights hereunder,
and all rights, remedies and powers of the Issuer, the Trustee and the Holders
shall continue as though no such proceedings had been taken.
Section 5.6 Limitations on Suits by Securityholders. No Holder of
any Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise upon or under or with respect to this
Indenture, or for the appointment of a trustee, receiver, liquidator, custodian
or other similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Securities of each
affected series then Outstanding (determined as provided herein and voting as
one class) shall have made written request upon the Trustee to institute such
action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 5.9; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security with every other
taker and Holder and the Trustee, that no one or more Holders of Securities of
any series shall have any right in any manner whatever by virtue or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights
of any other Holder of Securities or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities of the affected series. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Section 5.7 Unconditional Right of Securityholders to Receive
Principal and Interest and to Institute Certain Suits. Notwithstanding any
other provision in this Indenture and any provision of any Security, the right
of any Holder of any Security to receive payment of the principal of and
interest, if any, on such Security on or after the respective due dates
expressed in such Security or any date fixed for redemption, or to institute
suit for the enforcement of any such payment on or
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after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 5.8 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. Except as provided in Section 5.6, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of
Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein; and, subject to Section 5.6, every right and power given by this
Indenture or by law to the Trustee or to the Holders of Securities may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Holders of Securities, as the case may be.
Section 5.9 Control by Holders of Securities. The Holders of a
majority in aggregate principal amount of the Securities of each series
affected at the time Outstanding (determined as provided herein and voting as
one class) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee with respect to the
Securities of such affected series by this Indenture; provided that such
direction shall not be otherwise than in accordance with law and the provisions
of this Indenture; and provided further that (subject to the provisions of
Section 6.1) the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel, shall determine that the
action or proceeding so directed may not lawfully be taken or if the Trustee in
good faith by its board of directors, its executive committee or a trust
committee of directors or Responsible Officers of the Trustee shall determine
that the action or proceedings so directed would involve the Trustee in
personal liability or that the actions or forbearances specified in or pursuant
to such direction would be unduly prejudicial to the interests of Holders of
the Securities of all affected series not joining in the giving of said
direction, it being understood that (subject to Section 6.1) the Trustee shall
have no duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders.
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Nothing in this Indenture shall impair the right of the Trustee in
its discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.
Section 5.10 Waiver of Past Defaults. Prior to the declaration of
acceleration of the Maturity of any Securities as provided in Section 5.1, the
Holders of a majority in aggregate principal amount of the Securities of all
series at the time Outstanding with respect to which a default or an Event of
Default shall have occurred and be continuing (determined as provided herein
and voting as one class) may on behalf of the Holders of all such affected
Securities waive any past default or Event of Default described in Section 5.1
and its consequences, except a default or an Event of Default (i) in the
payment of the principal of or interest, if any, on any Security of such
series, or (ii) in respect of a covenant or provision hereof or of any Security
which cannot be modified or amended without the consent of the Holder of each
Security affected. In the case of any such waiver, the Issuer, the Trustee and
the Holders of all such affected Securities shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
Upon any such waiver, such default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 5.11 Trustee to Give Notice of Default, But May Withhold in
Certain Circumstances. The Trustee shall, within 90 days after the occurrence
of a default with respect to the Securities of any series, give notice of all
defaults with respect to such series known to the Trustee to all Holders of
Securities of such series in the manner and to the extent provided in Section
4.4(c), unless in each case such defaults shall have been cured before the
mailing or publication of such notice (the term "default" for the purpose of
this Article being hereby defined to mean any event or condition which is, or
with notice or lapse of time or both would become, an Event of Default);
provided that, except in the case of default in the payment of the principal of
or the interest, if any, on any of the Securities of such series, or in the
payment of any sinking fund installment or analogous payment on such series,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
or trustees and/or Responsible Officers of
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the Trustee in good faith determines that the withholding of such notice is in
the interests of the Securityholders of such series.
Section 5.12 Right of Court to Require Filing of Undertaking to Pay
Costs. All parties to this Indenture agree, and each Holder of any Security by
his or her acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder or
group of Securityholders of any series holding in the aggregate more than 10%
in aggregate principal amount of the Securities of such series, or, in the case
of any suit relating to or arising under clause (d) or (g) of section 5.1 (if
the suit relates to the Securities of more than one but less than all series),
10% in aggregate principal amount of the Securities then Outstanding and
affected thereby, or, in the case of any suit relating to or arising under
clause (d) or (g) (if the suit relates to all the Securities then Outstanding),
10% in aggregate principal amount of all Securities then Outstanding, or to any
suit instituted by any Securityholder for the enforcement of the payment of the
principal of or the interest on any Security on or after the due date expressed
in such Security or any date fixed for redemption.
Section 5.13 Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE SIX
CONCERNING THE TRUSTEE
Section 6.1 Duties and Responsibilities of the Trustee; During
Default; Prior to Default. The Trustee, prior to
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the occurrence of an Event of Default with respect to the Securities of a
particular series and after the curing or waiving of all Events of Default
which may have occurred with respect to such series, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture.
In case an Event of Default with respect to the Securities of a particular
series has occurred (which has not been cured or waived), the Trustee shall
exercise with respect to such series such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such
Events of Default which may have occurred with respect to such series:
(i) the duties and obligations of the Trustee with respect to
the Securities of such series shall be determined solely by the
express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of
any such statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall
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be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with an
appropriate direction of the Holders pursuant to Section 5.9 relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable grounds for believing that
the repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
Section 6.2 Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, security or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors may be evidenced to the Trustee
by a copy thereof certified by the secretary or an assistant secretary of
the Issuer;
(c) the Trustee may consult with counsel and any advice or any
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
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Indenture, unless such Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities which
might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such
Events of Default, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, appraisal, bond, debenture, note, security or
other paper or document unless requested in writing so to do by the
Holders of not less than a majority in aggregate principal amount of the
Securities of all affected series then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of
every such investigation shall be paid by the Issuer or, if paid by the
Trustee, shall be repaid by the Issuer upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by it hereunder.
Section 6.3 Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities, other than as to the due execution and delivery of the Indenture by
the Trustee. The
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Trustee shall not be accountable for the use or application by the Issuer of
any of the Securities or of the proceeds thereof.
Section 6.4 Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and, subject
to Sections 6.8 and 6.13, may otherwise deal with the Issuer and receive,
collect, hold and retain collections from the Issuer with the same rights it
would have if it were not the Trustee or such agent.
Section 6.5 Moneys Held by Trustee. Subject to the provisions of
Section 10.4, all moneys received by the Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Trustee nor any agent of
the Issuer or the Trustee shall be under any liability for interest on any
moneys received by it hereunder.
Section 6.6 Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), and the Issuer covenants and agrees to pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of it in accordance
with any of the provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
agents and other persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Issuer also covenants to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad
faith on the part of the Trustee arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and the
Trustee's duties hereunder, including the costs and expenses of defending
itself against or investigating any claim of liability in the premises. The
obligations of the Issuer under this Section to compensate and indemnify the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder and shall survive
the satisfaction and discharge of this Indenture. Such additional indebtedness
shall not be deemed to be Subordinated Securities, as that term is defined in
Section 12.1, and shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities,
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and the Securities are hereby subordinated to such senior claim. When the
Trustee incurs expenses after the occurrence of a default, the expenses are
intended to constitute expenses of administration under any bankruptcy law.
