1
EXHIBIT 4.1
THE DETROIT EDISON SECURITIZATION FUNDING LLC,
A MICHIGAN LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANY AGREEMENT
DATED: Effective November 20, 2000
2
THE DETROIT EDISON SECURITIZATION FUNDING LLC,
A MICHIGAN LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
ARTICLE AND SECTION PAGE
- ------------------- ----
ARTICLE I
DEFINITIONS.....................................................................................1
ARTICLE II
CONTINUATION AND GENERAL MATTERS WITH RESPECT TO THE COMPANY...................................6
2.1 Continuation; Filings..................................................................6
2.2 Name; Ownership of Property............................................................6
2.3 Office; Resident Agent.................................................................6
2.4 Purposes...............................................................................7
2.5 Term...................................................................................7
2.6 Special Covenants......................................................................7
ARTICLE III
IDENTITY OF MEMBER; MEMBER'S CONTRIBUTIONS AND DISTRIBUTIONS..................................11
3.1 Member................................................................................11
3.2 Capital Contributions.................................................................12
3.3 Return of Capital Contributions; Interest on Capital Contributions....................12
3.4 Sale of Securitization Property.......................................................12
3.5 Approval of Member....................................................................12
3.6 Action by Member......................................................................13
3.7 Compensation and Reimbursement of Member..............................................13
3.8 Limited Liability of Member...........................................................13
3.9 Activities of Member..................................................................13
3.10 Member's Good Faith...................................................................13
ARTICLE IV
MANAGEMENT.....................................................................................14
4.1 Management by Managers................................................................14
4.2 Number and Appointment of Managers....................................................14
4.3 Independent Managers..................................................................15
4.4 Resignation or Removal of Managers....................................................16
4.5 Meetings of Managers..................................................................16
4.6 Quorum; Voting by Managers............................................................17
4.7 Written Approval of Managers in Lieu of Meeting.......................................17
4.8 Managers' Positions Within the Member.................................................18
4.9 Managers' Compensation and Reimbursement..............................................18
4.10 Managers' Duty to Devote Time.........................................................18
4.11 Managers' Standard of Care and Absence of Liability...................................18
4.12 Delegation to Officers................................................................18
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS TO MEMBER;
RECORD KEEPING AND TAX MATTERS.................................................................19
5.1 Allocations...........................................................................19
5.2 Distributions.........................................................................19
5.3 Expenses..............................................................................19
5.4 Books and Records.....................................................................20
5.5 Fiscal Year; Accounting Method........................................................20
5.6 Tax Information, Financial Statements and Reports.....................................20
5.7 Tax Matters Partner...................................................................20
(i)
3
5.8 Bank Accounts.........................................................................21
ARTICLE VI
ASSIGNMENTS AND ACQUISITIONS OF MEMBERSHIP INTEREST............................................21
6.1 General Matters Regarding Assignments.................................................21
6.2 Disability Event as to Member.........................................................21
6.3 Admission of Substitution Member......................................................22
6.4 Admission of Additional Members.......................................................23
6.5 Merger or Consolidation of Member.....................................................23
6.6 Withdrawal............................................................................23
ARTICLE VII
EXCULPATION AND INDEMNIFICATION................................................................23
7.1 Exculpation...........................................................................23
7.2 Indemnification.......................................................................24
7.3 Advancement of Expenses...............................................................24
7.4 Indemnification of Employees and Agents...............................................25
7.5 Nonexclusivity of Rights and Other Matters............................................25
7.6 Insurance.............................................................................25
7.7 Saving Clause.........................................................................25
7.8 Contribution..........................................................................25
ARTICLE VIII
DISSOLUTION AND LIQUIDATION....................................................................26
8.1 Term..................................................................................26
8.2 Winding Up and Liquidation of the Company.............................................26
8.3 Certificate of Dissolution............................................................27
ARTICLE IX
MISCELLANEOUS PROVISIONS.......................................................................27
9.1 Offset................................................................................27
9.2 Nonpetition Covenant..................................................................27
9.3 Notices...............................................................................28
9.4 Construction..........................................................................28
9.5 Severability..........................................................................29
9.6 Waiver................................................................................29
9.7 No Conflict with Articles.............................................................29
9.8 Entire Agreement......................................................................29
9.9 Amendment.............................................................................30
9.10 Insertion of Agreement Provisions in Indenture........................................30
9.11 Binding Agreement.....................................................................30
9.12 Counterparts..........................................................................30
Schedule I - Schedule of Managers
(ii)
4
THE DETROIT EDISON SECURITIZATION FUNDING LLC,
A MICHIGAN LIMITED LIABILITY COMPANY
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT is made and entered into
effective as of November 20, 2000, by and among (i) THE DETROIT EDISON
SECURITIZATION FUNDING LLC, a Michigan limited liability company, whose address
is 2000 Second Avenue, Detroit, Michigan 48226 ("FUNDING"), (ii) THE DETROIT
EDISON COMPANY, a Michigan corporation, whose address is 2000 Second Avenue,
Detroit, Michigan 48226 ("DETROIT EDISON") and (iii) each of the managers of the
Company identified in Schedule I attached hereto and incorporated herein.
RECITALS:
A. On November 20, 2000, Detroit Edison, as the sole member, caused
Articles of Organization with respect to Funding (the "ORIGINAL ARTICLES") to be
filed with the Michigan Department of Consumer and Industry Services, Bureau of
Commercial Services, Corporation Division (the "DEPARTMENT"), thereby causing
Funding to be formed as a limited liability company (the "COMPANY") under and
subject to the LLC Act (as defined below).
B.The parties hereto desire to set forth their agreements as to (i) the
terms and conditions of Detroit Edison's membership in the Company, including
without limitation, its obligation to contribute capital to the Company and its
right to receive distributions, (ii) the activities of the Company, including
the issuance of the Bonds in accordance with the Financing Order (as such terms
are defined below) and the satisfaction of the Company's obligations with
respect to such Bonds, (iii) certain indemnifications being provided by the
Company and (iv) the operation and management of the Company.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following capitalized terms shall have the following meanings:
"ADMINISTRATION AGREEMENT" shall mean the Administration Agreement,
dated , 2001, between the Company, as issuer, and Detroit
Edison, as administrator, with respect to the provision of corporate management
services to the Company, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"AFFILIATE", with respect to any specified Person, shall mean any other
Person controlling or controlled by or under common control with such specified
Person, where "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
5
"CONTROLLING" and "CONTROLLED" shall have meanings correlative to the foregoing;
it being acknowledged by the parties hereto that the Company is not controlled
by and is not under common control with Detroit Edison, and, accordingly, is not
an Affiliate of Detroit Edison.
"AGREEMENT" shall mean this Limited Liability Company Agreement, as the
same may be amended, supplemented, modified or restated from time to time in
accordance with the provisions hereof.
"ARTICLES" has the meaning set forth in Section 2.1 hereof.
"ASSIGN," "ASSIGNEE" and "ASSIGNMENT" have the meanings set forth in
Section 6.1(b) hereof.
"ASSIGNEE" shall mean the Company as the assignee of Detroit Edison
under the Financing Order and with respect to the Securitization Property.
"BASIC DOCUMENTS" shall mean the Governing Documents, the Indenture,
the Sale Agreement, the Bill of Sale, the Servicing Agreement, the
Administration Agreement, the Underwriting Agreement, the Hedge Agreements and
the Interest Rate Swap Agreements.
"BILL OF SALE" shall mean the bill of sale dated as of , 2001,
issued by Detroit Edison to the Company pursuant to the Sale Agreement, and any
other bill of sale delivered in accordance therewith.
"BONDS" shall mean one or more Series of securitization bonds (each of
which may be comprised of one or more Classes) issued pursuant to the Financing
Order and the Indenture.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
other day on which banks are authorized or required by law to be closed in the
City of Detroit, Michigan.
"CLASS" shall mean any class of a Series of Bonds, and "CLASSES" shall
mean two or more classes, as the context requires.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time (or any successor law).
"COMPANY" has the meaning set forth in Recital A.
"COMPETITION ACT" shall mean, jointly, the Customer Choice and Electric
Reliability Act, Senate Bill No. 937, 2000 PA 141 and Enrolled Senate Bill No.
1253, 2000 PA 142, both effective June 5, 2000, both with respect to the
restructuring of the electric utility business in Michigan, which acts authorize
electric utilities to (i) recover qualified costs through irrevocable
non-bypassable securitization charges, (ii) assign such securitization charges
to special purpose entities and (iii) issue or have their assignees issue debt
securities secured by such securitization charges, as amended from time to time
(and any successor laws).
"DAY" or "DAYS" shall mean each calendar day, including Saturdays,
Sundays and legal holidays; provided, however, that if the day on which a period
of time for consent or approval or other action ends is not a business day, such
period shall end on the next business day.
"DEPARTMENT" has the meaning set forth in Recital A.
2
6
"DETROIT EDISON" has the meaning set forth in the introductory
paragraph hereof.
"DISABILITY EVENT" has the meaning set forth in Section 6.2(a) hereof.
"DISABLED MEMBER" has the meaning set forth in Section 6.2(a) hereof.
"DISSOLUTION PROPOSAL" shall mean a written proposal unanimously
approved by the Managers with respect to the dissolution of the Company (i)
which contains a schedule regarding the use and distribution of liquidation
proceeds and (ii) to which have been attached the written consents of such
Persons as the Managers have determined it was necessary to obtain with respect
to the dissolution.
"FINANCING ORDER" shall mean the opinion and order issued by MPSC on
November 2, 2000 as amended by opinion and order dated January 4, 2001 in MPSC
Case No. U-12478, pursuant to the Competition Act, providing for the creation of
the Securitization Property, the collection of the Securitization Charge with
respect to such Securitization Property, the periodic adjustment of the
Securitization Charge, and the creation of a special purpose entity to acquire
title to the Securitization Property and to issue bonds with respect thereto.
