Exhibit 10.1
LETTER OF CREDIT REIMBURSEMENT AGREEMENT
Dated
as of November 30, 2007
THIS LETTER OF CREDIT REIMBURSEMENT
AGREEMENT (this “ Agreement ”) is between
CONSUMERS ENERGY COMPANY (the “ Company ”) and
THE BANK OF NOVA SCOTIA (the “ Bank ”).
The Company has requested, and the
Bank has agreed to grant, a secured letter of credit facility on
the terms and subject to the conditions set forth in this
Agreement. Accordingly, the Company and the Bank agree as
follows:
SECTION
1. DEFINITIONS AND INTERPRETATION.
1.1 Definitions . In addition
to the terms defined in the preamble, as used herein, (a) the
terms set forth below shall have the following meanings (such
definitions to be applicable to both the singular and plural forms
of such terms) and (b) other capitalized terms not defined
herein have the respective meanings set forth in the Credit
Agreement referred to below:
Bond Delivery Agreement means
a bond delivery agreement whereby the Bank, among other things,
acknowledges delivery of the Bonds, substantially in the form of
Exhibit B .
Bonds means a series of
interest-bearing First Mortgage Bonds created under the
Supplemental Indenture issued in favor of, and in form and
substance satisfactory to, the Bank.
Business Day means any day on
which the Bank’s main office in New York, New York is open
for the transaction of commercial banking business (including the
issuance of, and receipt of drawings under, letters of
credit).
Collateral Account means a
special, interest-bearing account maintained (pursuant to
arrangements satisfactory to the Bank) at the Bank’s office
at the address specified pursuant to Section 11.2 ,
which account shall be in the name of the Company but under the
sole dominion and control of the Bank.
Commitment means the
commitment of the Bank to issue Letters of Credit hereunder.
Commitment Amount means
$200,000,000, as reduced from time to time in accordance with the
terms hereof.
Commitment Fee Rate —
see Schedule 1 .
Credit Agreement means the
Fourth Amended and Restated Credit Agreement dated as of
March 30, 2007 among the Company, various financial
institutions and JPMorgan Chase Bank, N.A., as administrative
agent, as amended, modified or waived after the date hereof but
without giving effect to any termination thereof.
Default means any event
described in Section 10.1 .
Designated Covenant means
each covenant of the Company set forth in Articles VI through VIII
of the Credit Agreement (excluding Sections 6.5, 6.6, 6.8 and
6.10 of the Credit Agreement), together with all definitions
related thereto.
Expiration Date means the
date that is 364 days after the date hereof, as such date may
be extended pursuant to Section 2.6 .
FMB Release Date means the
date on which the Bonds are released pursuant to
Section 11.12 .
Letter of Credit — see
Section 2.1 .
Letter of Credit Application
— see Section 2.2 .
LC Commission Fee Rate
— see Schedule 1 .
Liabilities means all
obligations of the Company to the Bank and its successors and
assigns, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing or due
or to become due, arising out of or in connection with the Letters
of Credit, this Agreement or the other Transaction Documents.
Prime Rate means a rate per
annum equal to the prime rate of interest announced from time to
time by the Bank (which is not necessarily the lowest rate charged
to any customer), changing when and as such prime rate
changes.
Stated Amount means, with
respect to any Letter of Credit, the sum of (i) the maximum
aggregate amount available for drawing under such Letter of Credit
under any and all circumstances and (ii) the unpaid principal
amount of all reimbursement obligations in respect of drawings
under such Letter of Credit.
Supplemental Indenture means
a supplemental indenture substantially in the form of
Exhibit A .
Termination Date means the
earlier to occur of (a) the Expiration Date and (b) such
other date on which the Commitment Amount shall be reduced to zero
pursuant to Section 4 or the Commitment shall be
terminated pursuant to Section 10 .
Transaction Documents means
this Agreement, each Letter of Credit Application, the Supplemental
Indenture, the Bond Delivery Agreement, the Bonds and each other
instrument or document delivered in connection herewith.
Unmatured Default means any
event that if it continues uncured will, with lapse of time or
notice or lapse of time and notice, constitute a Default.
1.2 Other Interpretive
Provisions , (a) The term “including” is not
limiting and means “including without limitation.”
(b) Unless otherwise provided herein, (i) references to
agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other
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modifications are not prohibited by the terms of any Transaction
Document, and (ii) references to any statute or regulation
shall be construed to include all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or
interpreting such statute or regulation.
SECTION
2. COMMITMENT OF THE BANK; LETTER OF CREDIT PROCEDURES.
2.1 Commitment . The Bank
hereby agrees, on the terms and conditions set forth in this
Agreement, to issue standby letters of credit denominated in U.S.
dollars (each, a “ Letter of Credit ”) and to
renew, extend, increase, decrease or otherwise modify Letters of
Credit (“ Modify ,” and each such action a
“ Modification ”), from time to time from and
including the date hereof and prior to the Termination Date upon
the request of the Company; provided that the aggregate
Stated Amount of all Letters of Credit shall not at any time exceed
the Commitment Amount. No Letter of Credit shall (x) be issued
later than 30 days prior to the scheduled Termination Date,
(y) have an expiry date later than the fifth Business Day
prior to the scheduled Termination Date (unless the Company agrees
on writing on the date of issuance (or, if applicable, the date of
the Modification extending the expiry date thereof) of such Letter
of Credit to, and the Company does, on or prior to such fifth
preceding Business Day, deliver cash to the Bank for deposit in the
Collateral Account in an amount equal to an amount equal to not
less than 105% of the outstanding Stated Amount of such Letter of
Credit) or (z) provide for time drafts.
