EXHIBIT 1(c)
UNDERWRITING AGREEMENT
$468,592,000
Consumers Funding LLC
Securitization Bonds Series 2001-1
Consumers Energy Company
Underwriting Agreement
October 31, 2001
To the Representative named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Dear Sirs:
Consumers Funding LLC, a Delaware limited liability company (the
"Issuer"), proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you (the "Representative") are acting as
representative, the principal amount of the securities identified in
Schedule I hereto (the "Securitization Bonds"). If the firm or firms listed
in Schedule II hereto include only the firm listed in Schedule I hereto,
then the terms "Underwriters" and "Representative", as used herein, shall
each be deemed to refer to such firm.
The Issuer is a wholly-owned subsidiary of Consumers Energy
Company, an operating electric and gas public utility incorporated under
the laws of the State of Michigan (the "Company").
The Securitization Bonds will be issued pursuant to a base
indenture dated on or about November 8, 2001 as supplemented by the Series
2001-1 Supplemental Indenture thereto (as so supplemented, the
"Indenture"), between the Issuer and the Bank of New York, as trustee (the
"Bond Trustee"). The Securitization Bonds will be secured primarily by
Securitization Property sold to the Issuer by the Company. The Company's
sale of Securitization Property to the Issuer will occur pursuant to a Sale
Agreement between the Company and the Issuer, dated on or about November 8,
2001 (the "Sale Agreement"). The Securitization Property will be serviced
pursuant to a Servicing Agreement, dated on or about November 8, 2001,
between the Company, as servicer, and the Issuer, as owner of the
Securitization Property (as amended and supplemented from time to time, the
"Servicing Agreement"). Pursuant to an Administration Agreement between the
Company and the Issuer, dated on or about November 8, 2001 (the
"Administration Agreement"), the Company will provide certain
administrative services for the benefit of the Issuer. In addition, the
Company, the Issuer, the Bond Trustee, Canadian Imperial Bank of Commerce
and Asset Securitization Cooperative Corporation will enter into an
Intercreditor Agreement dated on or about November 8, 2001 (the
"Intercreditor Agreement").
Capitalized terms used and not otherwise defined herein shall have
the meanings given to them in the Indenture.
The Issuer has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), a registration statement on
Form S-3, as amended (Registration No. 333-47938), including a prospectus
relating to the Securitization Bonds and such registration statement has
become effective under the Act. The registration statement at the time such
registration statement became effective and as it may have been thereafter
amended to the date of this Agreement (including the documents then
incorporated by reference therein) is hereinafter referred to as the
"Registration Statement." The prospectus forming a part of the Registration
Statement at the time the Registration Statement became effective
(including the documents then incorporated by reference therein) is
hereinafter referred to as the "Basic Prospectus," provided that in the
event that the Basic Prospectus shall have been amended, revised or
supplemented prior to the date of this Agreement, or if the Issuer shall
have supplemented the Basic Prospectus by filing any documents pursuant to
Section 13, 14 or 15 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), after the time the Registration Statement became
effective and prior to the date of this Agreement, which documents are
deemed to be incorporated in the Basic Prospectus, the term "Basic
Prospectus" shall also mean such prospectus as so amended, revised or
supplemented. The Basic Prospectus, as it shall be revised or supplemented
to reflect the final terms of the offering and sale of the Securitization
Bonds by a prospectus supplement (the "Prospectus Supplement") relating to
the Securitization Bonds, and in the form to be filed with, or transmitted
for filing to, the Commission pursuant to Rule 424(b) under the Act, is
hereinafter referred to as the "Prospectus." Any preliminary prospectus
supplement to the Basic Prospectus that describes the Securitization Bonds
and the offering thereof and is used prior to filing of the Prospectus is
hereinafter referred to as the "Preliminary Prospectus." Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to
the Registration Statement, the Preliminary Prospectus or the Prospectus
shall be deemed to include only amendments or supplements to the
Registration Statement, the Preliminary Prospectus or Prospectus, as the
case may be, and documents incorporated by reference therein after the date
of this Agreement and prior to the termination of the offering of the
Securitization Bonds by the Underwriters.
1. Purchase and Sale: Upon the basis of the representations and
warranties and on the terms and subject to the conditions herein set forth,
the Issuer agrees to sell to the respective Underwriters, severally and not
jointly, and the respective Underwriters, severally and not jointly, agree
to purchase from the Issuer, at the purchase price specified in Schedule
III hereto, the respective principal amounts of Securitization Bonds set
forth opposite their names in Schedule II hereto.