Section 6.7 Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered or omitted by it
under the provisions of this Indenture in reliance thereon.
Section 6.8 Qualification of Trustee; Conflicting Interests. If the
Trustee has or shall acquire any "conflicting interest" within the meaning of
Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in
all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
Section 6.9 Persons Eligible for Appointment as Trustee. There
shall at all times be a Trustee hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State thereof or the District of Columbia having a combined capital and
surplus of at least $5,000,000, and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal, State or District of Columbia authority. Such corporation shall have
its principal place of business in The City of New York, if there be such a
corporation in such location willing to act upon reasonable and customary terms
and conditions. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then, for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
Section 6.10 Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign and be discharged of
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the trusts created by this Indenture by giving written notice of resignation to
the Issuer and by mailing notice of such resignation to the Holders of the then
Outstanding Securities at their addresses as they shall appear on the Security
registry books. Upon receiving such notice of resignation, the Issuer shall
promptly appoint a successor trustee or trustees with respect to the applicable
series by written instrument, in duplicate, executed by authority of the Board
of Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee or trustees. If no successor
trustee shall have been so appointed with respect to any series and shall have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Holder who has
been a bona fide Holder of a Security or Securities of such series for at least
six months may, subject to the provisions of Section 5.12, on behalf of such
Holder and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section
6.8 after written request therefor by the Issuer or by any Holder who has
been a bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Issuer or by any Holder; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
Securities of any or all series, as appropriate, and appoint a successor trustee
for such series by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee or trustees, or,
subject to the provisions of Section 5.12, any
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Holder who has been a bona fide Holder of a Security or Securities of such
series for at least six months may, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in
Section 7.1 of the action in that regard taken by the Holders.
(d) Any resignation or removal of the Trustee and any appointment of
a successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 6.11.
(e) Except in the case of a default in the payment of the principal
of or interest on any Security, or in the payment of any sinking or purchase
fund installment, the Trustee shall not be required to resign as provided by
Section 6.8 if the Trustee shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing thereon, that:
(i) the default under this Indenture may be cured or waived during a
reasonable period and under the procedures described in such application;
and
(ii) a stay of the Trustee's duty to resign will not be inconsistent
with the interests of the Securityholders.
Section 6.11 Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute,
acknowledge and deliver to the Issuer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, trusts and duties of its predecessor hereunder, with like
effect as if originally named as trustee hereunder; but, nevertheless, on the
written request of the Issuer or of the successor Trustee, upon payment of its
charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4,
pay over and transfer to the successor Trustee all moneys and property at the
time held by it hereunder and shall execute, acknowledge and deliver an
instrument transferring to such successor Trustee all such rights, powers,
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trusts and duties. Upon request of any such successor Trustee, the Issuer
shall execute and acknowledge any and all instruments in writing for more fully
and certainly vesting in and confirming to such successor Trustee all such
money, property, rights, powers and trusts. Any Trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such Trustee for the benefit of such applicable series to secure any amounts
then due it pursuant to the provisions of Section 6.6.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 6.8 and eligible under the provisions
of Section 6.9.
Upon acceptance of appointment by any successor Trustee as provided
in this Section, the Issuer shall give notice thereof to the Holders of
Securities, by mailing such notice to such Holders at their addresses as they
shall appear on the Security registry books. If the acceptance of appointment
is substantially contemporaneous with the resignation, then the notice called
for by the preceding sentence may be combined with the notice called for by
Section 6.10. If the Issuer fails to give such notice within 10 days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be given at the expense of the Issuer.
Section 6.12 Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be qualified under the provisions of Section 6.8 and eligible
under the provisions of Section 6.9, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time of such succession to the Trustee any of the
Securities of any series shall have been authenticated but not delivered, any
such successor Trustee may adopt the certificate of authentication of any
predecessor Trustee and deliver the Securities so authenticated; and, in case
at that time any of the Securities of any series shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of such successor Trustee;
and in all such cases such certificate of authentication shall have the full
force which is anywhere in the Securities of such series or in this Indenture
provided that the certificate of authentication of the Trustee
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shall have; provided that the right to adopt the certification of any
predecessor Trustee or to authenticate Securities of any series in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
Section 6.13 Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with its obligations under the applicable provisions
of Section 311 of the Trust Indenture Act.
Section 6.14 Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument in
writing, appoint with the approval of the Issuer an authenticating agent (the
"Authenticating Agent") which shall be authorized to act on behalf of, but
subject to the direction of, the Trustee to authenticate and deliver Securities
of such series, including Securities issued upon exchange, registration of
transfer, partial redemption or pursuant to Section 2.9. Securities of such
series so authenticated and delivered shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee. Whenever reference is made in this Indenture to
the authentication and delivery of Securities of any series by the Trustee or
to the Trustee's certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent for such series and a certificate of authentication
executed on behalf of the Trustee by such Authenticating Agent. Such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States of America or of any State thereof
or of the District of Columbia authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $5,000,000
(determined as provided in Section 6.9 with respect to the Trustee) and subject
to supervision or examination by Federal or State authority.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of any Authenticating Agent, shall be the successor to
such Authenticating Agent with respect to all series of Securities for which it
served as Authenticating Agent without the execution or filing of any paper or
any further act on the part of the Trustee or such Authenticating Agent.
Any Authenticating Agent may at any time, and if it shall cease to be
eligible hereunder shall, resign by giving written notice of resignation to the
Trustee and to the Issuer.
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The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice thereof to such Authenticating Agent and the Issuer.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall upon receipt
of an Issuer Order appoint a successor Authenticating Agent and shall provide
notice of such appointment to all Holders of Securities affected thereby in the
manner and to the extent provided in Section 6.11 with respect to the
appointment of a successor trustee. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. The Authenticating Agent for the
Securities of any series shall have no responsibility or liability for any
action taken by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
Section 7.1 Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in aggregate principal amount of the Holders of one or more series
of Securities may be evidenced (i) by one or more instruments of substantially
similar tenor signed by such specified percentage of Holders in person or by an
agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee; (ii) by the record of such specified
percentage of Holders voting in favor thereof at any meeting of such Holders
duly called and held by the Trustee; and (iii) by a combination of such
instrument or instruments and any such record of a meeting.
Section 7.2 Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument by
a Holder or his agent or proxy and proof of the holding by any Person of any of
the Securities of any series shall be sufficient if made in the following
manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved by the certificate of any notary public or other
officer of
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any jurisdiction authorized to take acknowledgments of deeds or administer
oaths that the Person executing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or other such officer. Where such execution is
by or on behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute sufficient proof of the
authority of the Person executing the same.
(b) The ownership of Securities shall be proved by the Security
Register or by a certificate of the Security Registrar.