2.2 Notice . Subject to
Section 2.1 , the Company shall give the Bank notice
prior to 12:00 noon (New York time) at least three Business Days
(or such lesser number of days as the Bank may agree in any
particular instance) prior to the proposed date of issuance or
Modification of a Letter of Credit, specifying the beneficiary, the
proposed date of issuance (or Modification) and the expiry date of
such Letter of Credit, and describing the proposed terms of such
Letter of Credit and the nature of the transactions proposed to be
supported thereby. The issuance or Modification by the Bank of any
Letter of Credit shall, in addition to the conditions precedent set
forth in Section 9 , be subject to the condition
precedent that such Letter of Credit shall be satisfactory to the
Bank and that the Company shall have executed and delivered an
application therefor on the Bank’s customary form for the
type of Letter of Credit requested (each a “ Letter of
Credit Application”) . In the event of any conflict
between the terms of this Agreement and the terms of any Letter of
Credit Application, the terms of this Agreement shall
control.
2.3 Reimbursement . Upon
receipt of a demand for payment from the beneficiary of a Letter of
Credit, the Bank shall promptly notify the Company as to the amount
to be paid by the Bank as a result of such demand and the proposed
payment date (the “ LC Payment Date ”). The
Bank’s sole responsibility to the Company upon any such
demand shall be to determine that the documents delivered under the
applicable Letter of Credit in connection with such demand are in
conformity in all material respects with the requirements of such
Letter of Credit. The Company shall be irrevocably and
unconditionally obligated to reimburse the Bank on the applicable
LC Payment Date for any amounts to be paid by the Bank upon any
drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind; provided that the
Company shall not be precluded from asserting any claim for direct
(but not consequential) damages suffered by the Company to the
extent, but only to the extent, caused by (i) the gross
negligence or willful misconduct of the Bank in determining whether
a demand presented under any Letter of Credit complied with the
terms of such Letter of Credit or (ii) the Bank’s
failure to
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pay
under any Letter of Credit issued after the presentation to it of a
request strictly complying with the terms and conditions of such
Letter of Credit. If the Company fails to reimburse the Bank in
full for any drawing under a Letter of Credit on the applicable LC
Payment Date, the unpaid principal amount of such reimbursement
obligation shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to (x) the rate
applicable to Floating Rate Advances under the Credit Agreement
plus, beginning on the third Business Day after the LC Payment
Date, 1%.
2.4 Obligations Absolute . The
Company’s obligations under this Section 2 shall
be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that
the Company may have or have had against the Bank or any
beneficiary of a Letter of Credit. The Company further agrees with
the Bank that the Bank shall not be responsible for, and the
Company’s reimbursement obligation in respect of any Letter
of Credit shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute
between or among the Company, any of its affiliates, the
beneficiary of any Letter of Credit or any financing institution or
other party to whom any Letter of Credit may be transferred or any
claims or defenses whatsoever of the Company or of any of its
affiliates against the beneficiary of any Letter of Credit or any
such transferee. The Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. The Company agrees that any
action taken or omitted by the Bank under or in connection with a
Letter of Credit and the related drafts and documents, if done
without gross negligence and willful misconduct, shall be binding
upon the Company and shall not put the Bank under any liability to
the Company. Nothing in this Section 2.4 is intended to
limit the right of the Company to make a claim against the Bank for
damages as contemplated by the proviso to the second sentence of
Section 2.3 .
2.5 Actions of the Bank . The
Bank shall be entitled to rely, and shall be fully protected in
relying, upon any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or
other document believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and
other experts selected by the Bank.
2.6 Extension of Expiration
Date . Not earlier than 120 days prior to, nor later than
60 days prior to, the initial Expiration Date (the “
Initial Expiration Date ”), the Company may request
that the Bank (in its sole discretion) extend the Initial
Expiration Date for an additional 364 days. If the Bank agrees
to so extend the Initial Expiration Date (which agreement may be
conditioned upon the payment of an extension fee to be agreed to by
the Company and the Bank), the Expiration Date shall be extended
for an additional 364 days effective as of the Initial
Expiration Date.
2.7 Indemnification . The
Company hereby agrees to indemnify and hold harmless the Bank and
its directors, officers, agents and employees from and against any
and all claims and damages, losses, liabilities, reasonable costs
or expenses that the Bank may incur (or that may be claimed against
the Bank by any Person whatsoever) by reason of or in connection
with the
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issuance, execution and delivery or transfer of or payment or
failure to pay under any Letter of Credit or any actual or proposed
use of any Letter of Credit, including any claims, damages, losses,
liabilities, costs or expenses (“ indemnified
liabilities ”) that the Bank may incur by reason of or on
account of the Bank issuing any Letter of Credit which specifies
that the term “Beneficiary” included therein includes
any successor by operation of law of the named Beneficiary, but
which Letter of Credit does not require that any drawing by any
such successor Beneficiary be accompanied by a copy of a legal
document, satisfactory to the Bank, evidencing the appointment of
such successor Beneficiary; provided that the Company shall
not be required to indemnify the Bank for indemnified liabilities
to the extent it is determined in a final non-appealable judgment
by a court of competent jurisdiction that such indemnified
liabilities arose out of an event described in the proviso to the
second sentence of Section 2.3 .
2.8 Evidence . The obligation
of the Company to repay the Liabilities shall be evidenced by one
or more Bonds.