"FUNDING" has the meaning set forth in the introductory paragraph
hereof.
"GOVERNING DOCUMENTS" shall mean this Agreement and the Articles.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local or
foreign court or governmental department, commission, board, bureau, agency,
authority, instrumentality or regulatory body.
"HEDGE AGREEMENTS" shall mean, collectively, any agreements between the
Company and third party counterparties entered into to protect against interest
rate movements prior to the pricing of any of the Bonds, as the same may be
amended, supplemented or otherwise modified and in effect from time to time.
"INDENTURE" shall mean the Indenture, dated as of ,
2001 between the Company and the Trustee, with respect to the issuance of the
Bonds pursuant to the Financing Order, the repayment of the Bonds and related
matters, as the same may be amended, modified or supplemented from time to time.
"INDEPENDENT MANAGER" shall mean, with respect to the Company, a
Manager who is not, and within the five years prior to the date of his
appointment was not (except solely by virtue of such Person's serving as, or
being an Affiliate of any other Person serving as, an independent director or
manager, as applicable, of the Member or any bankruptcy-remote special purpose
entity that is an Affiliate of the Member or the Company), (i) a stockholder,
member, partner, director, officer, manager, employee, customer, supplier,
creditor, contractor, independent contractor or Affiliate of, or any Person that
has received any benefit in any form whatever from (other than in such Manager's
capacity as a ratepayer or customer of the Member in the ordinary course of
business), or any Person that has provided any service in any form whatsoever
to, or any major creditor (or any Affiliate of any major creditor) of, the
Company, the Member, or any of their Affiliates, or (ii) a Person owning
beneficially, directly or indirectly, any outstanding shares of common stock,
any limited liability company interests or any partnership interests, as
applicable, of the Company, the Member or any of their Affiliates, or of any
major creditor (or any Affiliate of any major creditor) of any of the foregoing,
or a stockholder, member, partner, director, officer, employee, customer,
supplier, creditor, contractor, independent contractor or Affiliate of, or any
Person that has received any benefit in any form whatever from (other than in
such Person's capacity as a ratepayer or customer of the Member in the ordinary
course of business), or any Person that has provided any service in any form
3
7
whatever to, such beneficial owner or any of such beneficial owner's Affiliates,
(iii) a member of the immediate family of any person described above or (iv) is
a Person who otherwise controls the Company, the Member or any of their
Affiliates; provided that, the indirect or beneficial ownership of stock through
a mutual fund or similar diversified investment vehicle with respect to which
the owner does not have discretion or control over the investments held by such
diversified investment vehicle shall not preclude such owner from being an
Independent Manager. For purposes of this definition, "MAJOR CREDITOR" shall
mean a natural person or business entity to which the Company, the Member or any
of their Affiliates has outstanding indebtedness for borrowed money or credit on
open account in a sum sufficiently large as would reasonably be expected to
influence the judgment of the proposed Independent Manager adversely to the
interests of the Company when the interests of that Person are adverse to those
of the Company, and "INDEPENDENT MANAGERS" shall mean all the Independent
Managers, collectively.
"INTEREST RATE SWAP AGREEMENTS" shall mean, collectively, any
agreements with respect to any Classes of floating rate Bonds between the
Company and recognized swap dealers, as swap counterparties, for interest rate
swap transactions, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"LLC ACT" shall mean the Michigan Limited Liability Company Act, MCLA
450.4101 et seq, as amended from time to time (and any successor law).
"MANAGER" and "MANAGERS" have the meanings set forth in Section 4.1
hereof.
"MEMBER" shall mean Detroit Edison, in its capacity as a Member of the
Company, or any successor in interest of Detroit Edison which is admitted to the
Company as a substitute Member in accordance with Section 6.3 hereof, or any
additional Person who is admitted as a Member of the Company in accordance with
Section 6.4 hereof.
"MEMBERSHIP INTEREST" shall mean all of the right, title and interest
of the Member in its capacity as a member of the Company within the meaning of
the LLC Act and this Agreement.
"MPSC" shall mean the Michigan Public Service Commission or any
successor Governmental Authority.
"ORIGINAL ARTICLES" has the meaning set forth in Recital A.
"PERSON" or "PERSONS" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership (general or
limited), limited liability company, joint stock company, trust, unincorporated
organization or Governmental Authority.
"PROCEEDING" has the meaning set forth in Section 7.2(a) hereof.
"REPRESENTATIVE" has the meaning set forth in Section 6.2(a) hereof.
"SALE AGREEMENT" shall mean the Securitization Property Sale Agreement,
dated as of , 2001, between Detroit Edison, as seller, and the
Company, as issuer, with respect to the sale and assignment of the
Securitization Property to the Company, as the same may be amended, supplemented
or otherwise modified and in effect from time to time.
"SECURITIZATION CHARGE" shall mean a non-bypassable charge provided for
in the Financing Order for the purpose of providing funds for the full recovery
of certain qualified costs of Detroit Edison or the
4
8
Assignee, which shall be payable pursuant to, and as set forth in, the Financing
Order, or all such non-bypassable charges provided for in the Financing Order,
collectively, as the context may require.
"SECURITIZATION PROPERTY" shall mean the irrevocable right of Detroit
Edison or the Assignee to impose, collect, receive and to be paid amounts from
the collections of the Securitization Charge; all rights of Detroit Edison or
the Assignee under the Financing Order, including, without limitation, all
rights to obtain periodic adjustments of such Securitization Charge, and all
revenues, collections, payments, money and proceeds arising under, or with
respect to, all of the foregoing; or all such rights and revenues, collectively,
as the context may require.
"SERIES" shall mean each series of Bonds issued and authenticated
pursuant to the Financing Order and the Indenture and a related Supplement, or
two or more such series collectively, as the context may require.
"SERVICING AGREEMENT" shall mean the Securitization Property Servicing
Agreement, dated as of , 2001, between the Company, as issuer,
and Detroit Edison, as servicer, whereby the servicer will manage, service,
administer and effect collection of the Securitization Charge, as the same may
be amended, supplemented or otherwise modified and in effect from time to time.
"SPECIAL MEMBERS" and "SPECIAL MEMBER" have the meanings set forth in
Section 6.2(b) hereof.
"SUPPLEMENT" shall mean a supplement to the Indenture complying (to the
extent applicable) with the terms of the Indenture.
"TAX MATTERS PARTNER" has the meaning set forth in Section 5.7 hereof.
"TREASURY REGULATION" shall mean a regulation, including a proposed or
temporary regulation, promulgated under the Code, or any other successor
Treasury Regulation. References herein to a specific provision of a proposed or
temporary regulation shall include the analogous provision of the final Treasury
Regulation.
"TRUSTEE" shall mean the party named as such in the Indenture until a
successor replaces it in accordance with the applicable provisions of the
Indenture, and, thereafter, the successor.
"UNDERWRITING AGREEMENT" shall mean the Underwriting Agreement, dated
as of , 2001, among the Company, Detroit Edison and Salomon
Smith Barney, Inc., on behalf of itself and as representative of the several
underwriters listed therein, with respect to the sale and purchase of the Bonds.
5
9
ARTICLE II
CONTINUATION
AND GENERAL MATTERS WITH
RESPECT TO THE COMPANY
2.1 CONTINUATION; FILINGS.
By execution of this Agreement, the parties hereto agree to the
continuation of the Company as a limited liability company pursuant to and in
accordance with the LLC Act. Immediately following the execution of this
Agreement, the parties agree to the filing by the Company with the Department of
a restatement of the Original Articles (such restatement, as amended and/or
restated from time to time, is referred to herein as the "ARTICLES"), amending
and restating in their entirety the Original Articles. The parties further agree
to execute and deliver, or to the execution and/or delivery on behalf of the
Company of, such other certificates, instruments, notices and/or documents, and
to the filing, recording and publishing of such certificates, instruments,
notices and/or documents, and to the performance of such other acts, as may be
necessary or appropriate from time to time to comply with all applicable
requirements for the existence and continuation of the Company in the State of
Michigan and the carrying out of its activities. The parties agree that the
operation of the Company and the relationship of the Member and Managers to the
Company shall, subject to Section 9.7 hereof, be governed by the Governing
Documents.
2.2 NAME; OWNERSHIP OF PROPERTY.
(a) The name of the Company shall continue to be "THE DETROIT EDISON
SECURITIZATION FUNDING LLC." The Company may use such other names as may
subsequently be selected by the Managers from time to time, and may also conduct
its business under one or more assumed names selected by the Managers from time
to time.
(b) All business of the Company shall be conducted in the name(s) or
assumed name(s) of the Company that has (have) been selected by the Managers in
accordance with subsection (a) above, and all contracts, property and other
assets of the Company shall be held in such name(s). The Member shall have and
own an undivided interest in the Company in accordance with the terms hereof;
provided, however, that the Member shall not have any specific ownership
interest in Company contracts, property or other assets, and shall not hold any
such Company contracts, property or other assets in its individual name, except
that the Member may temporarily hold the collected portions of the
Securitization Charge in its accounts (solely as servicer on behalf of the
Company, and not on its own behalf) pending delivery of the Securitization
Charge to the Company in accordance with the Servicing Agreement. The parties
acknowledge that the Member's Membership Interest shall be personal property for
all purposes.
2.3 OFFICE; RESIDENT AGENT.
(a) The principal office of the Company and the registered office which
the Company is required to maintain under the LLC Act shall be located at 2000
Second Avenue, Detroit, Michigan 48226 or at such other places within the State
of Michigan as may be selected by the Managers from time to time.
(b) Susan M. Beale, whose address is 2000 Second Avenue, Detroit,
Michigan 48226-1279, or such other Person as may be selected by the Managers
from time to time, shall be the resident agent of the Company. If the resident
agent shall ever resign, the Managers shall promptly appoint a successor.