The Company and the Issuer are advised by the Representative that
the Underwriters propose to make a public offering of their respective
portions of the Securitization Bonds as soon as practicable, in their
judgment, after this Agreement has become effective.
2. Payment and Delivery: Payment for the Securitization Bonds
shall be made to the Issuer or its order in Federal or other immediately
available funds in New York City (or such other place or places of payment
as shall be agreed upon by the Issuer and the Representative in writing),
upon the delivery of the Securitization Bonds at the offices of Skadden,
Arps, Slate, Meagher and Flom LLP ("Skadden, Arps"), at Four Times Square,
New York, New York 10036 (or such other place or places of delivery as
shall be agreed upon by the Issuer and the Representative) to the
Representative for the respective accounts of the Underwriters against
receipt therefor signed by the Representative on behalf of itself and as
agent for the other Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York time on November 8, 2001 (or on such later business
day as shall be agreed upon by the Company, the Issuer and the
Representative in writing), unless postponed in accordance with the
provisions of Section 11 hereof. The day and time at which payment and
delivery for the Securitization Bonds are to be made is herein called the
"Time of Purchase."
The Securitization Bonds to be so delivered shall be initially
represented by Securitization Bonds registered in the name of Cede & Co.,
as nominee of The Depository Trust Company ("DTC"). The interests of
beneficial owners of the Securitization Bonds will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Securitization Bonds will be available only under limited circumstances.
The Company and the Issuer agree to make the Securitization Bonds
available for inspection by the Underwriters at the offices of Skadden,
Arps, at least 24 hours prior to the Time of Purchase, in definitive, fully
registered form, as described pursuant to the preceding paragraph.
3. Conditions of Underwriters' Obligations: The several
obligations of the Underwriters hereunder are subject to the accuracy of
the warranties and representations on the part of the Issuer and the
Company contained herein as of the date of execution of this Agreement and
as of the Time of Purchase, on the part of the Company contained in Article
III of the Sale Agreement and Section 5.01 of the Servicing Agreement and
to the following other conditions:
(a) If filing of the Prospectus, or any supplement thereto,
is required pursuant to Rule 424(b), the Prospectus, and any such
supplement, shall have been filed in the manner and within the
time period required by Rule 424(b); and no stop order suspending
the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Representative shall have received an opinion of
David A. Mikelonis, Senior Vice President and General Counsel of
the Company, Skadden, Arps, Slate Meagher & Flom LLP, outside
counsel for the Company (with respect to the opinion in clause
(iii) below), Miller, Canfield, Paddock and Stone, P.L.C., special
Michigan counsel for the Company (with respect to the opinion in
clause (iii) below), or such other counsel for the Company as may
be acceptable to the Representative, dated the Time of Purchase,
in form and substance reasonably satisfactory to the
Representative, to the effect that:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Michigan, and there is no other
jurisdiction where the nature of the Company's business
requires qualification in order to protect the validity and
enforceability of this Agreement, the Servicing Agreement,
the Sale Agreement, the Bill of Sale, the Administration
Agreement and the Intercreditor Agreement (collectively, the
"Company Documents") or where the failure to be so qualified
could materially and adversely affect the business,
properties or assets of the Company. The Company has the
power and authority to execute, deliver and perform its
obligations under the Company Documents and to own its
properties and conduct its business as described in the
Registration Statement and the Prospectus;
(ii) The execution, delivery and performance by
the Company of the Company Documents and the consummation by
the Company of the transactions contemplated thereby have
been duly authorized by all requisite corporate action on
the part of the Company and each of the Company Documents
has been duly executed and delivered by the Company;
(iii) The Company Documents constitute valid and
legally binding obligations of the Company enforceable
according to their terms;
(iv) The Company holds all franchises,
certificates of public convenience, licenses and permits
necessary to carry on the utility business in which it is
engaged, the absence of which would have a material adverse
effect on the financial condition of the Company or on the
validity of the Company Documents. All consents, approvals,
authorizations of, or filings or registrations with, any
governmental body, authority or agency applicable to the
Company and required as a condition to the validity of the
Company Documents or in connection with the execution,