SECTION
3. FEES.
3.1 Commitment and LC Commission
Fees . The Company agrees to pay the Bank (a) a commitment
fee in an amount equal to the Commitment Fee Rate in effect from
time to time on the daily remainder of (i) the Commitment
Amount and (ii) the Stated Amount of all Letters of Credit and
(b) a letter of credit commission fee in an amount equal to
the LC Commission Fee Rate in effect from time to time on the daily
Stated Amount of each Letter of Credit, in each case for the period
from the date of issuance of such Letter of Credit to the date such
Letter of Credit expires or otherwise terminates; provided
that, at any time any Default exists, the Bank may, by written
notice to the Company, increase the rate per annum for the
commitment fee and/or the letter of credit commission fee by 1.0%
(which increased rate shall, unless otherwise agreed by the Bank,
remain effective until the first date on which no Default exists).
Such fees shall be computed for the actual number of days elapsed
on the basis of a 360-day year and payable in arrears on the last
day of each calendar quarter and on the Termination Date (and, if
applicable, thereafter on demand), in each case for the period then
ended for which such fees have not previously been paid.
3.2 Issuance Fees . The
Company agrees to pay to the Bank (i) an issuance fee of $100
for each Letter of Credit, payable not more than 30 days
following delivery by the Bank of an invoice therefor, (ii) if
at any time any other financial institution holds a risk
participation in all or any portion of a Letter of Credit, a
fronting fee of 12.5 basis points per annum of the face amount of
such Letter of Credit, payable quarterly in arrears on the last day
of each calendar quarter and on the Termination Date (and
thereafter, if applicable, on demand), and (iii) documentary and
processing charges in connection with the issuance or modification
of and draws under any Letter of Credit in accordance with the
Bank’s standard schedule for such charges as in effect from
time to time.
SECTION
4. REDUCTIONS OF THE COMMITMENT AMOUNT. The Company may from time
to time, upon not less than five Business Days’ prior written
notice to the Bank, permanently reduce the Commitment Amount to an
amount that is not less than the Stated Amount of all Letters of
Credit. Upon any such reduction in the Commitment Amount, the Bank
shall, upon request of the Company, promptly surrender to or upon
the order of the Company one
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or more
Bonds specified by the Company; provided that the Company
remains in compliance with Section 8.2 .
SECTION
5. SECTION 6 MAKING OF PAYMENTS.
5.1 Making of Payments . All
amounts payable by the Company hereunder shall be paid in U.S.
dollars in immediately available funds to the Bank at its principal
office in New York, New York not later than 2:30 p.m., New York
time, on the date due, and funds received after such time shall be
deemed to have been received by the Bank on the immediately
following Business Day. The Company hereby authorizes the Bank to
charge any account of the Company maintained with the Bank for
(a) any reimbursement obligations that become due upon any
drawing under a Letter of Credit and (b) each payment of fees
or other amounts that are due and payable hereunder (but the
failure of the Bank to charge any such account shall not affect the
Company’s obligation to pay the Bank all amounts payable
hereunder as such amounts become due).
5.2 Due Date Extension . If
any amount required to be paid hereunder becomes due on a date that
is not a Business Day, then such amount shall be paid on the
immediately following Business Day.
SECTION
6. YIELD PROTECTION.
6.1 Yield Protection . The
Company agrees to reimburse the Bank for any increase in the cost
(including any increase in capital costs) to the Bank of, or any
reduction in the amount of any sum receivable by the Bank in
respect of, any Letter of Credit in accordance with the terms of
Section 4.1 of the Credit Agreement as if such Section were
set forth in full herein mutatis mutandis (it being
understood that (a) any reference to the “Agent”,
a “Bank” or an “L/C Issuer” shall be deemed
to be a reference to the Bank, (b) any reference to a
“Letter of Credit” shall be deemed to be a reference to
a Letter of Credit and (c) any reference to “this
Agreement” shall be deemed to be a reference to this
Agreement).
6.2 Bank Statements; Limitations
on Demands; Survival . Each demand by the Bank pursuant to this
Section 6 shall be accompanied by a statement setting
forth in reasonable detail the basis for such demand and a
calculation of the amount being demanded. Determinations and
statements of the Bank pursuant to this Section 6 shall
be conclusive absent demonstrable error. Notwithstanding the
foregoing, the Bank shall not be entitled to demand compensation or
be compensated hereunder to the extent that such compensation
relates to any period of time more than 90 days prior to the
date upon which the Bank first notified the Company of the
occurrence of the event entitling the Bank to such compensation
(unless, and to the extent that, any such compensation so demanded
relates to the retroactive application of any event so notified to
the Company). The provisions of this Section 6 shall
survive termination of this Agreement.
SECTION
7. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into
this Agreement and to issue Letters of Credit hereunder, the
Company represents and warrants that:
7.1 Incorporation and Good
Standing . The Company is duly incorporated, validly existing
and in good standing under the laws of the State of Michigan.
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7.2 Corporate Power and Authority:
No Conflicts . The execution, delivery and performance by the
Company of the Transaction Documents are within the Company’s
corporate powers, have been duly authorized by all necessary
corporate action and do not (a) violate the Company’s
charter, bylaws or any applicable law, or (b) breach or result
in an event of default under any indenture or material agreement,
and do not result in or require the creation of any Lien upon or
with respect to any of its properties (except the Lien of the
Indenture securing the Bonds and any Lien in favor of the Bank on
the Collateral Account or any funds therein).
7.3 Governmental Approvals .
No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the
Company of any Transaction Document, except for the authorization
to issue, sell or guarantee secured and/or unsecured short-term
debt granted by the Federal Energy Regulatory Commission, which
authorization has been obtained and is in full force and
effect.
7.4 Legally Enforceable
Agreements . Each Transaction Document constitutes a legal,
valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to (a) the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’
rights generally and (b) the application of general principles
of equity (regardless of whether considered in a proceeding in
equity or at law).