6
10
2.4 PURPOSES.
The Company has been formed exclusively for the following purposes:
(1) to purchase, hold, own, manage, administer, service,
collect amounts due on and otherwise deal with the Securitization
Property, the Company's rights in any funds held by the Trustee, any
other assets to be acquired pursuant to the Basic Documents, and any
proceeds and rights associated therewith;
(2) to authorize, issue, sell and deliver the Bonds under the
Indenture;
(3) to create security interests in and pledge the
Securitization Property and the other collateral of the Company to the
Trustee pursuant to the terms of the Competition Act, the Financing
Order and the Indenture;
(4) to enter into arrangements to protect against interest
rate movements prior to the pricing of Bonds and interest rate swap
transactions;
(5) to negotiate, authorize, execute, deliver, assume the
obligations under, and perform, the Basic Documents and any other
agreement or instrument or document relating to the activities set
forth in items (1), (2), (3) and (4) above; and to incur additional
indebtedness or other liabilities payable to service providers and
trade creditors in the ordinary course of business in connection with
the foregoing activities;
(6) to invest the proceeds from the Securitization Property
and the Company's other assets, capital and income in accordance with
the Basic Documents, or otherwise in a manner not inconsistent with the
Basic Documents; and
(7) to engage in and perform any activity and exercise any
powers permitted to be exercised by limited liability companies under
the laws of the State of Michigan that are related or incidental to the
foregoing and necessary, suitable or convenient to accomplish the
foregoing,
and for no other purposes.
2.5 TERM.
The term of the Company commenced on November 20, 2000 and shall be
continued until the Company is dissolved and liquidated in accordance with the
provisions of the Governing Documents.
2.6 SPECIAL COVENANTS.
(a) The Company covenants as follows:
(1) the Company shall (i) act and conduct business solely in
its limited liability company name or assumed name(s) and through its
duly authorized Member or Managers, (ii) take all reasonable steps to
continue its identity as, and at all times hold itself out to other
Persons as, a legal entity separate from the Member and any other
Person, and make it apparent to other
7
11
Persons that it is an entity with assets and liabilities distinct from
the Member and other Persons, (iii) conduct its business so as not to
mislead others as to its identity or its assets, (iv) make it apparent
to other Persons that, except for Federal and state tax purposes and
certain internal accounting purposes, it is not a division of the
Member or an Affiliate of the Member or any other Person and (v)
correct any known misunderstanding regarding its separate identity;
(2) the Company shall observe all limited liability company
and other formalities required by this Agreement;
(3) the Company shall maintain an arm's-length relationship
with its Affiliates and the Member;
(4) the Company shall not form, or cause to be formed, any
subsidiaries;
(5) except as otherwise provided in the Basic Documents, the
funds and other assets of the Company shall not be commingled with
those of any other Person, the accounts of the Company shall be kept
separate from those of any other Person, the books and records of the
Company (including business and accounting records) shall be maintained
separately from those of the Member and shall reflect the Company's
separate identity and its separate ownership of the Securitization
Property, and the Company shall maintain separate financial statements
from those of any other Person;
(6) the Company shall pay its own liabilities out of its own
funds, including the fees and expenses of the administrator and
servicer pursuant to the Administration Agreement and the Servicing
Agreement, respectively;
(7) the Company shall use its own separate stationery,
invoices, checks and other business forms;
(8) the Company shall allocate fairly and reasonably any
overhead for office space, personnel and facilities shared with the
Member or any other Person;
(9) the Company shall not (i) except as set forth in the Basic
Documents, own, purchase, repurchase, acquire or agree to acquire any
stock, obligations, assets or securities, or any interest in, or make
capital contributions to, the Member or any Person (other than Eligible
Investments as defined in the Basic Documents) or (ii) make any
expenditure for capital assets or lease any capital assets other than
the Securitization Property purchased pursuant to the Sale Agreement;
(10) the Company shall not (i) issue, incur or assume any
indebtedness or any other obligations except for the Bonds and expenses
related thereto, except as otherwise contemplated by the Basic
Documents, (ii) guaranty, become obligated for, become liable on or
hold itself out as being liable for (whether contingently or otherwise)
the debts of the Member or any other Person, (iii) otherwise hold out
its credit as being available to satisfy the obligations of the Member
or any other Person, (iv) pledge its assets for the benefit of any
Person other than the Trustee, (v) make loans or advances or extend
credit to any Person or (vi) grant any lien, security interest,
mortgage or encumbrance except as contemplated or permitted by the
Basic Documents;
(11) the Company shall at all times ensure that its
capitalization is adequate in light of its business and purpose;
8
12
(12) the business and affairs of the Company shall be managed
and operated in strict conformity with the Basic Documents;
(13) the Company shall (i) not permit the lien of the
Indenture not to constitute a continuing valid first priority security
interest in the collateral identified in the Indenture, (ii) take any
action necessary or advisable to maintain and preserve the lien and
security interest, and priority thereof, of the Indenture, (iii) not
permit the validity of the Indenture to be impaired or the lien of the
Indenture to be amended, subordinated, terminated or discharged, (iv)
not permit any lien, charge, claim, security interest, mortgage or
other encumbrance, other than the lien and security interest created by
the Indenture, to be created on or to extend to or otherwise arise upon
or burden the collateral or any part thereof or any proceeds thereof
identified in the Indenture, (v) not permit any Person to be released
from any covenants or obligations with respect to the Indenture except
as expressly permitted by the Indenture and (vi) not, except as
expressly permitted by Basic Documents, sell, transfer, exchange or
dispose of any of the collateral identified in the Indenture unless
directed to do so by the Trustee in accordance with the Indenture;
(14) the Bonds shall be secured by a security interest in all
assets of the Company and shall be paid solely from the Securitization
Charge and other assets of the Company; and there shall be no recourse
to the Member for payments of principal, interest or any other amount
owed or due under or in connection with the Bonds by bondholders, the
Trustee, the Company or any other Person;
(15) the Company shall be operated in such a manner as the
Managers deem reasonable and necessary or appropriate to preserve (i)
the limited liability of Detroit Edison (or its successor) as the
Member in the Company and (ii) until the expiration of the period of
one year and one day after the termination of the Indenture and the
payment in full of the Bonds, the bankruptcy-remote status of the
Company; and
(16) the Company shall not make any payments, distributions or
dividends to the Member in respect of its Membership Interest other
than the amount released to the Company by the Trustee in accordance
with the Indenture, except as otherwise provided in the Indenture.
(b) The Member covenants as follows:
(1) this Agreement has been duly authorized, executed and
delivered on behalf of the Company;
(2) except as otherwise provided in the Basic Documents, the
funds and other assets of the Member shall not be commingled with those
of the Company and the books and records of the Company shall be
maintained separately from those of the Member and shall be clear and
accurate so that another Person would have no difficulty in
ascertaining the assets and liabilities of the Company and in
segregating all of such assets and liabilities from those of the
Member;
(3) the Member shall not (i) guaranty, become obligated for,
become liable on or hold itself out as being liable for (whether
contingently or otherwise) the debts of, or pledge its assets on behalf
of, or hold out its credit as being available to satisfy the
obligations of, the Company, (ii) seek or obtain credit or incur any
obligation to any Person based on the assets of the Company, (iii)
induce any third party to rely on the creditworthiness of the Company,
(iv) maintain or publish consolidated financial statements with the
Company unless the financial statements include footnotes indicating
that the Securitization Property has been irrevocably sold to the
Company and is not available to creditors of the Member under any
circumstances, (v) finance the operations of the Company, (vi) borrow
any money from or lend any money to the Company or (vii) fail to
correct any known misunderstanding or misrepresentation with respect to
any of the foregoing;
9
13
(4) the Member shall at all times (i) act in a way that
insures that its creditors reasonably expect and rely upon only the
Member's assets being available to secure, or serve as the source of
payment of the obligations of, the Member, (ii) not act in a way that
would lead any creditor to reasonably expect that the assets of the
Member would be available to satisfy the obligations of the Company and
(iii) not act in a way that would lead any creditor to reasonably
expect that the assets of the Company would be available to satisfy the
obligations of the Member;
(5) the Member shall have no liability for and shall incur no
expense with respect to the credit enhancement obtained by the Company
with respect to the Bonds;
(6) the capital contribution described in Section 3.2(a)
hereof shall be made from the Member's separate funds and not from the
proceeds of the sale of the Bonds; the capital contribution made by the
Member to the Company shall be reflected on the books of the Member and
the Company as a capital contribution and not as an obligation from the
Company to the Member; there shall be no contractual obligation or
legal compulsion on the part of the Company to repay the capital or any
earnings thereon or any equivalent amount to the Member; and the
Company shall have no legal or contractual obligation to pay any funds
which were theretofore in the Capital Subaccount, the
Overcollateralization Account or the Reserve Account (as those terms
are defined in the Indenture) and earnings thereon not used to pay debt
service on the Bonds and released to the Company, to the Member;
(7) the amounts payable to the Member for acting as the
servicer under the Servicing Agreement and as the administrator under
the Administration Agreement are fair and reasonable compensation for
the services to be provided by it under those agreements;
(8) prior to the remittance of the Securitization Charge by
the Member to the Company, the Securitization Charge shall be accounted
for in the books and records of the Member as being the property of the
Company;
(9) the Member shall retain certain tax charges identified in
the Financing Order and the rights and interests arising under the
Financing Order related thereto; the Member does not intend its
retention of such tax charges to affect the treatment of the sale of
the Securitization Property as a true sale and the absolute transfer to
the Company of all the Member's rights to such property;
(10) the Member believes that the purchase price paid or
payable by the Company for the Securitization Property, consisting of
the net proceeds of the sale of the Bonds, is fair consideration for
the absolute sale of such property by the Member and constitutes
reasonably equivalent value therefor; the Member was not insolvent
prior to the sale of the Securitization Property, was not rendered
insolvent as a result of such sale, was not engaged in business or a
transaction, nor was it about to engage in business or a transaction,
for which any property remaining after such sale was an unreasonably
small capital, and did not intend to incur debts that would be beyond
the Member's ability to pay as such debts matured after such sale;
(11) the Member shall not amend, modify or otherwise change
the Governing Documents in a manner that shall adversely affect the
existence of the Company as a single purpose entity;
(12) the Member has not and the Company shall not encumber the
Securitization Property except for the security interest granted to the
Trustee for the holders of the Bonds;
10
14
(13) the Member expects the securitization transaction
described in the Basic Documents to be classified on its financial
statements as a financing, with the Bonds represented as either debt or
deferred revenue. This accounting treatment is necessary to satisfy
requirements of the United States Securities and Exchange Commission
and/or the Internal Revenue Service; however, in its financial
statements and internal records, the Member shall include footnotes
and/or textual discussion indicating that the Securitization Property
has been irrevocably sold to the Company and that it shall not be
available to the Member or its creditors under any circumstances;
(14) the Member has not formed the Company or entered into the
securitization transaction described in the Basic Documents with any
intention of hindering, delaying or defrauding either present or future
creditors;
(15) the Member shall not cause the Company to file a
voluntary petition for relief under the Federal bankruptcy code;
(16) the Member shall not (i) file a voluntary petition for
relief under the Federal bankruptcy code, (ii) file an answer or other
pleading in response to an involuntary bankruptcy petition against the
Member, consenting to or admitting or failing to contest the material
allegations in the petition or (iii) dissolve until the expiration of
one year and one day after the termination of the Indenture and the
payment in full of the Bonds;
(17) the Member agrees that neither the Articles nor this
Agreement is an executory contract under the Federal bankruptcy code;
and
(18) the Member acknowledges that the management of the
Company has been delegated to the Managers.