delivery and performance by the Company of the Company
Documents have been obtained or made;
(v) The execution, delivery and performance by
the Company (or, in the case of clause (d) below, the
Issuer) of the Company Documents, each in accordance with
its terms, do not (a) conflict with the Restated Articles of
Incorporation or By-laws of the Company, (b) conflict with
or breach any of the terms or provisions of, or constitute
(with or without notice or lapse of time) a default under
any indenture, material agreement or instrument to which the
Company is a party or by which the Company or any of its
property is bound, (c) result in the creation or imposition
of any security interest or lien on any properties of the
Company pursuant to the terms of any such agreement or
instrument, except as provided in the Sale Agreement, (d)
violate any law or any consent, order, rule, regulation or
decree of any court or federal or state regulatory body,
administrative agency or other governmental authority having
jurisdiction over the Company or the Issuer or any of their
respective properties, or (e) violate any law, rule or
regulation applicable to the Company;
(vi) There is no pending and, to the best of
such counsel's knowledge, no threatened action, suit or
proceeding before any court or governmental agency,
authority or body or any arbitrator involving the Company or
any of its subsidiaries, or involving or relating to the
Financing Order or the collection of the Securitization
Charge or the use and enjoyment of the Securitization
Property under the Customer Choice and Electric Reliability
Act (2000 PA 141 and 142) (the "Customer Choice Act") of a
character required to be disclosed in the Registration
Statement or the Prospectus that is not adequately disclosed
in the Prospectus, and there is no franchise, contract or
other document of a character required to be disclosed in
the Registration Statement or the Prospectus, or to be filed
as an exhibit, that is not disclosed or filed as required;
(vii) The Securitization Property is not subject
to the lien of the Trust Indenture of Consumers Energy
Company with The Chase Manhattan Bank as Trustee, dated as
of September 1, 1945, as amended and supplemented (the
"Trust Indenture"), and the grant of a security interest in
the Securitization Property pursuant to Section 2.01(e) of
the Sale Agreement will not breach any covenant in the Trust
Indenture. The transfer of the Securitization Property and
the other Collateral by the Company to the Issuer on the
date of issuance of the Securitization Bonds is free and
clear of the lien created by any indenture, agreement or
other instrument to which the Company is a party or by which
the Company is bound;
(viii) The statements included in the Prospectus
under the caption "Consumers Energy Company," to the extent
that they constitute matters of Michigan law or legal
conclusions with respect thereto, provide a fair and
accurate summary of such law and conclusions; and
(ix) Nothing has come to such counsel's
attention to lead such counsel to believe that the
Registration Statement at the effective date thereof
contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of
the circumstances under which they were made, not
misleading, or that the Final Prospectus contained as of its
date or contains as of the date hereof an untrue statement
of a material fact or omitted or omits, as the case may be,
to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading.
(c) The Representative shall have received opinions of
counsel for the Issuer, portions of which may be delivered by
Skadden, Arps, Slate Meagher & Flom LLP, outside counsel for the
Issuer, portions of which may be delivered by Miller, Canfield,
Paddock and Stone, P.L.C., special Michigan counsel for the
Issuer, and portions of which may be delivered by Loomis, Ewert,
Parsley, David & Gotting, PC, special regulatory counsel for the
Issuer, each dated the Time of Purchase, in form and substance
reasonably satisfactory to the Representative, to the effect that:
(i) The Issuer has been duly formed and is
validly existing and in good standing as a limited liability
company under the laws of the State of Delaware;
(ii) The Issuer is duly qualified to do business
and is in good standing under the laws of the State of
Michigan;
(iii) The Issuer has the limited liability
company power and authority to execute, deliver and perform
its obligations under the Sale Agreement, the Bill of Sale,
the Servicing Agreement, the Administration Agreement, the
Intercreditor Agreement, the Indenture, the Underwriting
Agreement and the Securitization Bonds and to own its
properties and conduct its business as described in the
Registration Statement and the Prospectus;
(iv) The execution and delivery of each of the
Sale Agreement, the Bill of Sale, the Servicing Agreement,
the Administration Agreement, the Intercreditor Agreement,
the Indenture, the Underwriting Agreement and the
Securitization Bonds and the consummation by the Issuer of
the transactions contemplated thereby have been duly
authorized by all requisite limited liability company action
on the part of the Issuer and each of such documents has