7.5 Bonds . The issuance to
the Bank of the Bonds to evidence the Liabilities (a) will not
violate any provision of the Indenture or any other agreement or
instrument, or any law or regulation, or judicial or regulatory
order, judgment or decree, to which the Company or any of its
Subsidiaries is a party or by which any of the foregoing is bound
and (b) will, prior to the FMB Release Date, provide the Bank,
as beneficial holder of the Bonds, the benefit of the Lien of the
Indenture equally and ratably with the holders of other First
Mortgage Bonds.
7.6 Credit Agreement
Representations and Warranties . Each of the representations
and warranties of the Company set forth Sections 5.5 through
5.11, 5.13 and 5.14 of the Credit Agreement is true and correct in
all material respects, except to the extent that any such
representation or warranty expressly relates to an earlier date, in
which case it was true and correct as of such earlier date (it
being understood that, for purposes hereof, all references in such
provisions of the Credit Agreement, and in any related definitions,
to (a) the “Agent” or the “Banks”
shall be deemed to be references to the Bank and (b) a “
Material Adverse Change ” shall mean any event,
development or circumstance that has had or could reasonably be
expected to have a material adverse effect on (i) the
financial condition or results of operations of the Company and its
Consolidated Subsidiaries, taken as a whole, (ii) the
Company’s ability to perform its obligations under any
Transaction Document or (iii) the validity or enforceability
of any Transaction Document or the rights or remedies of the Bank
thereunder.
SECTION
8. COVENANTS. The Company agrees that until the expiration or
termination of the Commitment and thereafter until all Liabilities
are paid in full in cash and all outstanding Letters of Credit are
cancelled, have expired or are fully drawn, it will:
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8.1 Compliance with Designated
Covenants . Comply with each Designated Covenant as if all such
covenants were set forth in full herein, mutatis mutandis
.
8.2 Minimum Amount of Bonds .
Beginning on the date hereof and continuing until the earlier of
(i) the FMB Release Date and (ii) the date on which the
Commitment and Letters of Credit have terminated and all
Liabilities have been paid in full, cause the face amount of all
Bonds to at all times be equal to or greater than the greater of
(x) the Commitment Amount and (y) the sum of (A) the
aggregate undrawn Stated Amount of all outstanding Letters of
Credit plus (B) the aggregate unpaid amount of all
reimbursement obligations under all Letters of Credit.
8.3 Maintenance of Books and
Records; Inspections . Keep adequate records and books of
account, in which full and correct entries shall be made of all of
its financial transactions and its assets and business so as to
permit the Company and its Consolidated Subsidiaries to present
financial statements in accordance with GAAP and, subject to any
necessary approval from the Nuclear Regulatory Commission, at any
reasonable time and from time to time, permit the Bank or any agent
or representative thereof to examine and make copies of and
abstracts from its records and books of account, visit its
properties and discuss its affairs, finances and accounts with any
of its officers.
8.4 Notice of Default . As
soon as practicable and in any event within five Business Days
after becoming aware of the occurrence of any Default or Unmatured
Default, a statement of a Designated Officer as to the nature
thereof, and as soon as practicable and in any event within five
Business Days thereafter, a statement of a Designated Officer as to
the action which the Company has taken, is taking or proposes to
take with respect thereto.
SECTION
9. CONDITIONS TO ISSUANCE OF LETTERS OF CREDIT. The obligation of
the Bank to issue any Letter of Credit is subject to the following
conditions precedent:
9.1 Initial Letter of Credit .
The obligation of the Bank to issue the initial Letter of Credit
is, in addition to the conditions precedent specified in
Section 9.2 , subject to the condition precedent that
the Bank shall have received all of the following, each duly
executed and dated the date of issuance of such Letter of Credit
(or such earlier date as shall be satisfactory to the Bank), in
form and substance satisfactory to the Bank:
(a) a copy of the Restated
Articles of Incorporation of the Company, together with all
amendments, certified by the Secretary or an Assistant Secretary of
the Company, and a certificate of good standing, certified by the
appropriate governmental officer in its jurisdiction of
incorporation;
(b) a copy, certified by the
Secretary or an Assistant Secretary of the Company, of its bylaws
and of its Board of Directors’ resolutions (and resolutions
of other bodies, if any are deemed necessary by counsel for the
Bank) authorizing the execution of the Transaction Documents;
(c) an incumbency certificate,
executed by the Secretary or an Assistant Secretary of the Company,
which shall identify by name and title and bear the original or
facsimile signature of the officers of the Company authorized to
sign the Transaction Documents and the officers or
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other
employees authorized to request Letters of Credit hereunder, upon
which certificate the Bank shall be entitled to rely until informed
of any change in writing by the Company;
(d) a certificate, signed by a
Designated Officer of the Company, stating that on the date of such
issuance (i) no Default or Unmatured Default has occurred and
is continuing and (ii) each representation or warranty
contained in Section 7 is true and correct;
(e) the opinion letter of James
E. Brunner, Esq., General Counsel of the Company, covering
substantially the same matters as the corresponding opinion letter
issued in connection with the Credit Agreement;
(f) an executed Supplemental
Indenture;
(g) evidence satisfactory to the
Bank of the issuance of the Bonds in the form set forth in the
Supplemental Indenture and in an aggregate principal amount of
$200,000,000 pursuant to the Bond Delivery Agreement; and
(h) such other documents as the
Bank may reasonably request.
9.2 All Letters of Credit .
The obligation of the Bank to issue each Letter of Credit is
subject to the following further conditions precedent that (and the
submission of a Letter of Credit Application pursuant to
Section 2.2 shall constitute a representation and
warranty by the Company that such conditions will be satisfied on
the date of the issuance of such Letter of Credit):
(a) no Default or Unmatured
Default has occurred and is continuing or will result from the
issuance of such Letter of Credit; and
(b) the representations and
warranties of the Company contained in Section 7 are
true and correct as of the date of the issuance of such Letter of
Credit, with the same effect as though made on such date.