(c) The Company and the Member shall use reasonable efforts to cause
the covenants set forth in subsections (a) and (b) hereof to be fulfilled.
Failure of the Company, the Member or any Manager on behalf of the Company to
comply with any of the foregoing covenants or any of the other covenants
contained in this Agreement shall not affect the status of the Company as a
separate legal entity or the limited liability of the Member or any Manager.
ARTICLE III
IDENTITY OF MEMBER;
MEMBER'S CONTRIBUTIONS
AND DISTRIBUTIONS
3.1 MEMBER.
Detroit Edison is, as of the date hereof, the sole member of the
Company.
11
15
3.2 CAPITAL CONTRIBUTIONS.
(a) Contemporaneously with the issuance of the Series 2001-1 Bonds, the
Member shall contribute cash to the Company in the amount of $ .
(b) The Member shall not have the obligation to make additional
contributions to the Company; however, at the option of the Member and with the
consent of the Managers, the Member may make additional capital contributions to
the Company from time to time.
3.3 RETURN OF CAPITAL CONTRIBUTIONS; INTEREST ON CAPITAL CONTRIBUTIONS.
(a) The Member shall not have the right to withdraw its capital
contributions or to demand or receive the return of its capital contributions or
any part thereof except as otherwise expressly provided in this Agreement.
(b) To the extent that the Member shall ever have the right to withdraw
its capital contributions or to demand or receive the return of its capital
contributions, or any part thereof, neither the Company nor any other member
shall be personally liable or responsible for the return of such capital
contributions, and such return shall be made solely from the assets of the
Company.
(c) No interest shall be paid by the Company on any of the Member's
capital contributions to the Company.
3.4 SALE OF SECURITIZATION PROPERTY.
Contemporaneously with the execution of this Agreement, the Member and
the Company have executed and delivered the Sale Agreement providing for the
sale and conveyance of the Securitization Property to the Company.
3.5 APPROVAL OF MEMBER.
The approval of the Member shall be required as to each of the
following matters:
(1) a change in the business of the Company;
(2) the sale, exchange, lease or other transfer of all or
substantially all of the assets of the Company;
(3) the consolidation or merger of the Company with another
business entity; and
(4) the amendment of the Articles.
In addition, the approval of the Member to dissolve the Company shall
be required as described in Section 8.1(a) hereof.
12
16
3.6 ACTION BY MEMBER.
All actions of the Member shall be taken by means of the execution of a
written resolution of the Member, which resolution shall be signed on behalf of
the Member by an authorized officer of the Member and filed with the minutes and
permanent records of the Company.
3.7 COMPENSATION AND REIMBURSEMENT OF MEMBER.
(a) The Member shall not be entitled to any compensation from the
Company for its services to the Company, except that, while the Member is the
servicer under the Servicing Agreement or the administrator under the
Administration Agreement, it shall be entitled to the fees payable under those
agreements, which fees shall, (i) except as otherwise provided for therein, be
determined without regard to the income of the Company, (ii) not be deemed to
constitute distributions to the recipient of any profit, loss or capital of the
Company and (iii) be considered as operating expenses of the Company.
(b) The Member shall be entitled to reimbursement for the reasonable
out of pocket costs and expenses incurred by it for or on behalf of the Company
or in furtherance of the Company's business, including, without limitation, the
fees paid to legal counsel, accountants, consultants, contractors and other
providers of services to the Company.
3.8 LIMITED LIABILITY OF MEMBER.
Except as otherwise provided by the LLC Act or expressly assumed, the
debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and the Member shall not be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Member of the
Company.
3.9 ACTIVITIES OF MEMBER.
The Member and its Affiliates may engage in or possess an interest in
other business ventures of every kind and description, independently or with
others, which business ventures shall be separate from those of the Company. The
Company shall not have any rights in or to such independent ventures or the
income or profit therefrom.
3.10 MEMBER'S GOOD FAITH.
To the extent the Member takes any action with respect to the Company
(including, without limiting the generality of the foregoing, by means of its
appointment of an individual Manager or its control or appointment of any
individual Manager in any other capacity) the Member will act in good faith in
accordance with the terms of this Agreement, and make decisions with respect to
the business and daily operations of the Company to the extent applicable,
independent of, and not dictated by, any Affiliate of the Member.
13
17
ARTICLE IV
MANAGEMENT
4.1 MANAGEMENT BY MANAGERS.
(a) The business and affairs of the Company shall be managed by and
under the direction of managers (collectively, the "MANAGERS" and individually,
a "MANAGER"), who shall be the "managers" of the Company for purposes of the LLC
Act, and who, acting alone, shall have the full, exclusive and absolute right,
power and authority to manage and control the Company and the property, assets
and business thereof, to make all decisions affecting the Company, and to do all
acts necessary, convenient or incidental to or for the furtherance of the
purposes described herein, except for those decisions which pursuant to and in
accordance with the Articles, this Agreement or otherwise are required to be
approved by the Member. The Member acknowledges that all actions, decisions,
determinations, designations, directions, appointments, consents, approvals,
selections and the like made by the Managers in accordance with the authority
granted herein are intended to and shall be controlling and binding upon the
Company and the Member in its capacity as a member of the Company.
(b) The Managers shall be the agents of the Company for the purpose of
the Company's business, and the acts of the Managers shall bind the Company as
set forth in, and in accordance with the provisions of, the LLC Act and the
Governing Documents.
(c) All documents, contracts and agreements, including, without
limiting the generality of the foregoing, deeds, leases, easements, rights of
way, assignments, bonds, debentures, notes, obligations, evidences of
indebtedness, checks, drafts and mortgages, necessary or appropriate to be
executed on behalf of and in the name of the Company, including those providing
for the acquisition or disposition of the property of the Company, shall be
executed by any one (1) of the Managers without the joinder of any other
Managers, and, if so executed, shall be valid and binding on the Company.
(d) It is hereby specifically agreed that the Managers, on behalf of
the Company, shall enter into and perform the Basic Documents and shall, except
as provided in Section 3.5 hereof, make all decisions of the Company concerning
the Securitization Property, and shall execute and deliver all documents,
agreements, certificates and/or financing statements contemplated thereby and
related thereto, all without further act, vote or approval of the Member.
(e) By accepting his appointment as a Manager of the Company, each
Manager covenants that he will act in good faith in accordance with the terms of
this Agreement, and make decisions with respect to the business and daily
operations of the Company independent of, and not dictated by the Member or any
Affiliate of the Member, and free of any undue or excessive control exercised by
the Member, and each Manager acknowledges his primary fiduciary duty to the
Company.
4.2 NUMBER AND APPOINTMENT OF MANAGERS.
(a) The number of Managers of the Company shall not be less than three
(3) nor more than five (5), as may be determined by the Member from time to
time; provided, however, that no decrease in the number of Managers shall have
the effect of shortening the term of any incumbent Manager. Managers, other than
Independent Managers, may be employees or officers of the Member; however, no
Independent Manager and no more than one (1) of the other Managers may be a
member of the board of directors of the Member and/or DTE Energy Company, its
parent company. The Managers of the Company shall be appointed by the Member and
shall be deemed to have become Managers upon their execution of this Agreement,
in the case of the Managers appointed by the Member on or before the execution
date of this
14
18
Agreement, and upon execution of a counterpart of this Agreement, in the case of
Managers appointed by the Member subsequent to the execution date of this
Agreement. The Member acknowledges that (i) it heretofore appointed N.A. Khouri,
Larry G. Garberding and David E. Meador as Managers of the Company (and it
hereby reaffirms such appointments) and (ii) it is hereby appointing
and as Independent Managers of the Company.
A list of the Managers of the Company as of the date hereof and their addresses
is attached to this Agreement as Schedule I. The parties hereto acknowledge and
agree that the Company shall cause Schedule I to be updated from time to time,
as appropriate, to identify additional or replacement Managers, so that Schedule
I shall at all times set forth the identity of all of the then current Managers
of the Company.