Section 7.3 Holders to Be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security of any series shall be registered upon the
Security Register for such series as the absolute owner of such Security
(whether or not such Security shall be overdue and notwithstanding any notation
of ownership or other writing thereon) for the purpose of receiving payment of
or on account of the principal of and, subject to the provisions of Section 2.7
of this Indenture, interest, if any, on such Security and for all other
purposes; and none of the Issuer, the Trustee and any agent of the Issuer or
the Trustee shall be affected by any notice to the contrary. All such payments
so made to any such Person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
No holder of any beneficial interest in any Global Security held on
its behalf by a Depository shall have any rights under this Indenture with
respect to such Global Security, and such Depository may be treated by the
Issuer, the Trustee, and any agent of the Issuer or the Trustee as the owner of
such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall impair, as between a Depository and such
holders of beneficial interests, the operation of customary practices governing
the exercise of the rights of the Depository as holder of any Security.
Section 7.4 Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of one or more series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or any other obligor on the Securities with respect to which such
determination is being made or by any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Issuer or
any other obligor on
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the Securities with respect to which such determination is being made shall be
disregarded and deemed not to be Outstanding for the purposes of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver, only
Securities which the Trustee knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Issuer or any other obligor upon such Securities or any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer or any other obligor on such Securities. In
case of a dispute as to such right, the advice of counsel shall be full
protection in respect of any decision made by the Trustee in accordance with
such advice. Upon request of the Trustee, the Issuer shall furnish to the
Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Issuer to be owned or held by or for the
account of any of the above described Persons; and, subject to Sections 6.1 and
6.2, the Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purposes of any such
determination.
Section 7.5 Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the requisite percentage in
aggregate principal amount of the Securities of one or more series, as the case
may be, specified in this Indenture in connection with such action, any Holder
of a Security the serial number of which is shown by the evidence to be
included among the serial numbers of the Securities the Holders of which have
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of ownership as provided in Section 7.2, revoke such
action so far as concerns such Security. Except as aforesaid, any such action
taken by the Holder of any Security of any series shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities of such series issued in exchange or
substitution therefor or on registration of transfer thereof, irrespective of
whether or not any notation in regard thereto is made upon any such Security.
Any action taken by the Holders of the requisite percentage in aggregate
principal amount of the Securities of one or more series, as the case may be,
specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Holders of all the
Securities of such series.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a resolution of the Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of the execution thereof) for one
or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or
assets;
(b) to evidence the succession of another corporation to the Issuer,
or successive successions, and the assumption by the successor corporation
of the covenants, agreements and obligations of the Issuer pursuant to
Article Nine;
(c) to add to the covenants of the Issuer for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) such further covenants, restrictions, conditions or provisions as
the Issuer and the Trustee shall consider to be for the protection of the
Holders of Securities of any series, and to make the occurrence, or the
occurrence and continuance, of a default in complying with any such
additional covenant, restriction, condition or provision an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; in respect of any such
additional covenant, restriction, condition or provision, such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the
case of other defaults) or may provide for an immediate enforcement upon
such an Event of Default or may limit the remedies available to the
Trustee upon such an Event of Default or may limit the right of the
Holders of a majority in aggregate principal amount of the Securities of
such series to waive such an Event of Default;
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(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective
or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions as the Issuer may
deem necessary or desirable, with respect to matters or questions arising
under this Indenture, provided that no such action shall adversely affect
the interests of the Holders of the Securities of any series appertaining
thereto;
(e) to establish the form and terms of the Securities of any series
as permitted by Sections 2.1 and 2.3; and
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to add
to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by
more than one trustee, all as provided in Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property or assets
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of
Section 8.2.
Section 8.2 Supplemental Indentures With Consent of Securityholders.
With the consent (evidenced as provided in Article Seven) of the Holders of not
less than a majority in aggregate principal amount of the Securities of all
series at the time Outstanding affected by such supplemental indenture (voting
as one class), the Issuer, when authorized by a resolution of the Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of execution thereof) for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this
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Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Holders of the Securities of each such series; provided that no
such supplemental indenture shall (a) change the time of payment of the
principal, or any installment of the principal, of any Security or reduce the
principal amount thereof, or reduce the rate or change the time of payment of
interest, if any, thereon, or reduce any amount payable on the redemption
thereof, or make the principal thereof or the interest thereon payable in any
coin or currency other than that provided in such Security in accordance with
the terms thereof or impair or affect the right to institute suit for the
payment thereof when due, or, if such Security shall so provide, any right of
repayment at the option of the Holder, in each case without the consent of the
Holder of each Security so affected, (b) reduce the percentage in principal
amount of the Outstanding Securities of the affected series, the consent of
whose Holders is required for any such supplemental indenture or for any waiver
provided for in this Indenture, without the consent of the Holders of each
Security so affected or (c) without the consent of the Holders of each Security
so affected, modify any of the provisions of this Section or Section 5.10,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes
in this Section, or the deletion of this proviso, in accordance with the
requirements of Sections 6.11 and 8.1(f).
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more series of Securities, or which modifies the rights
of the Holders of Securities of such series appertaining to such Securities
with respect to such covenant or provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series.
Upon the request of the Issuer, accompanied by a Board Resolution
complying with the first paragraph of this Section and evidence of the consent
of the Holders of the Securities as aforesaid and such other documents, if any,
as may be required by Section 7.1, the Trustee shall join with the Issuer in
the execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any
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proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give notice thereof to the Holders of then Outstanding Securities of each
series affected thereby, by mailing a notice thereof by first-class mail to
such Holders at their addresses as they shall appear on the Security Register,
and in each case such notice shall set forth in general terms the substance of
such supplemental indenture. Any failure of the Issuer to give such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture.
Section 8.3 Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and
immunities under this Indenture of the Trustee, the Issuer and the Holders of
Securities of each series affected thereby shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
Section 8.4 Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, may receive an Officers' Certificate
and an Opinion of Counsel as conclusive evidence that any supplemental
indenture executed pursuant to this Article complies with the applicable
provisions of this Indenture.
Section 8.5 Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee as to any matter
provided for by such supplemental indenture. If the Issuer or the Trustee
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee and the Board of Directors, to any modification of
this Indenture contained in any such supplemental indenture may be prepared and
executed by the Issuer, authenticated by the Trustee and delivered in exchange
for the Securities of such series then Outstanding.
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ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Covenant of Issuer Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain Conditions. Nothing contained in this
Indenture or in any of the Securities shall prevent any consolidation of the
Issuer with, or merger of the Issuer into, any other corporation or
corporations (whether or not affiliated with the Issuer), or successive
consolidations or mergers to which the Issuer or its successor or successors
shall be a party or parties, shall prevent any sale, lease or conveyance of the
property of the Issuer as an entirety or substantially as an entirety, shall
prevent any consolidation of any Person with, or the merger of any Person into,
the Issuer or shall prevent any sale, lease or conveyance of the property of
any Person as an entirety or substantially as an entirety to the Issuer;
provided, that, and the Issuer hereby covenants and agrees, upon any such
consolidation, merger, sale, lease or conveyance, the due and punctual payment
of the principal of and interest, if any, on all the Securities, according to
their tenor, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed or observed by the
Issuer, shall be expressly assumed, by supplemental indenture satisfactory in
form to the Trustee, executed and delivered to the Trustee by the corporation
formed by such consolidation, or into which the Issuer shall have been merged,
or which shall have acquired such property; provided, further, that the
corporation formed by such consolidation or into which the Issuer merged or the
Person which acquired by conveyance or sale, or which leases, the properties
and assets of the Issuer as an entirety or substantially as an entirety shall
be a corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia; provided, further, that
immediately after giving effect to such transaction, and treating any
indebtedness which becomes an obligation of the Issuer or a Subsidiary as a
result of such transaction as having been incurred by the Issuer or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; provided, further, if, as a result of
any such consolidation or merger or such conveyance, transfer or lease,
properties or assets of the Issuer would become subject to a mortgage, pledge,
lien, security interest or other encumbrance which would not be permitted by
this Indenture, the Issuer or such successor corporation or Person, as the case
may be, shall take such steps as shall be necessary effectively to secure the
Securities equally and ratably with (or prior to) all indebtedness secured
thereby.