been duly executed and delivered by the Issuer;
(v) The issue and sale of the Securitization
Bonds by the Issuer, the execution and delivery by the
Issuer of each of the Sale Agreement, the Bill of Sale, the
Servicing Agreement, the Administration Agreement, the
Intercreditor Agreement, the Indenture and the Underwriting
Agreement and the performance by the Issuer of its
obligations under each of the foregoing, each in accordance
with its terms, do not (a) conflict with, result in any
breach of any of the terms or provisions of, or constitute
(with or without notice or lapse of time) a default under
the Issuer Certificate of Formation or the Issuer LLC
Agreement, (b) conflict with or breach any of the material
terms or provisions of, or constitute (with or without
notice or lapse of time) a default under any indenture,
material agreement or instrument to which the Issuer is a
party or by which the Issuer is bound, (c) result in the
creation or imposition of any security interest or lien on
any properties of the Issuer (other than as contemplated by
the Basic Documents), (d) violate any consent, order or
decree of any court or federal or state regulatory body,
administrative agency or other governmental authority having
jurisdiction over the Issuer or any of its properties, or
(e) violate any applicable law;
(vi) No consent, approval, license,
authorization or validation of, giving of notice to, or
filing, recording or registration with, any court or
governmental authority pursuant to applicable law which has
not been obtained or taken and is not in full force and
effect, is required under applicable law to authorize, or is
required under applicable law in connection with, the
execution, delivery or performance by the Issuer of any of
the Sale Agreement, the Bill of Sale, the Servicing
Agreement, the Administration Agreement, the Intercreditor
Agreement, the Indenture, the Underwriting Agreement or the
Securitization Bonds, or the performance by the Issuer of
the transactions contemplated by such documents;
(vii) Each of the Sale Agreement, the Bill of
Sale, the Servicing Agreement, the Administration Agreement,
the Intercreditor Agreement, the Indenture and the
Underwriting Agreement constitutes the valid and binding
obligation of the Issuer, enforceable against the Issuer in
accordance with its terms;
(viii) When authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Underwriters in accordance with the terms of this
Agreement, the Securitization Bonds will constitute the
valid and binding obligations of the Issuer enforceable
against the Issuer in accordance with their respective terms
and will be entitled to the benefits of the Indenture;
(ix) Neither the execution, delivery or
performance by the Issuer of the Sale Agreement, the Bill of
Sale, the Servicing Agreement, the Administration Agreement,
the Intercreditor Agreement, the Indenture, the Underwriting
Agreement or the Securitization Bonds nor the compliance by
the Issuer with the terms and provisions thereof nor the
issuance and sale by the Issuer of the Securitization Bonds,
will contravene any provisions of applicable laws;
(x) The Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and neither the Sale Agreement nor the
Servicing Agreement is required to be registered under the
Trust Indenture Act;
(xi) The Securitization Bonds have been duly
authorized and executed by the Issuer;
(xii) The Registration Statement has become
effective under the Act; any required filing of the
Prospectus pursuant to Rule 424(b) under the Act has been
made in the manner and within the time period required by
Rule 424(b); to the best of the knowledge of such counsel
after due inquiry with the Commission, no stop order
suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have
been instituted or threatened; and the Registration
Statement, the Preliminary Prospectus and the Prospectus
(other than the financial statements and other financial and
statistical information contained therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the
Act and the rules thereunder, and any amendments thereto
under the Exchange Act comply as to form in all material
respects with the applicable requirements of the Exchange
Act and the rules thereunder;
(xiii) The Issuer is not, and after giving
effect to the offering and sale of the Securitization Bonds
and the application of the proceeds thereof as described in
the Prospectus will not be required to be, registered as an
"investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
(xiv) The Issuer will not be subject to any
other taxes currently imposed by the State of Michigan or
any political subdivision thereof which would result from
the issuance of the Securitization Bonds, the Issuer's
purchase of the Securitization Property from the Company or
from its ownership of the Securitization Property;
(xv) The Securitization Bonds, the Indenture,
the Servicing Agreement and, the Sale Agreement, the Issuer
LLC Agreement and the Intercreditor Agreement conform in all
material respects to the descriptions thereof (other than,
with respect to the Securitization Bonds, the statements
under the subheading "The Securitization Bonds--
Securitization Bonds Will Be Issued in Book-Entry Form")