(b) A Manager appointed in accordance with this Agreement shall serve
in such capacity unless and until his successor has been selected by the Member,
as aforesaid, and qualified, or until he resigns, dies, becomes incapacitated,
is removed or such position otherwise become vacant. In such case, a replacement
Manager shall be appointed by the Member.
4.3 INDEPENDENT MANAGERS.
(a) While the Bonds are outstanding, at least two (2) Managers shall
continue to be Independent Managers. Schedule I shall, in addition to
identifying the then current Managers, also set forth which of the Managers
constitute Independent Managers. Independent Managers may not delegate their
duties, authorities or responsibilities hereunder. If an Independent Manager
resigns, dies, is removed or becomes incapacitated, or his position otherwise
becomes vacant, no action hereunder requiring the unanimous affirmative vote of
the Managers shall be taken until a successor Independent Manager has been
appointed by the Member and qualified, and such successor Independent Manager
has approved such action.
(b) Notwithstanding any other provision of this Agreement or any
provision of law that otherwise so empowers the Company, the Member, any Manager
or any other Person, the Company shall not, and neither the Member nor any
Manager nor any other Person on behalf of the Company shall do, any of the
following without the prior unanimous affirmative vote of all Managers (such
affirmative vote to include the affirmative vote of both Independent Managers):
(1) consummate any of the items set forth in Section 3.5 which
have been approved by the Member;
(2) engage in any business or activity other than that set
forth in Article II hereof;
(3) except as provided in the Basic Documents, incur any
indebtedness other than (A) the Bonds, (B) any obligations under
agreements with third party credit enhancers and swap or hedge
agreement counterparties relating to the Bonds and (C) ordinary course
expenses as set forth in Section 5.3 hereof;
(4) assume or guarantee the indebtedness of any other Person;
(5) make a general assignment for the benefit of creditors or
admit in writing the Company's inability to pay its debts generally as
they come due, or take action in furtherance of any such action;
(6) file a voluntary petition for relief under the Federal
bankruptcy code;
15
19
(7) file a petition or answer seeking consolidation,
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation;
(8) seek the appointment of a trustee, receiver or liquidator
of the Company or of all or a substantial part of its assets;
(9) file an answer or other pleading consenting to, admitting
or failing to contest the material allegations of a petition filed
against the Company in any proceeding petitioning for, or otherwise
consent to or acquiesce in, an involuntary bankruptcy or any action
seeking consolidation, reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, or the entry of any order appointing a
trustee, liquidator or receiver of the Company or of all or a
substantial portion of its assets;
(10) amend this Agreement or take action in furtherance of any
such amendment;
(11) approve any proposed Dissolution Proposal; or
(12) dissolve, liquidate or wind up the Company.
4.4 RESIGNATION OR REMOVAL OF MANAGERS.
(a) A Manager shall be entitled to resign as a Manager by means of the
delivery of a written notice of resignation to the Company. The resignation of a
Manager shall be effective as of the date of the delivery of his written notice
of resignation, unless the notice sets forth a later date, in which event the
resignation shall be effective as of that later date.
(b) A Manager may be removed with or without cause by the Member.
Removal of a Manager by a Member shall be effective on the date of delivery of a
written notice of removal from the Member to the Manager being removed; provided
that, an Independent Manager removed without cause shall continue to serve in
that capacity until a replacement Independent Manager has been selected and
qualified and has executed a counterpart of this Agreement.
4.5 MEETINGS OF MANAGERS.
(a) Except as otherwise provided in Section 4.7 hereof, any matters
subject to the approval of the Managers shall be decided at a meeting of the
Managers.
(b) Meetings of Managers may be held at the principal office of the
Company or at such other location, and at such time, as may be agreed upon by
the Managers.
(c) Meetings of Managers shall be called by means of a written notice
of meeting issued by the Member or any Manager, stating the place, date and time
of the meeting and the purpose for which it is being called. The notice of
meeting shall be given to each Manager at the address set forth on Schedule I
not less than two (2) business days prior to the date of such meeting. When a
notice is required to be given to the Managers hereunder, a waiver thereof in
writing signed by the Managers entitled to such notice, whether before, at or
after the time stated herein, shall be equivalent to the giving of such notice.
16
20
(d) Managers may be present at a meeting in person or by means of
conference telephone or similar communications equipment through which all
Persons participating in the meeting may communicate with the other participants
and all participants are advised of the communications equipment and the names
of the participants in the conference.
(e) If fewer than all Managers are present at a meeting, the business
transacted at any such meeting shall be confined to the business or purposes
stated in the aforesaid notice. If all Managers are present at a meeting, then,
in addition to the matters set forth in the notice, the Managers may discuss and
vote on any matters relating to the business of the Company subject to the vote
of Managers, whether or not such matters were set forth in the notice.
(f) The Managers present at a meeting shall select one of their number
to preside at the meeting. The Managers present at a meeting shall also select
one of their number to be the secretary of the meeting to keep the minutes of
the meeting. Such minutes shall be filed with the minutes and permanent records
of the Company.
(g) Voting shall be by voice vote unless a ballot vote is requested by
any Manager. If a ballot vote is requested, ballots shall be distributed to the
Managers for the purpose of recording each of their votes. Each ballot shall be
signed by the Manager casting it, shall be filed with the minutes of the
meeting, and shall be preserved with the minutes and permanent records of the
Company. A Manager who is not present at a meeting but wishes to vote on a
matter set forth in the notice of the meeting may vote by a writing submitted to
the Managers present at the meeting, such writing to be in such form as shall
have been designated by the unanimous approval of the Managers.
4.6 QUORUM; VOTING BY MANAGERS.
(a) At all meetings of the Managers, a majority in number of the
Managers shall constitute a quorum for the transaction of business. If a quorum
shall not be present at any meeting of the Managers, the Managers present at
such meeting shall adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum is present.
(b) Except as otherwise provided in Sections 4.3 or 5.2 hereof or in
any other specific provision of this Agreement, the act of a majority in number
of the Managers shall be the act of the Managers.
4.7 WRITTEN APPROVAL OF MANAGERS IN LIEU OF MEETING.
Any action required or permitted to be taken at a meeting of the
Managers may be taken without a meeting, without prior notice, and without a
vote if approvals in writing, setting forth the action so taken, are executed by
a majority in number of the Managers (or such other number as may be required
pursuant to Sections 4.3, 5.2 or any other specific provision of this
Agreement). Every written approval shall bear the date and signature of the
Manager signing it and shall be filed with the minutes and permanent records of
the Company. Prompt notice of the taking of an action shall be given to all
Managers who did not execute a written approval of such action.
17
21
4.8 MANAGERS' POSITIONS WITHIN THE MEMBER.
The employment of Managers by the Member or its Affiliates shall not be
deemed a conflict of interest as to any Manager.
4.9 MANAGERS' COMPENSATION AND REIMBURSEMENT.
The Company may provide reasonable compensation to Independent Managers
(but not to Managers who are not Independent Managers) for their services on
behalf of the Company, from the revenues of the Company, in such amounts and at
such times as may be authorized by the Member. The Managers shall be entitled to
reimbursement by the Company for the reasonable out of pocket costs and expenses
paid or incurred by them for or on behalf of the Company or in furtherance of
the Company's business, including, without limitation, expenses and
disbursements of such agents, representatives, experts and counsel (including
legal counsel and accountants) as they may employ in connection with the
exercise and performance of their rights and duties under the Governing
Documents, the Indenture, the Sale Agreement and the Servicing Agreement. Such
amounts shall be treated as expenses of the Company and shall not be deemed to
constitute distributions of any profit, loss or capital of the Company.
4.1 MANAGERS' DUTY TO DEVOTE TIME.
A Manager shall devote such time, attention and effort to the Company
as he deems reasonably necessary for the proper management of the business of
the Company.
4.11 MANAGERS' STANDARD OF CARE AND ABSENCE OF LIABILITY.
(a) A Manager shall discharge his duties with respect to the Company's
business and affairs in good faith, with the care an ordinary prudent person in
a like position would exercise under similar circumstances, and in a manner he
reasonably believes to be in the best interests of the Company.
(b) Except as otherwise expressly provided by the LLC Act, no Manager
shall be liable for the debts, obligations, or liabilities of the Company
(whether arising in contract, tort or otherwise), including, without limitation,
under a judgment, decree or order of a court, by reason of being a manager of
the Company.
4.12 DELEGATION TO OFFICERS.
The Managers are hereby authorized to appoint one or more officers and
to delegate operations of the Company to such officer(s); however, all major
decisions (including, without limiting the generality of the foregoing, the
decisions identified in Section 4.3(b) hereof) shall be made by the Managers and
the authority to make such decisions shall not be delegated to (an) officer(s).
18
22
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS TO MEMBER;
RECORD KEEPING AND TAX MATTERS
5.1 ALLOCATIONS.
Except as may be required by section 704(c) of the Code and Treasury
Regulation ss.1.704-1(b)(2)(iv)(f)(4) issued thereunder, all items of income,
gain, loss, deduction, and credit of the Company for each fiscal year shall be
allocated to the Member.
5.2 DISTRIBUTIONS.
Subject to Section 8.2(a) below, distributions to the Member shall be
made as, when and to the extent that the Managers, in their sole discretion, by
unanimous vote, determine that the Company's cash on hand exceeds the current
and anticipated needs of the Company to fulfill its business purposes.
Notwithstanding the foregoing, no distribution shall be declared or made (i) if
a default has occurred or is otherwise continuing under the Indenture or any
Bonds then outstanding, (ii) such distribution shall result in a reduction or
withdrawal of the then current rating of any outstanding Class and/or Series of
Bonds by any Rating Agency (as defined in the Indenture), (iii) such
distribution shall otherwise violate any of the Basic Documents or (iv) if,
after giving it effect, the Company shall not be able to pay its debts as they
become due in the usual course of business or the Company's total assets shall
be less than the sum of its total liabilities.