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Section 9.2 Successor Corporation Substituted for Issuer. In case
of any consolidation, merger, sale, lease or conveyance referred to in, and in
accordance with, Section 9.1, and following such an assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for
the Issuer, with the same effect as if it had been named herein as Issuer.
Such successor corporation may cause to be signed, and may issue
either in its own name or in the name of the Issuer prior to such succession,
any or all of the Securities issuable hereunder which theretofore shall not
have been signed by the Issuer and delivered to the Trustee; and, upon the
order of such successor corporation, instead of the Issuer, and subject to all
the terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Securities which previously shall have
been signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All of
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter issued
in accordance with the terms of this indenture as though all of such Securities
had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease), the Issuer or any successor corporation which shall
theretofore have become such in the manner described in this Article shall be
discharged from all obligations and covenants under this Indenture and the
Securities and may be liquidated and dissolved.
Section 9.3 Opinion of Counsel Delivered to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, may receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale, lease
or conveyance, and any such assumption, and any such liquidation or
dissolution, complies with the applicable provisions of this Indenture and that
all conditions precedent herein provided for relating to such transactions have
been complied with.
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ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 10.1 Satisfaction and Discharge of Indenture. (A) If at
any time (a) the Issuer shall have paid or caused to be paid the principal of,
and interest, if any, on all the Securities of each series theretofore
authenticated, (other than Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.9), in accordance
with the terms of this Indenture and such Securities or (b) as to Securities
not so paid, the Issuer shall have delivered to the Trustee for cancellation
all Securities of each series theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.9) or (c) as to Securities not
so paid or delivered for cancellation, (i) all the Securities of such series
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (ii) the Issuer shall have irrevocably deposited or caused to
be deposited with the Trustee as trust funds money in an amount (other than
moneys repaid by the Trustee or any paying agent to the Issuer in accordance
with Section 10.4) or Government Obligations, maturing as to principal and
interest at such times and in such amounts as will insure the availability of
money, or a combination thereof, sufficient in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay (A) the principal and
interest, if any, on all Securities of such series on each date that such
principal or interest, if any, is due and payable and (B) any mandatory sinking
fund or analogous payments on the dates on which such payments are due and
payable in accordance with the terms of this Indenture and the Securities of
such series; and if, in any such case, the Issuer shall also pay or cause to be
paid all other sums payable hereunder by the Issuer then this Indenture shall
cease to be of further effect (except as to (i) rights of registration of
transfer and exchange of Securities, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) the rights of Holders of Securities
to receive payments of principal thereof, and interest, if any, thereon, upon
the original stated due dates therefor or any date of redemption (but not upon
acceleration), and remaining rights of such Holders to receive mandatory
sinking fund or analogous payments, if any, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) the rights of Holders of
Securities as beneficiaries hereof with respect to the property so deposited
with the Trustee and payable to all or any of them and (vi) the
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obligations of the Issuer under Section 3.2) and the Trustee, on demand of the
Issuer accompanied by an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with, and at
the cost and expense of the Issuer, shall execute proper instruments
acknowledging such satisfaction and discharge of this Indenture, provided that
the rights of Holders of the Securities to receive amounts in respect of
principal of and interest on the Securities held by them shall not be delayed
longer than required by then applicable mandatory rules or policies of any
national securities exchange upon which the Securities are listed. The Issuer
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Securities.
(B) The following provisions shall apply to the Securities of each
series unless specifically otherwise provided in the Board Resolution,
Officers' Certificate or supplemental indenture relating thereto provided
pursuant to Section 2.3. In addition to discharge of this Indenture pursuant
to the next preceding paragraph (A) the Issuer shall be deemed to have paid and
discharged the entire indebtedness on all the Securities of such series on the
91st day after the date of making the deposit referred to in clause (a), and
the provisions of this Indenture with respect to the Securities of such series
shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Securities of such series, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen Securities, (iii) the rights of
Holders of Securities of such series appertaining thereto to receive payments
of principal thereof and interest, if any, thereon, upon the original stated
due dates therefor or any date of redemption (but not upon acceleration), and
remaining rights of such Holders to receive mandatory sinking fund or analogous
payments, if any, solely from the trust fund referred to in subparagraph (a)
below, (iv) the rights, obligations, duties and immunities of the Trustee
hereunder, (v) the rights of Holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
and payable to all or any of them and (vi) the obligations of the Issuer under
Section 3.2), and the Trustee, at the cost and expense of the Issuer, shall, at
the Issuer's request, execute proper instruments acknowledging the same, if:
(a) the Issuer shall have irrevocably deposited or caused to be
irrevocably deposited with the Trustee as a trust fund specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities of such series (i) money in an amount, or (ii)
Government Obligations, maturing as to principal and interest at such
times and in such
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amounts as will insure the availability of money, or (iii) a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and interest,
if any, on all Securities of such series on each date that such principal
or interest, if any, is due and payable and (B) any mandatory sinking fund
or analogous payments on the dates on which such payments are due and
payable in accordance with the terms of this Indenture and the Securities
of such series;
(b) no Event of Default or event which, with notice or lapse of time
or both, would become an Event of Default with respect to the Securities
of such series shall have occurred and be continuing on the date of such
deposit or at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(c) such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other material agreement
or instrument to which the Issuer is a party or by which it is bound;
(d) such deposit shall not cause any Securities of such series then
listed on any national securities exchange registered under the Securities
Exchange Act of 1934, as amended, to be delisted;
(e) the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) if such deposits shall include Government
Obligations in respect of any government other than the United States of
America, such deposit shall not result in the Issuer, the Trustee or such
trust constituting an "investment company" under the Investment Company
Act of 1940, as amended, and (ii) the Holders of the Securities of such
series then Outstanding will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred; and
(f) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the defeasance
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contemplated by this paragraph have been complied with.
Section 10.2 Application by Trustee of Funds Deposited for Payment
of Securities. Subject to Section 10.4, all moneys and Government Obligations
deposited with the Trustee (or other trustee), and all money received by the
Trustee in respect of Government Obligations deposited with the Trustee,
pursuant to Section 10.1 in respect of the Outstanding Securities of a
particular series shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Issuer acting as its
own paying agent), to the Holders of such Securities of all sums due and to
become due thereon for principal and interest, if any; but such money need not
be segregated from other funds except to the extent required by law.
