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EXHIBIT 99-41
INTER-CREDITOR AGREEMENT
INTER-CREDITOR AGREEMENT dated as of March 9th, 2001 among CITICORP
NORTH AMERICA, INC., a Delaware corporation with an office at 388 Greenwich
Street, New York, New York 10013 ("CNAI"), individually and as Agent for the
Investor, the Owners and the Bank under the RPA's (as hereinafter defined),
CITIBANK, N.A., a national banking association with an office at 388 Greenwich
Street, New York, New York 10013 (the "Bank"), THE BANK OF NEW YORK, a New York
banking corporation, with an office at 101 Barclay Street, Floor 21W, New York,
New York 10286 (the "Trustee"), THE DETROIT EDISON SECURITIZATION FUNDING LLC, a
Michigan limited liability company with an office at 2000 2nd Avenue, 937 WCB,
Detroit, Michigan 48226-1279 (the "Issuer") and THE DETROIT EDISON COMPANY, a
Michigan corporation with an office at 2000 2nd Avenue, Detroit, Michigan
48226-1279 ("Detroit Edison").
WHEREAS, pursuant to the terms of (i) that certain Trade Receivables
Purchase and Sale Agreement, dated as of February 28, 1989, as amended and
restated as of October 1, 1991 and as further amended and restated as of March
9, 2001 among Detroit Edison, CORPORATE ASSET FUNDING COMPANY, INC. (the
"Investor"), the Bank and CNAI, individually and as agent for the Investor and
the Owners and (ii) that certain Trade Receivables Purchase and Sale Agreement,
dated as of February 28, 1989, as amended and restated as of October 1, 1991,
and further amended through and including the amendment dated as of March 9,
2001, among Detroit Edison, the Bank and CNAI, individually and as agent for
itself and the Bank (said agreements as the same now exist and as they may
hereafter from time to time be amended, restated or modified, being the "RPA's";
CNAI, individually and as Agent under the RPA's, being hereinafter referred to
as "Agent"; certain terms which are capitalized and used throughout this
Agreement (in addition to those defined herein) having the meanings ascribed
thereto on this date in the RPA's), Detroit Edison has sold and may hereafter
sell interests in its accounts receivable referred to as Eligible Assets to the
Investor or the Bank, as the case may be; and
WHEREAS, pursuant to the terms of that certain Securitization Property
Sale Agreement, dated as of March 9, 2001, between Detroit Edison and the Issuer
(said agreement as the same now exists and as it may hereafter from time to time
be amended, restated or modified, being the "Sale Agreement"), Detroit Edison
has sold to the Issuer certain assets known as Securitization Property (as
defined in the Sale Agreement) which includes the SB Charges (as defined in the
Servicing Agreement); and
WHEREAS, pursuant to the terms of that certain Indenture dated as of
March 9, 2001 between the Issuer and the Trustee (said indenture as the same now
exists and as it may hereafter from time to time be amended, restated or
modified and as supplemented from time to time by one or more Series Supplements
(the "Series Supplements"; the Series Supplements and the Indenture being the
"Indenture"), the Issuer, among other things, has granted to the Trustee a
security interest in certain of its assets to secure certain Securitization
Bonds issued pursuant to the Indenture ("Securitization Bonds"); and
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WHEREAS, pursuant to the terms of that certain Securitization Property
Servicing Agreement, dated as of March 9, 2001 between the Issuer and Detroit
Edison, as servicer (said agreement, as the same now exists and as it may
hereafter from time to time be amended, restated or modified, being the
"Servicing Agreement"), Detroit Edison has agreed to provide for the benefit of
the Issuer servicing functions with respect to the collection of SB Charges; and
WHEREAS, pursuant to the terms of the RPA's, Detroit Edison has agreed
to provide for the benefit of the Investor or the Bank, as the case may be,
servicing functions with respect to Collections related to Eligible Assets; and
WHEREAS, Collections with respect to Eligible Assets and collections
with respect to SB Charges and related bank accounts as to which the same may be
deposited are the subject of the RPA's, the Sale Agreement, the Indenture and
the Servicing Agreement; and
WHEREAS, the parties hereto wish to agree upon their respective rights
relating to such Collections, collections and bank accounts, as well as other
matters of common interest to them which arise under or result from the
coexistence of the RPA's, the Sale Agreement, the Indenture and the Servicing
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. The Agent and the Bank hereby acknowledge the ownership
interest of the Issuer in the SB Charges including revenues, collections,
payments, money and proceeds arising therefrom (the "Issuer Assets") and the
security interest in favor of the Trustee in such assets (the "Trustee
Collateral") as granted by the Issuer for itself or as agent for Detroit Edison
in the Granting Clause of the Indenture. The Trustee and the Issuer hereby
acknowledge the ownership interest of the Investor, the Owners, the Bank and the
Agent in the Eligible Assets. The Agent and the Bank further acknowledge that,
notwithstanding anything in the RPA's to the contrary, none of the Agent, the
Bank, the Investor or the Owners has any interest in the Issuer Assets or the
Trustee Collateral and each of the Trustee and the Issuer further acknowledge
that, notwithstanding anything in the Sale Agreement or the Indenture to the
contrary, it has no interest in the Eligible Assets.