contained in the Prospectus;
(xvi) The statements set forth in (a) the
Prospectus under the captions (i) "The Securitization Bonds"
(other than the statements under the subheading
"Securitization Bonds Will Be Issued in Book-Entry Form")
and "Payments of Interest and Principal" (other than the
statements under the subheadings "Material Income Tax
Considerations" and "ERISA Considerations"), insofar as they
purport to summarize certain provisions of the
Securitization Bonds and the Indenture, (ii) "The Sale
Agreement", insofar as they purport to summarize certain
provisions of the Sale Agreement, (iii) "The Servicing
Agreement", insofar as they purport to summarize certain
provisions of the Servicing Agreement, (iv) "The Indenture",
insofar as they purport to summarize certain provisions of
the Indenture, (v) "The Intercreditor Agreement", insofar as
they purport to summarize certain provisions of the
Intercreditor Agreement, and (vi) "Consumers Funding LLC",
insofar as they purport to summarize certain provisions of
the Issuer LLC Agreement, in each case constitute fair
summaries of such provisions; (b) the Prospectus Supplement
under the captions (i) "The Series 2001-1 Securitization
Bonds" insofar as they purport to summarize certain
provisions of the Securitization Bonds and (ii) "Credit
Enhancement - Collection Account and Subaccounts" insofar as
they purport to summarize certain provisions of the
Indenture, constitute fair summaries of such provisions, and
(c) the Prospectus under the caption "ERISA Considerations",
insofar as such statements purport to summarize certain
provisions of the laws referred to therein, fairly summarize
such provisions in all material respects;
(xvii) The statements in the Prospectus under
the heading "Material Income Tax Consequences for the
Securitization Bonds" subject to the qualifications set
forth therein, accurately describe the material federal
income tax consequences to holders of the Securitization
Bonds that are not U.S. persons (within the meaning of the
Internal Revenue Code), under existing law and the
assumptions stated therein;
(xviii) Such counsel adopts and confirms its
opinion as set forth in the Prospectus Supplement under the
caption "Introduction - Tax Status" and in the Prospectus
under the captions "Payments of Interest and Principal -
Material Income Tax Consequences" and "Material Income Tax
Consequences for the Securitization Bonds";
(xix) The statements in the Prospectus
Supplement under the captions "Introduction - Transaction
Overview", "The Series 2001-1 Securitization Bonds - The
Collateral" and "Credit Enhancement" and the statements in
the Prospectus under the captions "Risk Factors", "Judicial,
Legislative or Regulatory Action That May Adversely Affect
Your Investment", "Servicing Risks", "The Risks Associated
With Potential Bankruptcy or Creditors' Rights Proceedings",
"Other Risks Associated With An Investment In The
Securitization Bonds", "Summary of Terms - Transaction
Overview", "The Collateral", "The Customer Choice Act", "The
MPSC Financing Order and the Securitization Charge" and "How
a Bankruptcy of the Seller or the Servicer May Affect Your
Investment" that describe Michigan law or state legal
conclusions under Michigan law, provide a fair and accurate
summary of such laws and conclusions;
(xx) Such counsel adopts and confirms its
opinions as set forth under the headings "Payments of
Interest and Principal - Material Income Tax Consequences"
and "Material Income Tax Consequences for the Securitization
Bonds - Material State of Michigan Tax Consequences" in the
Prospectus;
(xxi) No facts have come such counsel's
attention that has led it to believe that the Registration
Statement at the effective date thereof contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus
contained as of its date or contains as of the Closing Date
an untrue statement of a material fact or omitted or omits,
as the case may be, to state a material fact necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading,
except that such counsel need express no opinion or belief
with respect to (i) the numerical, statistical and financial
information included therein or excluded therefrom, (ii) the
Bond Trustee's Statement of Eligibility and Qualification
under the Trust Indenture Act on Form T-1 or (iii) the
statements under the subheading "The Securitization
Bonds--Securitization Bonds Will Be Issued in Book-Entry
Form";
(xxii) The financing order of the Michigan
Public Service Commission dated October 24, 2000, as
supplemented by the order dated January 4, 2001
(collectively, the "Financing Order"), has been duly issued
by the Michigan Public Service Commission in accordance with
all applicable laws, rules and regulations, including the
Customer Choice Act; the Financing Order and process by
which it was issued complies with all applicable laws, rules
and regulations, including the Customer Choice Act; the
Financing Order is in full force and effect and is final and
nonappealable; and the Customer Choice Act has been duly
enacted by the State of Michigan in accordance with all
applicable laws, is in full force and effect and is not the