5.3 EXPENSES.
Except as otherwise provided in this Agreement, and subject to the
provisions of the Basic Documents, the Company shall be responsible for all
expenses and the allocation thereof, including, without limitation:
(1) all expenses related to the issuance of the Bonds;
(2) all expenses related to the payment of the principal of
and interest on the Bonds;
(3) all amounts payable to Detroit Edison as the administrator
and servicer under the Administration Agreement and the Servicing
Agreement, respectively, or any successor(s) to Detroit Edison under
such agreements;
(4) all expenses related to the business of the Company and
all routine administrative expenses of the Company, including the
maintenance of books and records of the Company, and the preparation
and dispatch to the Member of checks, financial reports, tax returns
and notices required pursuant to this Agreement;
(5) all expenses incurred in connection with any litigation or
arbitration involving the Company (including the cost of any
investigation and preparation) and the amount of any judgment or
settlement paid in connection therewith;
(6) all expenses of indemnity or contribution payable by the
Company to any Person;
19
23
(7) all expenses incurred in connection with the collection of
amounts due to the Company from any Person;
(8) all expenses incurred in connection with the preparation
of amendments to this Agreement;
(9) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company; and
(10) all expenses otherwise allocated in good faith to the
Company by the Managers.
5.4 BOOKS AND RECORDS.
The Company shall maintain complete, accurate and separate books and
records of its business and affairs, which shall reflect all Company
transactions and which shall be appropriate and adequate for the Company's
business, including minutes of the meetings and other proceedings of the
Managers and the Member. Such books and records shall be kept at the Company's
principal office. The Member and its duly authorized representatives shall have
complete access to all books and records of the Company at the Company's
principal office, and the right to inspect and copy them, during normal business
hours.
5.5 FISCAL YEAR; ACCOUNTING METHOD.
The fiscal year of the Company for financial reporting and federal
income tax purposes shall, unless the Managers determine otherwise pursuant to
the requirements of the Code, be the calendar year. The Company shall utilize
the accrual method of accounting.
5.6 TAX INFORMATION, FINANCIAL STATEMENTS AND REPORTS.
As soon as practicable following the end of each fiscal year, the
Managers shall cause to be prepared and shall furnish to the Member (i) all
information relating to the Company that is necessary for the preparation of the
Member's Federal income tax return for such fiscal year and (ii) a balance
sheet, an income statement and a statement of changes in the Member's capital
account. The aforesaid financial statements shall be prepared in accordance with
the accounting method selected by the Managers, consistently applied (except as
therein noted), and shall be accompanied by an audit report from a nationally
recognized accounting firm. The Managers also may cause to be prepared or
delivered such other reports as they may deem appropriate. The Company shall
bear the cost of all such financial statements and reports.
5.7 TAX MATTERS PARTNER.
The Member is hereby designated as "TAX MATTERS PARTNER" for the
Company, with full power and authority to act as such for the Company, and with
all the rights and responsibilities of that position described in Sections 6222
through 6232 of the Code.
20
24
5.8 BANK ACCOUNTS.
The Managers or an authorized signatory designated by the Managers may
open and maintain one or more bank and/or investment accounts in the name of the
Company with such financial institutions and/or firms as the Managers shall
determine; may rent and obtain access to safety deposit boxes or vaults; may
purchase certificates of deposit; and may sign and deliver checks, written
directions or other instruments to withdraw all or any part of the funds
belonging to the Company and on deposit in any such bank or investment accounts.
ARTICLE VI
ASSIGNMENTS AND ACQUISITIONS OF MEMBERSHIP INTEREST
6.1 GENERAL MATTERS REGARDING ASSIGNMENTS.
(a) The Member may assign all or any portion of its Membership Interest
to another Person so long as, and only so long as, (i) such assignment is not
prohibited by and does not cause a breach under the Basic Documents or under any
other agreement by which the Member or the Company or any properties of the
Company is/are bound or affected and (ii) each Rating Agency (as defined in the
Indenture) then rating the Bonds of any Series and/or Class shall have confirmed
in writing to the Trustee and the Company that such transfer shall not result in
a reduction or withdrawal of the then current rating by such Rating Agency of
any outstanding Series and/or Class of Bonds. An assignment accomplished in
accordance with this provision shall be deemed to have occurred upon the
execution by the Member of a written assignment assigning its Membership
Interest to the assignee, and the assignee's written acceptance of such
assignment. An assignment accomplished in accordance with the first two (2)
sentences of this subsection (a) shall entitle the assignee to the distributions
to which the Member had been entitled prior to the assignment, but shall not
vest any other rights in the assignee, including any right to consent to or
otherwise control any matters subject to the consent of the Member, unless the
assignee is admitted as a member of the Company in accordance with Section 6.3
hereof, and the Member shall continue to remain liable for all of its
obligations and liabilities with respect to its Membership Interest. An
attempted assignment by the Member which is not in compliance with this
subsection (a) shall be null and void ab initio and the Company shall not be
required to recognize any such assignment.
(b) For purposes of this Article VI, "ASSIGNMENT" means any assignment,
sale, conveyance, transfer, mortgage, pledge, encumbrance, hypothecation or
other disposition of any type or kind, (ii) "ASSIGN" means the making of an
assignment and (iii) "ASSIGNEE" means a person to whom or for whose benefit an
assignment is made.
6.2 DISABILITY EVENT AS TO MEMBER.
(a) The occurrence of a dissolution, bankruptcy, insolvency,
receivership or other similar proceeding by, as to or against the Member (such
proceeding being referred to as a "DISABILITY EVENT" and such member being
referred to as a "DISABLED MEMBER") shall not constitute a withdrawal of the
Member from the Company, shall not otherwise cause the Member to cease to be a
member of the Company nor cause the Member's Membership Interest to be
terminated, and shall not cause the Company to be dissolved or its affairs wound
up. Upon the occurrence of a Disability Event, the Member, or the liquidator,
trustee or other representative of the Disabled Member, as the case may be (the
"REPRESENTATIVE"), as its agent and attorney-in-fact, shall exercise the
Disabled Member's rights and powers with respect to the Company, including the
Disabled Member's right and power to assign its Membership Interest to an
21
25
assignee subject to and in accordance with Section 6.1 hereof and to cause such
assignee to be admitted to the Company as a substitute Member in accordance with
Section 6.3 hereof.
(b) If, notwithstanding anything in subsection (a) to the contrary, and
subject to the approval of a court of competent jurisdiction if any is required,
a Disability Event as to the Member is, under any of the Basic Documents or
otherwise, deemed to cause or constitute a withdrawal or resignation of the
Member from the Company, so that such Member ceases to be a member of the
Company and there is no member of the Company, then it is hereby agreed that,
contemporaneously with such Disability Event, the Independent Managers shall be
admitted as special members of the Company (collectively, the "SPECIAL MEMBERS"
and individually, a "SPECIAL MEMBER"), such admission to occur without further
action of, and without the execution of any other documents by any Person. The
Member hereby consents to and approves the admission of the Special Members
under such circumstances effective as of the occurrence of such Disability
Event. The Special Members shall be deemed to be members of the Company until
the Representative has assigned all of the Disabled Member's Membership Interest
to an assignee and the assignee has been admitted to the Company as a substitute
member in accordance with the provisions of Section 6.3 hereof. By executing
this Agreement or a counterpart hereof, each Independent Manager hereby
acknowledges and agrees to his admission as a Special Member of the Company
subject to and in accordance with the provisions of this Section 6.2(b) and
undertakes to be bound by the terms and provisions of this Agreement and to
carry out his obligations hereunder as a Special Member. Special Members shall
have no obligation to make any capital contributions to the Company unless
contributions must be made in order for such Special Members to be deemed to be
members of the Company, and then only to the extent they are so required, and
the Special Members shall have no interest in the profits, losses or capital of
the Company or any right to receive any distributions from the Company unless
they are required to obtain an interest in or right to such items in order to be
deemed to be members of the Company, and then only to the extent so required.
While the Special Members are deemed to be members of the Company, any matters
subject to the consent or approval of the "Member" under this Agreement or the
Articles, and anything in the LLC subject to the vote of the members, shall
require the unanimous consent of the Special Members. Notwithstanding the
foregoing, immediately upon the admission of the assignee of the Disabled Member
as a substitute member in accordance with Section 6.3 hereof, the Special
Members shall be deemed to have withdrawn from, and shall thereupon no longer be
deemed to be members of, the Company.
(c) If, notwithstanding anything contained in subsection (a) or (b) to
the contrary, the Company is deemed to have been dissolved upon the occurrence
of a Disability Event, then it is hereby agreed that (i) the Company shall be
immediately reconstituted as a limited liability company under the LLC Act, (ii)
the reconstituted entity shall continue its existence subject to and in
accordance with the terms and provisions of this Agreement (modified only to the
extent required so as to make them applicable to the reconstituted limited
liability company) and the Agreement as so modified shall be binding upon the
reconstituted limited liability company and its members and managers, (iii) the
reconstituted limited liability company's managers shall be the persons
identified in Schedule I and its members shall be the Independent Managers until
the admission of the assignee(s) described in Section 6.2(a) as its member(s),
and by execution of this Agreement the Managers hereby agree thereto, and (iv)
each of the undersigned hereby authorizes each of the Managers, acting alone, to
execute, deliver, file and/or record such articles, agreements and certificates
(including, without limitation, articles of organization or amendments or
restatements thereof) as shall be necessary to carry out the intent of this
subsection (c).