2. The Agent, the Bank and the Trustee acknowledge that
Collections relating to the Eligible Assets shall be initially deposited into
either (a) account no. 1000-909620 at Comerica Bank, 500 Woodward Avenue,
Detroit, Michigan 48226, ABA #072-000096 or (b) account no. 11028-23 at Bank
One, Michigan at 611 Woodward Avenue, Detroit Michigan 48226, ABA #072-000326
(each, a "Deposit Account") and that collections with respect to SB Charges, as
servicer under the Servicing Agreement, will also initially be deposited into
the Deposit Accounts. The Trustee and the Issuer waive any interest in deposits
to the Deposit Accounts to the extent that they relate to Collections on account
of Eligible Assets and the Agent and the Bank waive any interest in deposits to
the Deposit Accounts to the extent that they relate to collections on account of
SB Charges (as defined in the RPA's). Each of the parties hereto
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acknowledges the respective security interests of the others in the Deposit
Accounts to the extent of their respective interests as described in this
Agreement.
3. The Agent and the Bank hereby acknowledge that,
notwithstanding anything in the RPA's to the contrary, all collections of Issuer
Assets are property of the Issuer pledged to the Trustee for the benefit of the
Trustee and Securitization Bondholders and any Swap Counterparty (each as
defined in the Indenture). Each of the Issuer and the Trustee hereby acknowledge
that, notwithstanding anything in the Sale Agreement or the Indenture to the
contrary, all Collections related to Eligible Assets, are the property of the
Bank, the Investor and the Owners, as the case may be, subject to the terms of
the RPA's.
4. The acknowledgments contained in Paragraphs 1, 2 and 3 of
this Agreement are applicable irrespective of the time or order of attachment or
perfection of security or ownership interests or the time or order of filing or
recording of financing statements or mortgages.
5. The parties hereto recognize the existence of rights in
favor of the Trustee and the Agent under the Indenture and the RPA's, as the
case may be, to (i) replace Detroit Edison as servicer thereunder and (ii) to
take control over Collections relating to Eligible Assets and collections
relating to Issuer Assets by means, among other things, of notifying customers
of Detroit Edison to stop making payments to Detroit Edison on account of
Eligible Assets or Issuer Assets, as the case may be, and to direct that such
payments be made to a Person or a lock-box or bank account selected by the
relevant party (whether by means of court ordered sequestration or otherwise),
in each case subject to the terms of this paragraph 5.
In the event that either the Trustee or the Agent is entitled to and
desires (i) to exercise its right to replace Detroit Edison or its successor as
servicer, the party desiring to exercise such right will consult with the other
with respect to the Person who would replace Detroit Edison or its successor
and/or (ii) to exercise its rights referred to in clause (ii) of the prior
paragraph, any redirection of funds will be either to (A) a replacement servicer
agreed to by both the Trustee and the Agent in accordance with the terms hereof
or (B) to an account designated by the Trustee or the Agent, as the case may be,
which shall be governed by the following:
Subject to satisfaction of the Rating Agency Condition (as defined
below) and the consent, if required by law or the Financing Order (as defined in
the Indenture), of the MPSC, the Trustee and the Agent shall appoint an
independent third party (which shall be a financial institution having minimum
capital of $50,000,000 or a nationally-recognized, independent accounting firm)
to (i) allocate and remit funds from such account on a daily basis to the
persons entitled thereto, being the Trustee in the case of all collections
relating to the Issuer Assets and the Agent in the case of all Collections
relating to the Eligible Assets, and (ii) maintain records as to the amounts
deposited into such account, the amounts remitted therefrom and the allocation
as provided in clause (i). The Trustee and the Agent agree not to take any
action to contest or interfere with the actions of the independent third party
provided in the preceding clauses (i) or (ii); provided that, subject to the
foregoing, each such party reserves the right to require an
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accounting of collections, allocations and remittances by the independent third
party in order to preserve the respective property rights recognized under this
Agreement. The parties hereto agree that such account shall meet the
requirements of an "Eligible Securities Account," as such term is defined in the
Indenture.