SECTION
10. EVENTS OF DEFAULT AND THEIR EFFECT.
10.1 Events of Default . Each
of the following shall constitute a “ Default ”
under this Agreement:
10.1.1 Non-Payment of Liabilities,
etc . The Company shall fail to pay (a) any reimbursement
obligation within one day after the same becomes due, or
(b) any interest or any fee or other Liability payable
hereunder within five days after such interest, fee or other
Liability becomes due and payable.
10.1.2
Bankruptcy, Insolvency, etc . The Company: (a) shall
make an assignment for the benefit of creditors, or petition or
apply to any tribunal for the appointment of a custodian, receiver
or trustee for it or a substantial part of its assets; or
(b) shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (c) shall have had any such petition
or application filed or any such proceeding shall have been
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commenced, against it, in which an adjudication or appointment is
made or order for relief is entered, or which petition, application
or proceeding remains undismissed for a period of 30 consecutive
days or more; or (d) by any act or omission shall indicate its
consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of
a custodian, receiver or trustee for all or any substantial part of
its property; or (e) shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period
of 30 days or more; or (f) shall take any corporate
action to authorize any of the actions set forth above in this
Section 10.1.2.
10.1.3
Non-Compliance with this Agreement . The Company fails to
comply with or to perform any provision of this Agreement or any
other Transaction Document (and not constituting a Default under
any other provision of this Section 10 ) and
continuance of such failure for 30 consecutive days after the
earlier of (a) a Designated Officer obtaining knowledge of
such breach and (b) written notice thereof by means of
facsimile, regular mail or written notice delivered in person (or
telephonic notice thereof confirmed in writing) having been given
to the Company by the Bank.
10.1.4
Warranties . Any representation or warranty made by the
Company (or any of its officers) in this Agreement or any other
Transaction Document or in any certificate, document, report,
financial or other written statement furnished at any time pursuant
to any Transaction Document shall prove to have been incorrect in
any material respect on or as of the date made or deemed
made.
10.1.5
Cross-Default . Any “Event of Default” under and
as defined in the Credit Agreement occurs.
10.2 Effect of Default .
(a) If any Default described in
Section 10.1.2 shall occur, the Commitment (if it has
not theretofore terminated) shall immediately terminate and all
Liabilities shall immediately become due and payable upon demand
(regardless of any provision hereof to the contrary); and in the
case of any other Default, the Bank may (i) without
presentment, demand or any other notice whatsoever, declare all
Liabilities to be due and payable upon demand (regardless of any
provision hereof to the contrary) and/or (ii) by notice to the
Company, declare the Commitment (if it has not theretofore
terminated) to be terminated, and the Company will be and become
thereby unconditionally obligated, without any further notice, act
or demand, to pay to the Bank an amount in immediately available
funds, which funds shall be held in the Collateral Account, equal
to the difference between (x) 105% of the Stated Amount of all
Letters of Credit at such time and (y) the amount on deposit
in the Collateral Account at such time which is free and clear of
all rights and claims of third parties and has not been applied
against the Liabilities (such difference, the “ Collateral
Shortfall Amount ”).
(b) If at any time while any
Default is continuing, the Bank determines that the Collateral
Shortfall Amount at such time is greater than zero, the Bank may
make demand on the Company to pay, and the Company will, forthwith
upon such demand and without any further notice or act, pay to the
Bank the Collateral Shortfall Amount, which funds shall be
deposited in the Collateral Account.
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(c) The Bank may, at any time or
from time to time after funds are deposited in the Collateral
Account, apply such funds to the payment of the Liabilities and any
other amounts as shall from time to time have become due and
payable by the Company to the Bank thereunder. The Company hereby
pledges, assigns and grants to the Bank a security interest in all
of the Company’s right, title and interest in and to all
funds which may from time to time be on deposit in the Collateral
Account to secure the prompt and complete payment and performance
of the Liabilities. The Bank will invest any funds on deposit from
time to time in the Collateral Account in certificates of deposit
of The Bank of Nova Scotia having a maturity not exceeding
30 days.
(d) At any time while any
Default is continuing, neither the Company nor any Person claiming
on behalf of or through the Company shall have any right to
withdraw any of the funds held in the Collateral Account. After all
of the Liabilities have been indefeasibly paid in full, all Letters
of Credit have expired or been terminated and the Commitment has
been terminated, any funds remaining in the Collateral Account
shall be returned by the Bank to the Company or paid to whomever
may be legally entitled thereto at such time.
(e) The Bank shall promptly
advise the Company in writing of any declaration pursuant to
clause (a)(i) above, but failure to do so shall not impair
the effect of such declaration.
SECTION
11. GENERAL.
11.1 Waiver; Amendments . No
delay on the part of the Bank in the exercise of any right, power
or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power
or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement shall be effective
unless the same shall be in writing and signed and delivered by the
Bank, and then such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
11.2 Notices . All notices and
other communications provided to any party hereto under this
Agreement shall be in writing (including by facsimile) and
addressed or delivered to such party at its address set forth below
its signature hereto or at such other address as may be designated
by such party in a notice to the other party. Any notice, if mailed
and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted and transmission is confirmed.
11.3 Costs and Expenses;
Indemnity; Taxes .