subject of any pending appeal or litigation;
(xxiii) The Financing Order is effective in
accordance with its terms, and the Financing Order, together
with the "Securitization Charges" (as referred to therein)
authorized in the Financing Order, are irrevocable and not
subject to reduction, impairment or adjustment by further
action of the Michigan Public Service Commission for the
period that the Securitization Bonds are outstanding, except
as provided under Section 10k (3) of the Customer Choice
Act;
(xxiv) The Financing Order authorizes the
issuance of the Securitization Bonds, the transfer of the
Securitization Property to the Issuer, the imposition of the
Securitization Charges and the periodic adjustments of the
Securitization Charges, and the sections of the Financing
Order authorizing the foregoing are irrevocable;
(xxv) The provisions of the Customer Choice Act
are constitutional under the constitutions of the United
States and of Michigan;
(xxvi) The Securitization Bonds are
"securitization bonds" within the meaning of Section 10h of
the Customer Choice Act and the Securitization Bonds are
entitled to the protections of the Customer Choice Act. With
respect to routine periodic adjustments to the
Securitization Charge required by Section 10k(3) of the
Customer Choice Act, the Michigan Public Service Commission
has not determined the procedures to be applied in
conducting its review of those adjustments pursuant to the
Financing Order, including whether notice and opportunity
for a hearing will be granted, except that, as required by
the Financing Order, each review and determination of the
routine periodic adjustment must be completed within 45 days
after the Company, as servicer, or a successor servicer,
files its request for an adjustment and must be limited in
scope, among others specified in the Financing Order, to the
arithmetic computation contained in the Company's, or
successor servicer's, proposed adjustment;
(xxvii) The issuance and sale of the
Securitization Bonds and the consummation of the
transactions contemplated by the Basic Documents are
consistent in all respects with the requirements of the
Customer Choice Act and the Financing Order;
(xxviii) The Issuer is an "assignee" within the
meaning of Section 10h of the Customer Choice Act and is not
considered to be a public utility or person providing
electric service solely by virtue of its performance of the
transactions specified in the Basic Documents;
(xxix) The Customer Choice Act is no longer
subject to referendum for the purpose of approving or
rejecting it, and no petition for a voter initiative for the
purpose of amending or repealing any portion of the Customer
Choice Act has been filed with the Michigan Secretary of
State;
(xxx) Effective on the date the Securitization
Bonds are issued, if any provision or portion of the
Customer Choice Act is held to be invalid, is invalidated,
superseded, replaced or expires for any reason, that
occurrence does not affect the validity or continuation of
any provisions of the Customer Choice Act that are relevant
to the issuance, administration, payment, retirement, or
refunding of the Securitization Bonds or to any actions of
the Company, its successors, an assignee, a collection
agent, or a financing party, and said provisions shall
remain in full force and effect;
(xxxi) An attempt by the State of Michigan, the
Michigan Public Service Commission or any other entity to
repeal, amend or otherwise impair the Customer Choice Act or
the rights of the holders of the Securitization Bonds,
whether by legislation, initiative, executive order or
Constitutional amendment, would be subject to preliminary
injunction if a court of competent jurisdiction hearing a
request for preliminary injunction finds that such relief is
necessary to prevent immediate and irreparable harm that
cannot be compensated by damages, that greater injury will
occur from refusing the injunction than from granting it,
that the preliminary injunction will restore the parties to
the status quo as it existed immediately before the alleged
wrongful conduct, that the alleged wrong is manifest and the
injunction is reasonably suited to abate it; and that the
right to such relief by the challenging party is clear;
further, upon final adjudication of the challenged repeal,
amendment or impairment, a court of competent jurisdiction
would permanently enjoin the alleged wrongful conduct if the
court concluded that such conduct constitutes a legal wrong
for which no adequate remedy at law was available;
(xxxii) The provisions of the Sale Agreement
together with the Bill of Sale are effective to create, in
favor of the Issuer, a valid security interest (as such term
is defined in the Michigan UCC) in the Seller's rights in
the Securitization Property, which security interest if
characterized as a transfer for security will secure a
payment obligation incurred by the Seller in the amount paid
by the Issuer for the Securitization Property;
(xxxiii) The security interest described in the
immediately preceding paragraph in favor of the Issuer in
the Seller's rights in the Securitization Property is
perfected;
(xxxiv) The provisions of the Indenture are