If in accordance with the previous paragraph a replacement servicer
cannot be agreed upon within five Business Days, each of the Trustee and the
Agent at their own expense will appoint a Person to select a replacement
servicer for them and such Persons shall agree upon a replacement servicer. Such
replacement servicer shall be an "eligible" servicer which is a Person (i) which
is a financial institution having minimum capital of $50,000,000, experienced in
collecting utility company receivables and (ii) whose appointment is subject to
the Rating Agency Condition.
Anything in this Agreement to the contrary notwithstanding, any action
taken by either the Trustee or the Agent pursuant to this paragraph 5 shall be
subject to the Rating Agency Condition and the consent, if required by law or
the Financing Order, of the MPSC. For the purposes of this Agreement, the Rating
Agency Condition means, with respect to any such action, notification to each
rating agency then rating any class or series of the Securitization Bonds of
such action, and the receipt of notification from each of Fitch and S&P (each as
defined in the Indenture) that such action will not result in a reduction or
withdrawal of their rating on such Securitization Bonds. The parties hereto
acknowledge and agree that the approval or the consent of the rating agencies
which is required in order to satisfy the Rating Agency Condition is not subject
to any standard of commercial reasonableness, and the parties are bound to
satisfy this condition whether or not the rating agencies are unreasonable or
arbitrary.
6. The Agent, the Trustee and Detroit Edison agree to
cooperate with each other and make available to each other or any replacement
servicer any and all records and other data relevant to the Issuer Assets and
Eligible Assets hereinabove mentioned which it may from time to time receive
from Detroit Edison (or its successor) or, in the case of Detroit Edison,
possess, including, without limitation, any and all computer programs, data
files, documents, instruments, files and records and any receptacles and
cabinets containing the same.
7. Nothing herein contained shall be deemed as effecting a
joint venture among the Agent, the Bank, Detroit Edison, the Issuer, the
Investor, the Owners and the Trustee.
8. For the purpose of this Agreement only, the Agent and the
Bank hereby consent and agree to the method of (a) adjustment set forth in
Section 4.01 of the Servicing Agreement and (b) calculation and allocation of
payments set forth in Section 4.03(a) of the Servicing Agreement and irrevocably
waive any right to object to or enjoin such adjustment, calculation, payment or
allocation. Such consent and agreement shall not relieve Detroit Edison of any
of its obligations to make payments in accordance with the terms of the RPA's.
9. This Agreement shall terminate upon the payment in full of
either the Securitization Bonds or the obligations under the RPA's, except that
the understandings and
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acknowledgments contained in paragraphs 1, 2, 3 and 4 shall survive the
termination of this Agreement.
10. This Agreement shall be governed by the laws of the State
of New York.
11. The Agent, the Bank, Detroit Edison, the Issuer and the
Trustee agree to execute any and all agreements, instruments, financing
statements, releases and any and all other documents reasonably requested by the
other in order to effectuate the intent of this Agreement. In each case where a
release is to be given pursuant to this Agreement, the term release shall
include any documents or instruments necessary to effect a release, as
contemplated by this Agreement. All releases, subordinations and other
instruments submitted to the executing party are to be prepared at no expense to
such party.
12. This Agreement is solely for the benefit of the Agent, the
Bank, Detroit Edison, the Issuer, the Investor, the Owners and the Trustee for
the benefit of the Securitization Bondholders, the Trustee and any Swap
Counterparty and no other person or entity shall have any rights, benefits,
priority or interest under or because of the existence of this Agreement.
13. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CITICORP NORTH AMERICA, INC.,
Individually and as Agent
By: /s/ Joseph A. Farina
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Name: Joseph A. Farina
Vice President
CITIBANK, N.A.
By: /s/ Joseph A. Farina
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Name: Joseph A. Farina
Vice President
THE DETROIT EDISON COMPANY
By: /s/ N.A. Khouri
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Name: N.A. Khouri
Title: Vice President and Treasurer
THE BANK OF NEW YORK
as Trustee
By: /s/ Mauro Palladino
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Name: Mauro Palladino
Title: Vice President
THE DETROIT EDISON SECURITIZATION
FUNDING LLC
By: /s/ Kathleen Hier
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Name: Kathleen Hier
Title: Treasurer
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