Section 10.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to the Securities of any series, all moneys then held by any paying agent under
the provisions of this Indenture with respect to such series of Securities
shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
Section 10.4 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Three Years. Any moneys deposited with or paid to the Trustee or
any paying agent for the payment of the principal of or interest, if any, on
any Security of any series and not applied but remaining unclaimed for three
years after the date upon which such principal or interest shall have become
due and payable, shall, upon the written request of the Issuer and unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property law, be repaid to the Issuer by the Trustee or such
paying agent, and any Holder of the Securities of such series shall, unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property laws, thereafter look only to the Issuer for any payment
which such Holder may be entitled to collect, and all liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease;
provided, however, that the Trustee or such paying agent, before being required
to make any such repayment with respect to moneys deposited with it for any
payment shall at the expense of the Issuer, mail by first-class mail to Holders
of such Securities at their addresses as they shall appear on the Security
Register for the Securities of such series, notice that such moneys remain and
that, after a date specified therein, which shall not be less than 30 days from
the date of such mailing any unclaimed balance of such moneys then remaining
will be repaid to the Issuer.
Section 10.5 Indemnity for Government Obligations. The Issuer shall
pay and indemnify the Trustee against any tax,
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fee or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 10.1 or the principal or interest received in
respect of such Government Obligations, other than any such tax, fee or other
charge which by law is for the account of the Holders of the Securities for
whose benefit such Government Obligations are held.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES AND SINKING FUNDS
Section 11.1 Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any Securities of a series which have
the benefit of a sinking fund, except as otherwise specified as contemplated by
Section 2.3 for Securities of any series.
Section 11.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a whole
or in part shall be given by mailing notice of such redemption by first class
mail, postage prepaid, at least 30 days and not more than 60 days prior to the
date fixed for redemption, to such Holders at their last addresses as they
shall appear upon the registry books for such Securities. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the Holder receives the notice. Failure to
give notice by mail, or any defect in the notice to the Holder of any Security
of any series designated for redemption as a whole or in part, shall not affect
the validity of the proceedings for the redemption of any other Security of
such series.
The notice of redemption to each such Holder shall specify (a) the
principal amount of each Security of such series held by such Holder to be
redeemed, (b) the date fixed for redemption, (c) the redemption price, (d) that
such redemption is pursuant to the mandatory or optional sinking or other
analogous fund, or both, if such be the case, (e) that interest accrued to the
date fixed for redemption will be paid as specified in such notice and (f) that
on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue. In case any Security is to be redeemed in part
only, the notice of redemption shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities of
such series in authorized denominations for an aggregate principal amount equal
to the unredeemed portion thereof will be issued.
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The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with the
Trustee or with one or more paying agents (or, if the Issuer is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
3.4) an amount of money sufficient to redeem on the redemption date all the
Securities of any series so called for redemption at the applicable redemption
price, together with accrued interest to the date fixed for redemption. The
Issuer will deliver to the Trustee at least 60 days prior to the date fixed for
redemption an Officers' Certificate stating such date, the aggregate principal
amount of Securities of each series to be redeemed and that no Events of
Default with respect to the Securities of such series have occurred (which have
not been waived or cured). In case of a redemption at the option of the Issuer
prior to the expiration of any restriction on such redemption, the Issuer shall
deliver to the Trustee, prior to the giving of any notice of redemption to
Holders pursuant to this Section, an Officers' Certificate stating that such
restriction has been complied with. If less than all the Securities of any
series are to be redeemed, the Trustee shall select, in such manner as it shall
deem appropriate and fair, Securities of such series to be redeemed in whole or
in part. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any series
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.
Section 11.3 Payment of Securities Called for Redemption. If notice
of redemption has been given as provided in Section 11.2, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the applicable redemption price, together with interest accrued
to said date) interest on the Securities or portions of Securities so called
for redemption shall cease to accrue and, except as provided in Sections 6.5
and 10.4, such Securities shall cease
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from and after the date fixed for redemption to be entitled to any benefit or
security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the applicable
redemption price thereof and unpaid interest to the date fixed for redemption.
On presentation and surrender of such Securities at a place of payment
specified in said notice, redemption, such Securities or the specified portions
thereof shall be paid and redeemed by the Issuer at the applicable redemption
price, together with interest accrued thereon to the date fixed for redemption.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the order
of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.
Section 11.4 Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and certificate
number in an Officers' Certificate delivered to the Trustee at least 60 days
prior to the last date on which notice of redemption may be given as being
owned of record and beneficially by, and not pledged or hypothecated by either
(a) the Issuer or (b) an entity specifically identified in such Officers'
Certificate as an Affiliate of the Issuer.
Section 11.5 Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment", and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment". The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at its
option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or
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otherwise acquired (except as aforesaid) by the Issuer and delivered to the
Trustee for cancellation pursuant to Section 2.10, (b) receive credit for
optional sinking fund payments (not previously so credited) made pursuant to
this Section or (c) receive credit for Securities of such series (not
previously so credited) redeemed by the Issuer through any optional redemption
provision contained in the terms of such series. Securities so delivered or
credited shall be received or credited by the Trustee at the sinking fund
redemption price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (which need not contain the statements required by Section 14.5)
(a) specifying the portion of the mandatory sinking fund payment due on such
date to be satisfied by payment of cash and the portion to be satisfied by
credit of Securities of such series and the basis for such credit, (b) stating
that none of the Securities of such series to be so credited has theretofore
been so credited, (c) stating that no defaults in the payment of interest or
Events of Default with respect to such series have occurred and are continuing
(which have not been waived or cured) and (d) stating whether or not the Issuer
intends to exercise its right to make an optional sinking fund payment on such
date with respect to such series and, if so, specifying the amount of such
optional sinking fund payment which the Issuer intends to pay on or before the
next succeeding sinking fund payment date. Any Securities of such series to be
so credited and required to be delivered to the Trustee in order for the Issuer
to be entitled to credit therefor as aforesaid which have not theretofore been
delivered to the Trustee shall be delivered for cancellation pursuant to
Section 2.10 to the Trustee with such Officers' Certificate (or reasonably
promptly thereafter if acceptable to the Trustee). Such Officers' Certificate
shall be irrevocable, and upon its receipt by the Trustee the Issuer shall
become unconditionally obligated to make all the cash payments or other
deliveries therein referred to, if any, on or before the next succeeding
sinking fund payment date. Failure of the Issuer, on or before any such 60th
day, to deliver such Officers' Certificate and securities specified in this
paragraph, if any, shall not constitute a default but shall constitute, on and
as of such 60th day, the irrevocable election of the Issuer that (i) the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof and (ii) the
Issuer will make no optional sinking fund payment with respect to such series
on such date as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any
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preceding sinking fund payments made in cash shall exceed $50,000 and if the
Issuer shall so request with respect to the Securities of any particular
series, such cash shall be applied on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the applicable sinking
fund redemption price, together with accrued interest to the date fixed for
redemption. If such amount shall be $50,000 or less and the Issuer makes no
such request, then such amount shall be carried over until a sum in excess of
$50,000 is available. The Trustee shall select, in the manner provided in
Section 11.2, for redemption on such sinking fund payment date a sufficient
principal amount of Securities of such series to absorb said cash, as nearly as
may be, and shall (if requested in writing by the Issuer) inform the Issuer of
the serial numbers of the Securities of such series (or portions thereof) so
selected. Securities shall be excluded from eligibility for redemption under
this Section if they are identified by registration and certificate number in
an Officers' Certificate delivered to the Trustee at least 40 days prior to the
sinking fund payment date as being owned of record and beneficially by, and not
pledged or hypothecated by either (a) the Issuer or (b) an entity specifically
identified in such Officers' Certificate as an Affiliate of the Issuer. The
Trustee, in the name and at the expense of the Issuer (or the Issuer, if it
shall so request the Trustee in writing), shall cause notice of redemption of
the Securities of such series to be given in substantially the manner provided
in Section 11.2 (and with the effect provided in Section 11.3) for the
redemption of Securities of such series in part at the option of the Issuer.