(a) The Company shall reimburse
the Bank for (a) any reasonable costs, internal charges and
out-of-pocket expenses (including reasonable attorneys’ fees
and time charges of attorneys for the Bank) paid or incurred by the
Bank in connection with the preparation, review, execution,
delivery, syndication, distribution (including via the internet),
amendment and modification of the Transaction Documents and
(b) any reasonable costs, internal charges and out-of-pocket
expenses (including reasonable attorneys’ fees and time
charges of attorneys for the Bank) paid or incurred by the Bank in
connection with the collection and enforcement of the Transaction
Documents. The Company further agrees to indemnify the Bank and its
Affiliates,
11
and the
directors, officers, employees and agents of the foregoing (all of
the foregoing, the “ Indemnified Persons ”),
against all losses, claims, damages, penalties, judgments,
liabilities and reasonable expenses (including all reasonable
expenses of litigation or preparation therefor whether or not an
Indemnified Person is a party thereto) which any of them may pay or
incur arising out of or relating to this Agreement, the other
Transaction Documents, the transactions contemplated hereby, the
direct or indirect application or proposed application of the
proceeds of any Letter of Credit, any actual or alleged presence or
release of any Hazardous Substance on or from any property owned or
operated by the Company or any Subsidiary or any Environmental
Liability related in any way to the Company or any Subsidiary;
provided that the Company shall not be liable to any
Indemnified Person for any of the foregoing to the extent they
arise from the gross negligence or willful misconduct of such
Indemnified Person. Without limiting the foregoing, the Company
shall pay any civil penalty or fine assessed by the Office of
Foreign Assets Control against any Indemnified Person, and all
reasonable costs and expenses (including reasonable fees and
expenses of counsel to such Indemnified Person) incurred in
connection with defense thereof, as a result of any breach or
inaccuracy of the representation made in Section 5.14 of the
Credit Agreement. The obligations of the Company under this Section
shall survive the termination of this Agreement.
11.4 Captions. Section
captions used in this Agreement are for convenience only and shall
not affect the construction of this Agreement.
11.5 Governing Law. This
Agreement shall be a contract made under and governed by the
internal laws of the State of New York except, in the case of a
Letter of Credit, to the extent that such laws are inconsistent
with the ISP (as defined below). Except as otherwise expressly
provided in the applicable Letter of Credit or Letter of Credit
Application, each Letter of Credit shall be subject to the
International Standby Practices (the “ISP”) as most
recently published by the International Chamber of Commerce. All
obligations of the Company and rights of the Bank expressed herein
shall be in addition to and not in limitation of those provided by
applicable law.
11.6 Severability. Whenever
possible each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but
if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
11.7 Counterparts . This
Agreement may be executed in any number of counterparts and by the
parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement.
11.8 Successors and Assigns .
This Agreement shall be binding upon the Company and the Bank and
their respective successors and assigns, and shall inure to the
benefit of the Company, the Bank and the successors and assigns of
the Bank.
11.9 Waiver of Jury Trial .
EACH OF THE COMPANY AND THE BANK HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT, ANY OTHER
12
INSTRUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
11.10 Submission to
Jurisdiction . The Company hereby irrevocably and
unconditionally submits for itself and its property in any legal
action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the
Southern District of New York and appellate courts from any
thereof, and agrees that any such action or proceeding may be
brought in such courts. The Company (a) waives any objection
that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or
claim the same, (b) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the Company at its address set forth on
the signature page hereof or at such other address of which the
bank shall have been notified pursuant hereto, (c) agrees that
nothing herein shall affect the right of the bank to effect service
of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction and (d) waives, to the
maximum extent not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding referred to in
this Section any special, indirect, consequential or punitive
damages.
11.11 USA Patriot Act . The
Bank hereby notifies the Company that pursuant to requirements of
the USA Patriot Act, the Bank is required to obtain, verify and
record information that identifies the Company, which information
includes the name and address of the Company and other information
that will allow the Bank to identify the Company in accordance with
the USA Patriot Act.
11.12 Release of Bonds . The
Bank will release the Bonds and deliver, at the Company’s
expense, such documents to the Company or the trustee under the
Indenture as the Company may reasonably require to evidence such
release, upon written request by the Company accompanied by a
certificate of a Designated Officer certifying that (a) no
Default or Unmatured Default exists prior to or after giving effect
to such release and (b) at least two of the three then current
ratings of the Company’s senior unsecured long-term debt
(without third-party credit enhancement) are as follows:
(i) Baa2 or higher in the case of Moody’s, (ii) BBB
or higher in the case of S&P and (iii) BBB or higher in
the case of Fitch.
13
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be executed and delivered by
their duly authorized representatives as of the day and year first
above written.
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CONSUMERS ENERGY
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/s/ Laura L. Mountcastle
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Laura L. Mountcastle
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Vice President and Treasurer
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One Energy Plaza |
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Jackson, MI 49201 |
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Attention: Beverly S.