6.3 ADMISSION OF SUBSTITUTE MEMBER.
The assignee of the Member's Membership Interest pursuant to Sections
6.1 or 6.2 hereof may be admitted to the Company as a substitute Member in the
place of the assigning Member. Such admission shall be accomplished by means of
the assignee's execution and delivery to the Company of a counterpart of this
Agreement. Upon such admission, the assignee, as a substitute Member, shall be
deemed to have all of the rights and powers of, and shall be subject to all of
the restrictions, obligations and liabilities of, the assigning Member.
22
26
6.4 ADMISSION OF ADDITIONAL MEMBERS.
One or more additional members of the Company may be admitted to the
Company with the written consent of the Member; provided that, notwithstanding
the foregoing, so long as the Basic Documents are in effect, no additional
Member may be admitted to the Company unless Detroit Edison or its successors or
assigns that have been admitted to or are otherwise Members of the Company,
retain a majority interest in the Company and any Rating Agency Condition (as
defined in the Indenture) has been satisfied.
6.5 MERGER OR CONSOLIDATION OF MEMBER.
Any successor to the Member upon the merger or consolidation of the
Member into or with another Person, which merger or consolidation is not in
violation of the Basic Documents, shall, without further act, be deemed to be
the member hereunder in lieu of the original Member, and such merger or
consolidation shall not constitute an assignment for purposes of this Agreement.
6.6 WITHDRAWAL.
Except as otherwise set forth herein, the Member does not have the
right to withdraw from the Company. Any attempted withdrawal in violation of
this provision shall be null and void ab initio and the Company shall not be
obligated to recognize any such attempted withdrawal.
ARTICLE VII
EXCULPATION AND INDEMNIFICATION
7.1 EXCULPATION.
(a) Neither the Member nor any director, officer, stockholder,
controlling person or employee of the Member (all of which, collectively, are
included within the definition of "MEMBER" for purposes of this Article VII)
shall be liable to the Company, any other member of the Company or any other
Person (and the interest of the Member in the Company, and in the property and
assets of the Company, shall be free of any claims by the Company, any other
member of the Company or any other Person) by reason of the fact that the Member
was serving in its capacity as a Member unless such liability is based on or
arises in connection with (i) willful misconduct or gross negligence by the
Member, (ii) receipt by the Member of distributions from the Company in
violation of the distribution provisions of this Agreement or the LLC Act, (iii)
knowing violation of law by the Member or (iv) violation by the Member of state
or Federal securities law.
(b) No Manager shall be liable to the Company, the Member or any other
Person by reason of the fact that the Manager was serving in his capacity as a
Manager unless such liability is based on or arises in connection with (i)
willful misconduct or gross negligence by the Manager, (ii) approval by the
Manager of distributions from the Company in violation of the distribution
provisions of this Agreement or the LLC Act, (iii) knowing violation of law by
the Manager or (iv) receipt by the Manager of a financial benefit to which he is
not entitled.
23
27
7.2 INDEMNIFICATION.
(a) To the fullest extent permitted by law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide greater or broader
indemnification rights than such law permitted the Company to provide prior to
such amendment), the Member shall be fully protected and indemnified by the
Company against all liabilities, losses, expenses, claims and demands (including
amounts paid in respect of judgments, fines, penalties, expenses or settlement
of litigation and legal fees and expenses reasonably incurred) in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative or investigative (individually, a
"PROCEEDING"), or any appeal in such a Proceeding, or any inquiry or
investigation that could lead to such a Proceeding, by reason of the fact that
the Member was serving in its capacity as a Member, unless such liability is
based on or arises in connection with (i) willful misconduct or gross negligence
by the Member, (ii) receipt by the Member of distributions from the Company in
violation of the distribution provisions of this Agreement or the LLC Act, (iii)
knowing violation of law by the Member or (iv) violation by the Member of state
or Federal securities law. Detroit Edison acknowledges that the indemnification
provided pursuant to this subsection (a) is not intended to apply to those
matters for which Detroit Edison has indemnified the Company under any of the
Basic Documents.
(b) To the fullest extent permitted by agency law, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide greater or broader
indemnification rights than such law permitted the Company to provide prior to
such amendment), each Manager shall be fully protected and indemnified by the
Company against all liabilities, losses, expenses, claims and demands (including
amounts paid in respect of judgments, fines, penalties, expenses or settlement
of litigation and legal fees and expenses reasonably incurred) in connection
with any Proceeding, or any appeal in such a Proceeding, or any inquiry or
investigation that could lead to such a Proceeding, by reason of the fact that
the Manager was serving in his capacity as a Manager, unless such liability is
based on or arises in connection with (i) willful misconduct or gross negligence
by the Manager, (ii) approval by the Manager of distributions from the Company
in violation of the distribution provisions of this Agreement or the LLC Act,
(iii) knowing violation of law by the Manager and (iv) receipt by the Manager of
a financial benefit to which he is not entitled. Any officer of the Company who
has been delegated authority by the Managers pursuant to Section 4.12 hereof
shall be entitled to indemnification in accordance with this subsection (b) as
to acts or omissions related to the authority delegated to him, and to
exculpation from liability in accordance with Section 7.1(b) hereof.
(c) Notwithstanding anything herein to the contrary, for so long as any
Bonds are outstanding, no payment from funds of the Company (as distinct from
funds from other sources, such as insurance) with respect to any indemnity under
this Section 7.2 shall be payable except out of funds available for payment of
Company expenses as provided in the Indenture. Thereafter, any indemnity under
this Section 7.2 shall be provided out of and to the extent of Company assets
only, and the Member shall not have any personal liability on account thereof.
The indemnity provided under this Section 7.2 shall survive the liquidation,
dissolution and termination of the Company and the termination of this
Agreement.
7.3 ADVANCEMENT OF EXPENSES.
Expenses incurred by a Person which are of the type entitled to be
indemnified under Section 7.2 in defending any Proceeding shall be paid or
reimbursed by the Company in advance of the final disposition of the Proceeding,
without any determination as to such Person's ultimate entitlement to
indemnification under Section 7.2 hereof, upon receipt of a written affirmation
by such Person of such Person's good faith belief that such Person has met the
standard of conduct necessary for indemnification under applicable law and a
written undertaking by or on behalf of such Person to repay all amounts so
advanced if it shall ultimately be determined that such Person is not entitled
to be indemnified by the Company as authorized in Section 7.2 or otherwise. The
written undertaking shall be an unlimited general obligation of the Person but
need not be secured and shall be accepted without reference to financial ability
to make repayment.
24
28
7.4 INDEMNIFICATION OF EMPLOYEES AND AGENTS.
The Company shall indemnify and pay and advance expenses to an employee
or agent of the Company to the same extent and subject to the same conditions
under which it may indemnify and pay and advance expenses to a Manager under
this Article VII; and the Company shall indemnify and pay and advance expenses
to any Person who is or was an employee or agent of the Company and who is or
was serving at the request of the Company as a member, manager, director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic limited liability company,
partnership, corporation, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against such
Person and incurred by such Person in such a capacity or arising out of such
Person's status as such, to the same extent and subject to the same conditions
that the Company may indemnify and pay and advance expenses to the Manager under
this Article VII.
7.5 NONEXCLUSIVITY OF RIGHTS AND OTHER MATTERS.
The indemnification and advancement and payment of expenses provided by
this Article VII (i) shall not be deemed exclusive of any other rights to which
the Member, a Manager or other Person seeking indemnification and advancement of
payment of expenses may be entitled under any statute, agreement, or otherwise,
both as to actions in such Person's official capacity and as to actions in
another capacity while holding such position, (ii) shall continue as to any such
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity and advancement and payment of expenses and (iii) shall
inure to the benefit of the heirs, executors, administrators, successors and
assigns of such Member, Manager or other Person.
7.6 INSURANCE.
The Company may purchase and maintain insurance or another arrangement,
or both, at its expense, on behalf of itself or any Person who is or was serving
as the Member, Manager, employee or agent of the Company, or who is or was
serving at the request of the Company as a member, manager, director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or domestic limited liability company, partnership,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise, against any liability, expense or loss,
whether or not the Company would have had the power to indemnify such Person
against such liability under the provisions of this Article VII.
7.7 SAVING CLAUSE.
If this Article VII or any portion of this Agreement shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless the Member, each Manager
or any other Person indemnified pursuant to this Article VII as to costs,
charges and expenses (including, without limitation, attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative, to the
fullest extent permitted by any applicable law as to any portion of this Article
VII which was not invalidated.
7.8 CONTRIBUTION.
If the indemnification in favor of a Manager set forth in Section
7.2(b) hereof is for any reason deemed to be illegal or unenforceable, then, to
the fullest extent permitted by law, such Manager shall be entitled to
contribution from the Company as and to the extent available at law or in equity
for any matter for which such indemnification was deemed to be illegal or
unenforceable.
25
29
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 TERM.
(a) The term of the Company shall end, and the Company shall dissolve,
upon the occurrence of any of the following events:
(1) the vote of the Member to dissolve the Company,
(2) the sale or other disposition of all or substantially all
of the assets of the Company, or
(3) the occurrence of any event which, under the LLC Act,
results in the dissolution of the Company;
provided that, with respect to item (1) hereof and the LLC Act (to the extent
applicable), the vote of the Member to dissolve the Company shall mean the
Member's affirmative vote with respect to a Dissolution Proposal duly presented
for the Member's approval by the Managers, the consummation of which is approved
by the Managers' affirmative vote in accordance with item (1) of Section 4.3(b)
hereof; and provided further that, with respect to item (2) hereof and the LLC
Act (to the extent applicable), the sale or other disposition of all or
substantially all of the assets of the Company shall mean such sale or
disposition, the consummation of which is approved by the Managers' affirmative
vote in accordance with item (1) of Section 4.3(b) hereof.
(b) The parties acknowledge that it is their intention that the Company
not be dissolved upon the commencement of or as a consequence of any bankruptcy,
insolvency, receivership or other similar proceeding by or against the Company.