The amount of any sinking fund payments not so applied or allocated to the
redemption of Securities of such series shall be added to the next cash sinking
fund payment for such series and, together with such payment, shall be applied
in accordance with the provisions of this Section. Any and all sinking fund
moneys held on the stated maturity date of the Securities of a particular
series (or earlier, if such maturity is accelerated), which are not held for
the payment or redemption of particular Securities of such series, shall be
applied, together with other moneys, if necessary, sufficient for the purpose,
to the payment of the principal of and interest on the Securities of such
series at maturity.
Unless otherwise provided for, on or before each sinking fund payment
date, the Issuer shall pay to the Trustee in cash or shall otherwise provide
for the payment of all interest accrued to the date fixed for redemption on
Securities to be redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed Securities of
any series with sinking fund moneys or give any notice of redemption of
Securities of such series by operation of the sinking fund for such series
during the continuance of any
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Event of Default with respect to such series except that, if notice of
redemption of any Securities of such series shall theretofore have been given,
the Trustee shall redeem or cause to be redeemed such Securities, provided that
the Trustee or one or more paying agents shall have received from the Issuer a
sum sufficient for such redemption. Except as aforesaid, any moneys in the
sinking fund for such series at the time when any such Event of Default shall
occur, and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such Event of Default, be deemed to have been collected under
Article Five and held for the payment of all Securities of such series. In
case such Event of Default shall have been waived as provided in Section 5.10
or such Event of Default cured on or before the 60th day preceding any sinking
fund payment date, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the
redemption of Securities of such series.
ARTICLE TWELVE
SUBORDINATION
Section 12.1 Applicability of Article; Securities Subordinated to
Senior Indebtedness. (a) This Article Twelve shall apply only to the
Securities of any series which, pursuant to Section 2.3, are expressly made
subject to this Article. Such Securities are referred to in this Article
Twelve 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 Consumers; (iii) all
obligations of Consumers issued or assumed as the deferred purchase price of
property, all conditional sale obligations of Consumers and all obligations of
Consumers 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;
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(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 Consumers (whether or not such obligation is assumed by
Consumers), 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, issued to any other trusts, partnerships
or other entities affiliated with Consumers which act as a financing vehicle of
Consumers 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 Consumers 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 12.2 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 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
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Subordinated Securities for which they are exchanged are so subordinated
pursuant to this Article Twelve).
(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 Twelve).
(c) In the event that, notwithstanding the provisions of this Section
12.2, 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 12.2(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 12.2(b) above, then, unless and until all Senior
Indebtedness which shall have matured, and all 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
12.6 and 12.7) 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.
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Section 12.3 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 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 or reorganization
or readjustment the payment of which is subordinate, at least to the
extent provided in this Article Twelve 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 Twelve 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 12.3, 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
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subordinate, at least to the extent provided in this Article Twelve 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 12.6 and 12.7) 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 Nine hereof shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 12.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated such in
Article Nine.
Section 12.4 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
Twelve 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
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understood that the provisions of this Article Twelve 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 12.5 Obligation of the Issuer Unconditional. Nothing
contained in this Article Twelve 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 Twelve 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 Twelve, 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 6.1 and 6.2, 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 therein and all other facts pertinent thereto or to this Article
Twelve.
Nothing contained in this Article Twelve 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 12.2, payments at any time of the principal of, or interest on
Subordinated Securities.
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Section 12.6 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 Twelve 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 6.1
and 6.2, 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 Twelve, 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 Twelve, 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 Twelve shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.6.
Section 12.7 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 10.1 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 Twelve, if the same are deposited in trust prior to
the happening of any event specified in Section 12.2. Otherwise, any deposit
of monies or Government Obligations by the Issuer with the Trustee or any
paying agent
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(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 12.1,
12.2 and 12.3 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 12.6, 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 12.7 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 12.8 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 Twelve 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 12.9 Securityholders Authorize Trustee to
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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 Twelve 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 12.10 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 Twelve 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 Twelve, 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 12.2 and 12.3,
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 Twelve or otherwise.
Section 12.11 Article Twelve Not to Prevent Events of Defaults. The
failure to make a payment on account of principal, premium, if any, or interest
by reason of any provision in this Article Twelve shall not be construed as
preventing the occurrence of an Event of Default under Section 5.1.
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ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
Section 13.1 Incorporators, Stockholders, Officers and Directors of
Issuer Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture or in any
Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such, or against any past, present or future
stockholder, officer or director, as such, of the Issuer or of any successor,
either directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities appertaining
thereto by the Holders thereof and as part of the consideration for the issue
of the Securities appertaining thereto.
Section 13.2 Provisions of Indenture for the Sole Benefit of Parties
and Holders of Securities. Nothing in this Indenture, in the Securities
expressed or implied, shall give or be construed to give to any Person other
than the parties hereto and their successors and the Holders of the Securities,
any legal or equitable right, remedy or claim under this Indenture or under any
covenant or provision herein contained, all such covenants and provisions being
for the sole benefit of the parties hereto and their successors and of the
Holders of the Securities. Notwithstanding the foregoing, for so long as any
Trust Securities remain outstanding, the Issuer's obligations under this
Indenture will also be for the benefit of the holders of such Trust Securities,
and the Issuer acknowledges and agrees that such holders will be entitled to
enforce certain payment obligations under the Securities directly against the
Issuer to the extent provided in Sections 5(b) and 6(c) of Annex I of the
Declaration dated January __, 1996.
Section 13.3 Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture made
by or on behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
Section 13.4 Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice, direction, request or demand which by any provision of
this Indenture is required or permitted to be given or served by the Trustee or
by any Holder of Securities of any series or upon the Issuer shall be deemed to
have been sufficiently given or served by being deposited postage prepaid in
the United States mail, first- class mail (except as
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otherwise specifically provided herein), addressed (until another address of
the Issuer is filed by the Issuer with the Trustee) to Consumers Power Company,
212 West Michigan Avenue, Jackson, Michigan 49201, Attention: Secretary. Any
notice, direction, request or demand by the Issuer or any Holder of Securities
of any series or upon the Trustee shall be deemed to have been sufficiently
given or served by being deposited postage prepaid in the United States mail,
first-class mail (except as otherwise specifically provided herein), addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to The Bank of New York, 101 Barclay, New York, New York 10286. Any notice
required or permitted to be given or served by the Issuer or by the Trustee to
or upon any Holders of Securities of any series shall be deemed to have been
sufficiently given or served by being deposited in the United States mail,
first-class mail (except as otherwise specifically provided herein), addressed
at their addresses as they shall appear on the Security Register.
In any case where notice to the Holders of Securities is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be reasonably
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
Section 13.5 Officers' Certificates and Opinions of Counsel;
Statements to be Contained Therein. Except as otherwise expressly provided by
this Indenture, upon any application or demand by the Issuer to the Trustee to
take any action under any of the provisions of this Indenture, the Issuer shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or demand,
no additional certificate or opinion need be furnished.