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Facsimile No.:
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Telephone No.:
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E-Mail Address:
bsburger@cmsenergy.com |
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S-1
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THE BANK OF NOVA
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Thane Rattew |
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Managing Director |
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One Liberty
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New York, NY 10006
Attention: Kevin Kober
Facsimile No: (212) 225 5480
Telephone No: (212) 225 5186
E-Mail Address: Kevin_kober@scotiacapital.com
S-2
EXHIBIT A
[FORM
OF SUPPLEMENTAL INDENTURE]
ONE
HUNDRED SIXTH SUPPLEMENTAL INDENTURE
Providing among other things for
FIRST MORTGAGE BONDS,
2007-2 Collateral Series (Interest Bearing)
Dated as of November 30, 2007
CONSUMERS ENERGY COMPANY
TO
THE
BANK OF NEW YORK,
TRUSTEE
Counterpart ____ of 80
THIS ONE HUNDRED SIXTH SUPPLEMENTAL
INDENTURE, dated as of November 30, 2007 (herein sometimes
referred to as “this Supplemental Indenture”), made and
entered into by and between CONSUMERS ENERGY COMPANY, a corporation
organized and existing under the laws of the State of Michigan,
with its principal executive office and place of business at One
Energy Plaza, in Jackson, Jackson County, Michigan 49201, formerly
known as Consumers Power Company (hereinafter sometimes referred to
as the “Company”), and THE BANK OF NEW YORK, a New York
banking corporation, with its corporate trust offices at 101
Barclay St., New York, New York 10286 (hereinafter sometimes
referred to as the “Trustee”), as Trustee under the
Indenture dated as of September 1, 1945 between Consumers
Power Company, a Maine corporation (hereinafter sometimes referred
to as the “Maine corporation”), and City Bank Farmers
Trust Company (Citibank, N.A., successor, hereinafter sometimes
referred to as the “Predecessor Trustee”), securing
bonds issued and to be issued as provided therein (hereinafter
sometimes referred to as the “Indenture”),
WHEREAS at the close of business on
January 30, 1959, City Bank Farmers Trust Company was
converted into a national banking association under the title
“First National City Trust Company”; and
WHEREAS at the close of business on
January 15, 1963, First National City Trust Company was merged
into First National City Bank; and
WHEREAS at the close of business on
October 31, 1968, First National City Bank was merged into The
City Bank of New York, National Association, the name of which was
thereupon changed to First National City Bank; and
WHEREAS effective March 1, 1976,
the name of First National City Bank was changed to Citibank, N.A.;
and
WHEREAS effective July 16, 1984,
Manufacturers Hanover Trust Company succeeded Citibank, N.A. as
Trustee under the Indenture; and
WHEREAS effective June 19, 1992,
Chemical Bank succeeded by merger to Manufacturers Hanover Trust
Company as Trustee under the Indenture; and
WHEREAS effective July 15, 1996,
The Chase Manhattan Bank (National Association), merged with and
into Chemical Bank which thereafter was renamed The Chase Manhattan
Bank; and
WHEREAS effective November 11,
2001, The Chase Manhattan Bank merged with Morgan Guaranty Trust
Company of New York and the surviving corporation was renamed
JPMorgan Chase Bank; and
WHEREAS, effective November 13,
2004, the name of JPMorgan Chase Bank was changed to JPMorgan Chase
Bank, N.A.; and
WHEREAS, effective October 2,
2006, The Bank of New York assumed the rights and obligations of
JPMorgan Chase Bank, N.A. under the Indenture; and
WHEREAS the Indenture was executed
and delivered for the purpose of securing such bonds as may from
time to time be issued under and in accordance with the terms of
the Indenture, the aggregate principal amount of bonds to be
secured thereby being limited to $5,000,000,000 at any one time
outstanding (except as provided in Section 2.01 of the
Indenture), and the Indenture describes and sets forth the property
conveyed thereby and is filed in the Office of the Secretary of
State of the State of Michigan and is of record in the Office of
the Register of Deeds of each county in the State of Michigan in
which this Supplemental Indenture is to be recorded; and
WHEREAS the Indenture has been
supplemented and amended by various indentures supplemental
thereto, each of which is filed in the Office of the Secretary of
State of the State of Michigan and is of record in the Office of
the Register of Deeds of each county in the State of Michigan in
which this Supplemental Indenture is to be recorded; and
WHEREAS the Company and the Maine
corporation entered into an Agreement of Merger and Consolidation,
dated as of February 14, 1968, which provided for the Maine
corporation to merge into the Company; and
WHEREAS the effective date of such
Agreement of Merger and Consolidation was June 6, 1968, upon
which date the Maine corporation was merged into the Company and
the name of the Company was changed from “Consumers Power
Company of Michigan” to “Consumers Power
Company”; and
WHEREAS the Company and the
Predecessor Trustee entered into a Sixteenth Supplemental
Indenture, dated as of June 4, 1968, which provided, among
other things, for the assumption of the Indenture by the Company;
and
WHEREAS said Sixteenth Supplemental
Indenture became effective on the effective date of such Agreement
of Merger and Consolidation; and
WHEREAS the Company has succeeded to
and has been substituted for the Maine corporation under the
Indenture with the same effect as if it had been named therein as
the mortgagor corporation; and
WHEREAS effective March 11,
1997, the name of Consumers Power Company was changed to Consumers
Energy Company; and
WHEREAS, the Company has entered into
a Letter of Credit Reimbursement Agreement dated as of
November 30, 2007 (as amended or otherwise modified from time
to time, the “Reimbursement Agreement”) with The Bank
of Nova Scotia (the “Lender”) providing for the making
of certain financial accommodations thereunder, and pursuant to
such Reimbursement Agreement the Company has agreed to issue to the
Lender, as evidence of and security for the Liabilities (as such
term is defined in the Reimbursement Agreement), a new series of
bonds under the Indenture; and
WHEREAS, for such purposes the
Company desires to issue a new series of bonds, to be designated
First Mortgage Bonds, 2007-2 Collateral Series (Interest Bearing),
each of which
A-2
bonds
shall also bear the descriptive title “First Mortgage
Bond” (hereinafter provided for and hereinafter sometimes
referred to as the “2007-2 Collateral Bonds”), the
bonds of which series are to be issued as registered bonds without
coupons and are to bear interest at the rate per annum specified