Notwithstanding the foregoing, if, under the Basic Documents or otherwise, the
Company is dissolved upon the bankruptcy, insolvency, receivership or other
similar proceeding against the Company, then it shall immediately thereupon be
deemed to have been reconstituted in the manner set forth in Section 6.2(c)
hereof, except that the Member shall continue to be the sole Member thereof.
8.2 WINDING UP AND LIQUIDATION OF THE COMPANY.
(a) Upon the dissolution of the Company in accordance with Sections 8.1
and 4.3(b) hereof, unless it is reconstituted as provided in Section 6.2(c) or
8.1(b) hereof, the Managers shall proceed to wind up the affairs and liquidate
the property and assets of the Company, and shall apply and distribute the
proceeds of such liquidation in the following priority:
(1) to the expenses of liquidation;
(2) to the payment of all amounts payable under the Bonds and
the Financing Order;
26
30
(3) to the payment of all debts and liabilities of the Company
other than those set forth in item (2) hereof;
(4) to the establishment of such reserves as the Managers deem
necessary or advisable to provide for any contingent or unforeseen
liabilities or obligations of the Company, provided, however, that
after the expiration of such period of time as the Managers deem
appropriate, the balance of such reserves remaining after payment of
such contingencies shall be distributed in the manner hereinafter set
forth; and
(5) any remaining proceeds shall be distributed to the Member.
(b) A reasonable time shall be allowed for the orderly liquidation of
the property and assets of the Company and the payment of the debts and
liabilities of the Company in order to minimize the normal losses attendant upon
a liquidation.
(c) Anything contained in this Section 8.2 to the contrary
notwithstanding, if the Managers shall determine that a complete liquidation of
all the property and assets of the Company would involve substantial losses or
be impractical or ill-advised under the circumstances, the Managers shall
liquidate that portion of the assets of the Company sufficient to pay the
expenses of liquidation and the debts and liabilities of the Company (excluding
the debts and liabilities of the Company to the extent that they are adequately
secured by mortgages on or security interests in the assets of the Company), and
the remaining property and assets shall be distributed to the Member.
8.3 CERTIFICATE OF DISSOLUTION.
After the Company has been dissolved, a certificate of dissolution of
the Company shall be executed and filed with the Department.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 OFFSET.
Whenever the Company is to pay any sum to the Member, any amounts the
Member owes the Company may be deducted from such sum before payment.
9.2 NONPETITION COVENANT.
(a) The Member and each Manager hereby covenants and agrees that,
except as otherwise required pursuant to the exercise of its or his fiduciary
duty with respect to the Company, prior to the date which is one year and one
day after the termination of the Indenture and the payment in full of the Bonds,
any other amounts owed under the Indenture, including, without limitation, any
amounts owed to third-party credit enhancers, and any amounts owed under the
Hedge Agreements or Interest Rate Swap Agreements, it (he) shall not (i)
acquiesce, petition or otherwise invoke or cause the Company to invoke the
process of
27
31
any court or government authority for the purpose of commencing or sustaining a
case against the Company under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Company or any substantial part of
the property of the Company, (ii) consent to or approve, or make application
for, or constitute or maintain any action for the dissolution of the Company
under Sections 801 or 802 of the LLC Act or otherwise or (iii) order the winding
up or liquidation of the affairs of the Company; provided, however, that nothing
in this subsection (a) shall constitute a waiver of any right to
indemnification, reimbursement or other payment from the Company pursuant to
this Agreement.
(b) In the event that the Member or any Manager takes any action in
violation of subsection (a) hereof, the Company agrees that it shall file an
answer with the court or otherwise properly contesting the taking of such action
and raising the defense that the Member or the Manager, as the case may be, has
agreed in writing not to take such action and should be estopped and precluded
therefrom, and such other defenses, if any, as its counsel advises that it may
assert.
(c) The provisions of this Section 9.2 shall survive the termination of
this Agreement and the resignation, withdrawal or removal of the Member or any
Manager. Nothing herein contained shall preclude participation by the Member or
a Manager in the assertion or defense of its claims in any such proceeding
involving the Company.
9.3 NOTICES.
Any notice, offer, demand, consent or other communication required or
permitted to be given under any provision of this Agreement shall be deemed to
have been sufficiently given for all purposes if it is in writing, addressed to
the party to whom the same is directed at the address set forth below and (i)
delivered in person, (ii) sent by registered or certified United States mail,
return receipt requested, (iii) sent by receipted overnight courier, or (iv)
sent by facsimile transmission. Any such notice or other communication shall be
deemed to be delivered (i) upon personal delivery to the Person to whom it is
sent, (ii) on the second business day after the date on which the same was
deposited in a regularly maintained receptacle for the deposit of the United
States' mail, postage and charges prepaid, (iii) one business day following
delivery to the aforesaid overnight courier, with all charges prepaid, or (iv)
upon notification of receipt by the facsimile machine to which it is directed.
All notices, requests, and consents to be sent to the Member shall be sent to or
made to The Detroit Edison Company, 2000 Second Avenue, Detroit, Michigan
48226-1279, Attention: Treasurer. All notices, requests and consents to be sent
to the Company shall be sent to or made to The Detroit Edison Securitization
Funding LLC, 2000 Second Avenue, 850 WCB, Detroit, Michigan 48226-1279,
Attention: Susan M. Beale. All notices, requests and consents to a Manager shall
be sent to him at the address set forth on Schedule I. Any party may change his
address for purposes of this Agreement by giving the other parties notice of
such change in the manner hereinabove provided for the giving of notices.
9.4 CONSTRUCTION.
(a) The headings in this Agreement are inserted for convenience and
identification only, and are in no way intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any of the provisions
hereof.
(b) Any agreement, instrument, statute, law, regulation or rule defined
or referred to herein shall be deemed to mean such agreement, instrument,
statute, law, regulation or rule as from time to time amended, modified or
supplemented, and includes in the case of agreements and instruments, references
to all attachments thereto and instruments incorporated therein.
28
32
(c) Whenever the singular number is used herein, the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders.
(d) If any language is stricken or deleted from this Agreement, such
language shall be deemed never to have appeared herein and no other implication
shall be drawn therefrom.
(e) References to a Person are also to his permitted successors and
assigns.
(f) The parties hereto having participated fully and equally in the
negotiation and preparation hereof, this Agreement shall not be more strictly
construed nor any ambiguities within this Agreement resolved against any party
hereto.
(g) This Agreement shall be construed and enforced in accordance with,
and governed by, the laws and decisions of the State of Michigan, excluding any
conflict of laws rule or principle that might refer the governance or other
construction of this Agreement to the law of another jurisdiction.
9.5 SEVERABILITY.
If any provision hereof shall be judicially determined to be illegal,
or if the application thereof to any person or in any circumstance shall, to any
extent, be judicially determined to be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to persons or in
circumstances other than those to which it has been judicially determined to be
invalid or unenforceable, shall not be affected thereby, and each provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
9.6 WAIVER.
A waiver or consent, express or implied, to or of any breach or default
by any Person in the performance by such Person of its obligations with respect
to the Company shall not be a consent or waiver to or of any other breach or
default in the performance by such Person of the same or any other obligations
of such Person with respect to the Company.
9.7 NO CONFLICT WITH ARTICLES.
The provisions of this Agreement shall govern and control unless there
is a specific conflict with either the LLC Act or the Articles, in which event
the LLC Act or the Articles, as the case may be, shall govern and control.
9.8 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof. All prior agreements among the
parties hereto with respect to the subject matter hereof, whether written or
oral, are merged herein and shall be of no force or effect. This Agreement
cannot be modified or changed orally, but only by an agreement in writing.
29
33
9.9 AMENDMENT.
This Agreement may not be amended, except (i) by means of a writing
signed by the Member, the Company and the Managers and filed with the records of
the Company and (ii) while the Bonds are in effect, upon prior approval of the
Trustee and receipt of written confirmation by each Rating Agency (as defined in
the Indenture) then rating any Series and/or Class of Bonds, to the Trustee and
the Company, that such amendment will not result in a reduction or withdrawal of
the then current rating by any such Rating Agency of any outstanding Series
and/or Class of Bonds.
9.10 INSERTION OF AGREEMENT PROVISIONS IN INDENTURE.
Provisions of this Agreement may be included in the Indenture in favor
of the holders of the Bonds.
9.11 BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be binding upon, the
parties hereto, and their heirs, successors and assigns.
9.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall, for all purposes, constitute an original and all of which, taken
together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by their duly authorized representatives effective the
date first above stated.
"Company"
THE DETROIT EDISON SECURITIZATION
FUNDING LLC, a Michigan limited liability company
By:
--------------------------------------------------
N.A. Khouri
Its: Manager
and By:
---------------------------------------------------
Larry G. Garberding
Its: Manager
and By:
---------------------------------------------------
David E. Meador
Its: Manager
30
34
"Member"
THE DETROIT EDISON COMPANY, a Michigan
corporation
By:
--------------------------------------------------
Its:
-----------------------------------
-----------------------------------
"Managers"
-----------------------------------------------------
N.A. Khouri
-----------------------------------------------------
Larry G. Garberding
-----------------------------------------------------
David E. Meador
-----------------------------------------------------
-----------------------------------
-----------------------------------------------------
-----------------------------------
31
35
SCHEDULE I
MANAGERS
N.A. Khouri
2000 Second Avenue
Detroit, Michigan 48226
Larry G. Garberding
2000 Second Avenue
Detroit, Michigan 48226
David E. Meador
2000 Second Avenue
Detroit, Michigan 48226
[NAME OF MANAGER] Independent Manager
- ------------------------------------
[ADDRESS OF MANAGER]
[NAME OF MANAGER] Independent Manager
- ------------------------------------
[ADDRESS OF MANAGER]