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Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (other than certificates provided
pursuant to Section 4.3(d) or Section 11.5) shall include (a) a statement that
the individual signing such certificate or opinion has read such covenant or
condition and the definitions herein relating thereto, (b) a brief statement as
to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based, (c)
a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
individual, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the
certificate or opinion of or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any such certificate, statement or Opinion of Counsel may be based,
insofar as it relates to factual matters, on information with respect to which
is in the possession of the Issuer, upon the certificate, statement or opinion
of or representations by an officer or officers of the Issuer, unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
Section 13.6 Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of interest on or principal of
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the Securities of any series or the date fixed for redemption or repayment of
any such Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of such interest or
principal need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the date of maturity
or the date fixed for redemption or repayment, and no interest shall accrue for
the period from and after such date except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
Section 13.7 Conflict of any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with any provision set forth in
Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, that impose
duties on any person, such provision of the Trust Indenture Act of 1939 shall
control.
Section 13.8 Governing Law. This Indenture and each Security shall
be governed by and deemed to be a contract under, and construed in accordance
with, the laws of the State of Michigan, and for all purposes shall be
construed in accordance with the laws of such State, except as may otherwise be
required by mandatory provisions of law, provided, however, that the rights,
duties and obligations of the Trustee are governed and construed in accordance
with the laws of the State of New York.
Section 13.9 Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
Section 13.10 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 13.11 Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of ___________, 1996.
Consumers Power Company
By
----------------------------
Title:
[CORPORATE SEAL]
Attest:
By
----------------------
Title:
THE BANK OF NEW YORK,TRUSTEE
By
----------------------------
Title:
[CORPORATE SEAL]
Attest:
By
--------------------------
Title:
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<PAGE> 1
Exhibit (4)-7
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
CONSUMERS POWER COMPANY FINANCING I
Dated as of January __, 1996
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I.
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Reports by the Preferred Guarantee Trustee . . . . . . . . . . . . . . 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee . . . . . . . . . . . . 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . 5
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee . . . . . . . . . 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . 7
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . 9
ARTICLE IV.
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . 9
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees . 10
ARTICLE V.
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI.
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII.
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of January __, 1996, is executed and delivered by Consumers Power
Company, a Michigan corporation (the "Guarantor"), and The Bank of New York, as
trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Consumers Power Company Financing I, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of January __, 1996, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof 4,000,000 preferred securities, having an
aggregate liquidation amount of $100,000,000 designated the _____% Trust
Originated Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
<PAGE> 5
ARTICLE I.
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(c) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at 101
Barclay Street, New York, New York 10286.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the series of junior subordinated debt
securities of the Guarantor designated the ___% Subordinated Deferrable
Interest Notes due 2015 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
2
<PAGE> 6
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution"). If an event of default under
the Indenture has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of January ___, 1996,
between the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee, and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer are to be issued to the
Property Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
3
<PAGE> 7
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Bank of New York,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II.
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within 14 days after
January 1 and June 30 of each year, and (ii) at any other time within 30 days
of receipt by the Guarantor of a written request for a List of Holders as of a
date no more than 14 days before such List of Holders is given to the
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Preferred Guarantee Trustee provided, that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guarantee Trustee
by the Guarantor. The Preferred Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture
Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred Guarantee Trustee shall be protected
in withholding such notice, to the extent permitted by the Trust Indenture Act,
if and so long as a Responsible Officer of the Preferred Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders of the Preferred Securities.
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(b) The Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer of the
Preferred Guarantee Trustee charged with the administration of the Declaration
shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and is
continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred
Securities.
(c) The Preferred Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of
Default that may have occurred:
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(A) the duties and obligations of the
Preferred Guarantee Trustee shall be determined
solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee
Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Preferred Securities
Guarantee, and no implied covenants or obligations
shall be read into this Preferred Securities
Guarantee against the Preferred Guarantee Trustee;
and
(B) in the absence of bad faith on the
part of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee may conclusively rely, as
to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates
or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this
Preferred Securities Guarantee; but in the case of
any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they
conform to the requirements of this Preferred
Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee Trustee, unless
it shall be proved that the Preferred Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Preferred Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the
Holders of not less than a Majority in liquidation amount of
the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or
power conferred upon the Preferred Guarantee Trustee under
this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities
Guarantee shall require the Preferred Guarantee Trustee to
expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred
Securities Guarantee or indemnity, reasonably satisfactory to
the Preferred Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
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(ii) Any direction or act of the Guarantor
contemplated by this Preferred Securities Guarantee shall be
sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this
Preferred Securities Guarantee, the Preferred Guarantee
Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Preferred Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no
duty to see to any recording, filing or registration
of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Preferred Guarantee Trustee may consult
with counsel of its choice, and the written advice or opinion
of such counsel with respect to legal matters shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The
Preferred Guarantee Trustee shall have the right at any time
to seek instructions concerning the administration of this
Preferred Securities Guarantee from any court of competent
jurisdiction.
(vi) The Preferred Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers
vested in it by this Preferred Securities Guarantee at the
request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guarantee Trustee such security
and indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Preferred
Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances
as may be requested by the Preferred Guarantee Trustee;
provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Preferred Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be
bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, nominees,
custodians or attorneys, and the Preferred Guarantee Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder.
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(ix) Any action taken by the Preferred Guarantee
Trustee or its agents hereunder shall bind the Holders of the
Preferred Securities, and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any
of the terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this
Preferred Securities Guarantee the Preferred Guarantee Trustee
shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in liquidation
amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance
with such instructions.
(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.
ARTICLE IV.
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the
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combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.
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ARTICLE V.
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders. Notwithstanding anything to the
contrary herein, the Guarantor retains all of its rights under the Indenture to
extend the interest payment period on the Debentures and the Guarantor shall
not be obligated hereunder to pay during an Extension Period (as defined in the
Indenture) any monthly distributions on the Preferred Securities.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
Except as otherwise provided herein, the obligations,
covenants, agreements and duties of the Guarantor under this Preferred
Securities Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
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(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may institute a
legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against the Issuer, the Preferred Guarantee Trustee or any other
Person.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE VI.
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees)
issued by the Guarantor which rank pari passu with or junior to the Debentures
or (c) the Guarantor shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Preferred Securities Guarantee
Agreement); provided, however, the Guarantor may declare and pay a stock
dividend where the dividend stock is the same stock as that on which the
dividend is being paid.
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor including the
Debentures, except those liabilities of the Guarantor made pari passu or
subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.
ARTICLE VII.
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities
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Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon such
information, opinions, reports or statements presented to the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without gross negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Preferred Securities Guarantee.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
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(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders of
the Preferred Securities):
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Administrator
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
Consumers Power Company
212 West Michigan Avenue
Jackson, Michigan 49201
Attention: Alan M. Wright,
Senior Vice President and
Chief Financial Officer
(c) If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
MICHIGAN.