herein and are to mature on the Termination Date (as such term is
defined in the Reimbursement Agreement); and
WHEREAS, each of the registered bonds
without coupons of the 2007-2 Collateral Bonds and the
Trustee’s Authentication Certificate thereon are to be
substantially in the following form, to wit:
A-3
[FORM OF REGISTERED BOND
OF
THE 2007-2 COLLATERAL BONDS]
[FACE]
CONSUMERS ENERGY COMPANY
FIRST MORTGAGE BOND
2007-2 COLLATERAL SERIES (INTEREST BEARING)
CONSUMERS ENERGY COMPANY, a Michigan
corporation (hereinafter called the “Company”), for
value received, hereby promises to pay to The Bank of Nova Scotia,
as the lender (in such capacity, the “Lender”) under
the Letter of Credit Reimbursement Agreement dated as of
November 30, 2007 between the Company and the Lender (as
amended or otherwise modified from time to time, the
“Reimbursement Agreement”), or registered assigns, the
principal sum of Two Hundred Million Dollars ($200,000,000) or such
lesser principal amount as shall be equal to the aggregate amount
of obligations (the “Reimbursement Obligations”) of the
Company then outstanding under the Reimbursement Agreement to
reimburse the Lender for amounts paid by the Lender in respect of
any one or more drawings under Letters of Credit (as defined in the
Reimbursement Agreement) included in the Liabilities (as defined in
the Reimbursement Agreement) outstanding on the Termination Date
(as defined in the Reimbursement Agreement) (the “Maturity
Date”), but not in excess, however, of the principal amount
of this bond, and to pay interest thereon at the Interest Rate (as
defined below) until the principal hereof is paid or duly made
available for payment on the Maturity Date, or, in the event of
redemption of this bond, until the redemption date, or, in the
event of default in the payment of the principal hereof, until the
Company’s obligations with respect to the payment of such
principal shall be discharged as provided in the Indenture (as
defined on the reverse hereof). Interest on this bond shall be
payable on each Interest Payment Date (as defined below),
commencing on the first Interest Payment Date next succeeding
November 30, 2007. If the Maturity Date falls on a day which
is not a Business Day, as defined below, principal and any interest
and/or fees payable with respect to the Maturity Date will be paid
on the immediately preceding Business Day. The interest payable,
and punctually paid or duly provided for, on any Interest Payment
Date will, subject to certain exceptions, be paid to the person in
whose name this bond (or one or more predecessor bonds) is
registered at the close of business on the Record Date (as defined
below); provided, however, that interest payable on the
Maturity Date will be payable to the person to whom the principal
hereof shall be payable. Should the Company default in the payment
of interest (“Defaulted Interest”), the Defaulted
Interest shall be paid to the person in whose name this bond (or
one or more predecessor bonds) is registered on a subsequent record
date fixed by the Company, which subsequent record date shall be
fifteen (15) days prior to the payment of such Defaulted
Interest. As used herein, (A)“Business Day” shall mean
any day, other than a Saturday or Sunday, on which banks generally
are open in New
A-4
York,
New York for the conduct of substantially all of their commercial
lending activities and on which interbank wire transfers can be
made on the Fedwire system; (B) “Interest Payment Date”
shall mean each date on which Liabilities constituting interest
and/or fees are due and payable from time to time pursuant to the
Reimbursement Agreement; (C) “Interest Rate” shall mean
a rate of interest per annum, adjusted as necessary, to result in
an interest payment equal to the aggregate amount of Liabilities
constituting interest and fees due under the Reimbursement
Agreement on the applicable Interest Payment Date; and (D)
“Record Date” with respect to any Interest Payment Date
shall mean the day (whether or not a Business Day) immediately next
preceding such Interest Payment Date.
Payment of the principal of and
interest on this bond will be made in immediately available funds
at the office or agency of the Company maintained for that purpose
in the City of Jackson, Michigan, in such coin or currency of the
United States of America as at the time of payment is legal tender
for payment of public and private debts.
The provisions of this bond are
continued on the reverse hereof and such continued provisions shall
for all purposes have the same effect as though fully set forth at
this place.
This bond shall not be valid or
become obligatory for any purpose unless and until it shall have
been authenticated by the execution by the Trustee or its successor
in trust under the Indenture of the certificate hereon.
A-5
IN WITNESS WHEREOF, Consumers Energy
Company has caused this bond to be executed in its name by its
Chairman of the Board, its President or one of its Vice Presidents
by his or her signature or a facsimile thereof, and its corporate
seal or a facsimile thereof to be affixed hereto or imprinted
hereon and attested by its Secretary or one of its Assistant
Secretaries by his or her signature or a facsimile thereof.
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CONSUMERS ENERGY
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Attest: |
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TRUSTEE’S AUTHENTICATION CERTIFICATE
This is one of the bonds, of the
series designated therein, described in the within-mentioned
Indenture.
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THE BANK OF NEW YORK,
Trustee |
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A-6
[REVERSE]
CONSUMERS ENERGY COMPANY
FIRST
MORTGAGE BOND
2007-2 COLLATERAL SERIES (INTEREST BEARING)
This bond is one of the bonds of a
series designated as First Mortgage Bonds, 2007-2 Collateral Series
(Interest Bearing) (sometimes herein referred to as the
“2007-2 Collateral Bonds”) issued under and in
accordance with and secured by an Indenture dated as of
September 1, 1945, given by the Company (or its predecessor,
Consumers Power Company, a Maine corporation) to City Bank Farmers
Trust Company (The Bank of New York, successor) (hereinafter
sometimes referred to as the “Trustee”), together with
indentures supplemental thereto, heretofore or hereafter executed,
to which indenture and indentures supplemental thereto (hereinafter
referred to collectively as the “Indenture”) reference
is hereby made for a description of the property mortgaged and
pledged, the nature and extent of the security and the rights,
duties and immunities thereunder of the Trustee and the rights of
the holders of said bonds and of the Trustee and of the Company in
respect of such security, and the limitations on such rights. By
the terms of
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