15
<PAGE> 19
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
Consumers Power Company,
as Guarantor
By:____________________________________________
Name: Alan M. Wright
Title: Senior Vice President and
Chief Financial Officer
The Bank of New York, as Preferred Guarantee Trustee
By:____________________________________________
Name:
Title:
16
<PAGE> 1
Exhibit (12)
CONSUMERS POWER COMPANY
Ratio of Earnings to Fixed Charges and Preferred Dividends
(Millions of Dollars)
<TABLE>
<CAPTION>
Twelve Months
Ended
Years Ended December 31
Sept. 30, 1995 1994 1993 1992 1991 1990
-------------- ------ ------ ------ ------ ------
(b) (c)(d) (e)
<S> <C> <C> <C> <C> <C> <C>
Earnings as defined (a)
- -----------------------
Net Income (Loss) after
dividends on preferred stock $ 217 $ 202 $ 187 $(255) $(245) $(393)
Income taxes (benefits) 121 107 91 (127) (75) 190
Exclude equity basis subsidiaries (36) (16) (6) 12 2 -
Fixed charges as defined, adjusted to
exclude capitalized interest of $2,
$1, $1, $1, $1, and $36 million and
preferred stock dividend tax effect
of $15, $13, $6, $6, $5, and $6 for
the twelve months ended September 30, 1995
and for the years ended December 31,
1994, 1993, 1992, 1991 and 1990,
respectively 200 186 195 189 338 290
------------------------------------------------------------
Earnings as defined $ 502 $ 479 $ 467 $(181) $ 20 $ 87
===========================================================
Fixed charges as defined (a)
- ----------------------------
Interest on long-term debt $ 140 $ 136 $ 152 $ 150 $ 249 $ 268
Estimated interest portion of lease rental 10 10 11 14 16 16
Other interest charges 24 17 22 15 64 31
Preferred stock dividend requirement 43 37 17 17 15 17
------------------------------------------------------------
Fixed charges as defined $ 217 $ 200 $ 202 $ 196 $ 344 $ 332
============================================================
Ratio of earnings to fixed charges
and preferred dividends 2.31 2.40 2.31 - - -
============================================================
</TABLE>
NOTES:
(a) Earnings and fixed charges and preferred dividends as defined in
instructions for Item 503 of Regulation S-K.
(b) For the year ended December 31, 1992, fixed charges and preferred
dividends exceeded earnings by $377 million. Earnings as defined
include a $520 million pre-tax loss on the settlement of cost recovery
issues relating to power purchases from the MCV Partnership partially
offset by $(15) million for potential customer refunds and other
reserves related to 1992 but recorded in 1991. The ratio of earnings to
fixed charges and preferred dividends would have been 1.65 excluding
these amounts.
(c) Excludes an extraordinary after-tax loss of $14 million.
(d) For the year ended December 31, 1991, fixed charges and preferred
dividends exceeded earnings by $324 million. Earnings as defined
include $398 million of pre-tax write-downs and reserve amounts related
to the abandoned Midland project and $44 million for potential customer
refunds and other reserves recorded in 1991 but related to 1992 and
1990. The ratio of earnings to fixed charges and preferred dividends
would have been 1.34 excluding these amounts.
(e) For the year ended December 31, 1990, fixed charges and preferred
dividends exceeded earnings by $245 million. Earnings as defined
include $716 million of pre-tax write-downs and reserve amounts related
to the abandoned Midland project and $(29) million for potential
customer refunds and other reserves related to 1990 but recorded in
1991. The ratio of earnings to fixed charges and preferred dividends
would have been 2.33 excluding these amounts.
<PAGE> 2
Exhibit (12)
CONSUMERS POWER COMPANY
Ratio of Earnings to Fixed Charges
(Millions of Dollars)
<TABLE>
<CAPTION>
Twelve Months
Ended
Years Ended December 31
Sept. 30, 1995 1994 1993 1992 1991 1990
-------------- ------ ------ ------ ------ ------
(b) (c)(d) (e)
<S> <C> <C> <C> <C> <C> <C>
Earnings as defined (a)
- -----------------------
Net Income (Loss) $ 245 $ 226 $ 198 $(244) $(235) $(382)
Income taxes (benefits) 121 107 91 (127) (75) 190
Exclude equity basis subsidiaries (36) (16) (6) 12 2 -
Fixed charges as defined, adjusted to
exclude capitalized interest of $2,
$1, $1, $1, $1, and $36 million for
the twelve months ended September 30, 1995
and for the years ended December 31,
1994, 1993, 1992, 1991 and 1990,
respectively 172 162 184 178 328 279
------------------------------------------------------------
Earnings as defined $ 502 $ 479 $ 467 $(181) $ 20 $ 87
============================================================
Fixed charges as defined (a)
- ----------------------------
Interest on long-term debt $ 140 $ 136 $ 152 $ 150 $ 249 $ 268
Estimated interest portion of lease rental 10 10 11 14 16 16
Other interest charges 24 17 22 15 64 31
------------------------------------------------------------
Fixed charges as defined $ 174 $ 163 $ 185 $ 179 $ 329 $ 315
============================================================
Ratio of earnings to fixed charges 2.89 2.94 2.52 - - -
============================================================
</TABLE>
NOTES:
(a) Earnings and fixed charges as defined instructions for Item 503 of
Regulation S-K.
(b) For the year ended December 31, 1992, fixed charges exceeded earnings by
$360 million. Earnings as defined include a $520 million pre- tax loss
on the settlement of cost recovery issues relating to power purchases
from the MCV Partnership partially offset by $(15) million for potential
customer refunds and other reserves related to 1992 but recorded in
1991. The ratio of earnings to fixed charges would have been 1.81
excluding these amounts.
(c) Excludes an extraordinary after-tax loss of $14 million.
(d) For the year ended December 31, 1991, fixed charges exceeded earnings by
$309 million. Earnings as defined include $398 million of pre- tax
write-downs and reserve amounts related to the abandoned Midland project
and $44 million for potential customer refunds and other reserves
recorded in 1991 but related to 1992 and 1990. The ratio of earnings to
fixed charges would have been 1.40 excluding these amounts.
(e) For the year ended December 31, 1990, fixed charges exceeded earnings by
$228 million. Earnings as defined include $716 million of pre- tax
write-downs and reserve amounts related to the abandoned Midland project
and $(29) million for potential customer refunds and other reserves
related to 1990 but recorded in 1991. The ratio of earnings to fixed
charges would have been 2.46 excluding these amounts.
<PAGE> 1
Exhibit (15)
ARTHUR ANDERSEN LLP
To Consumers Power Company:
We are aware that Consumers Power Company has incorporated by
reference in this registration statement its Form 10-Q for the quarter ended
March 31, 1995, its Form 10-Q for the quarter ended June 30, 1995 and its Form
10-Q for the quarter ended September 30, 1995, which include our reports dated
May 8, 1995, August 9, 1995 and November 9, 1995, respectively, covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, those reports are not considered a
part of the registration statement prepared or certified by our Firm or reports
prepared or certified by our Firm within the meaning of Sections 7 and 11 of
the Act.
Arthur Andersen LLP
Detroit, Michigan,
December 19, 1995
<PAGE> 1
Exhibit (23)-4
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
January 31, 1995 (except with respect to certain matters discussed in Notes 2,
3, 7 and 13 to the consolidated financial statements as to which the date is
March 1, 1995) included or incorporated by reference in Consumers Power
Company's Form 10-K for the year ended December 31, 1994, and to all references
to our Firm included in this registration statement.
Arthur Andersen LLP
Detroit, Michigan,
December 19, 1995