effective to create, in favor of the Bond Trustee to secure
the payment of the Secured Obligations, a valid security
interest in the Collateral in which a security interest may
be created under Articles 8 and 9 of the Michigan UCC other
than property which constitutes Collateral solely because of
the phrase "and all other property of whatever kind" being
included in said definition (the "Indenture Collateral")
and, to the extent not included in the Indenture Collateral,
in the Securitization Property;
(xxxv) The security interest described in the
immediately preceding paragraph in favor of the Bond Trustee
created in the Indenture in the Indenture Collateral (other
than the Excluded UCC Items (as defined in such opinion))
has been perfected in all of such Indenture Collateral in
which a security interest may be perfected by the filing of
a financing statement within the State of Michigan;
(xxxvi) As provided in the Customer Choice Act,
the lien and security interest of the Bond Trustee in the
Issuer's rights in the Securitization Property (a) have been
created, (b) have attached to the Securitization Property,
(c) are valid and enforceable, (d) are a perfected lien and
security interest in the Issuer's rights in the
Securitization Property and all proceeds thereof, whether
accrued or not, (e) have priority in order of filing, and
(f) take precedence over any subsequent judicial and other
lien creditor. In addition, pursuant to the Customer Choice
Act, all rights and remedies with respect to a security
interest provided by the Michigan UCC shall apply to the
Securitization Property;
(xxxvii) The provisions of the Securities
Account Control Agreement together with those of the Account
Agreement (as defined in such opinion) are effective to
perfect the security interest of the Bond Trustee created in
the Indenture in the Security Entitlements (as defined in
such opinion) and the Securities Account (as defined in such
opinion);
(xxxviii) The Michigan Department of State is
the proper filing office under the Customer Choice Act for
the filing of financing statements in order to create a
perfected lien and security interest in the Securitization
Property under said Act as it pertains to the transfer
thereof by the Seller. The Michigan Department of State is
the proper filing office under Article 9 of the Michigan UCC
for the filing of financing statements in order to perfect a
security interest granted by the Issuer in the Indenture
Collateral (but excluding therefrom property in which a
security interest cannot be perfected by the filing of a
financing statement under the Michigan UCC, Excluded UCC
Items (as defined in such opinion) and proceeds of the
Indenture Collateral if such proceeds are not subject to the
filing requirements of Article 9 of the Michigan UCC) when
such perfection is governed by a filing within the State of
Michigan;
(xxxix) The provisions of the Indenture are
sufficient to constitute authorization by the Issuer of the
filing of the Financing Statement for purposes of Section
9-509 of the Delaware UCC;
(xl) To the extent that perfection is governed
by the Delaware UCC, upon the later of the attachment of the
security interest and the filing of the financing statement
described in such opinion (the "Financing Statement") in the
Office of the Secretary of State of the State of Delaware
(the "Filing Office"), the security interest of the Bond
Trustee will be perfected in the Issuer's rights in all
Collateral to the extent such collateral is of a type
subject to Article 9 of the Delaware UCC ("UCC Collateral")
that may be perfected by the filing of a UCC financing
statement in the Filing Office;
(xli) The UCC search report described in such
opinion (the "Issuer Search Report") identifies no person as
having filed in the Filing Office a financing statement
naming "Consumers Funding LLC" as debtor and containing a
description of collateral sufficient to include the UCC
Collateral as of the effective date of the Issuer Search
Report. The Issuer Search Report sets forth the proper
debtor necessary to identify those persons who under the
Delaware UCC have on file financing statements against the
Issuer covering the UCC Collateral as of the effective date
of the Issuer Search Report;
(xlii) For purposes of the Delaware UCC, the
Issuer is a "registered organization";
(xliii) Under the Contract Clauses of the United
States and State of Michigan Constitutions, the State of
Michigan, including the Michigan Public Service Commission,
could not constitutionally take any action of a legislative
character, including, but not limited to, the repeal or
amendment of the Customer Choice Act or the Financing Order
(including repeal or amendment by voter initiative as
defined in 63 Michigan Constitution, Article 2, Section 9,
or by amendment of the Michigan Constitution), that would
substantially impair the value of the Securitization
Property or substantially reduce or alter, except as allowed
under the adjustment provisions described in Section 10k(3)
of the Customer Choice Act, or substantially impair the
Securitization Charges to be imposed, collected and remitted
to the Issuer, unless such action is a reasonable exercise
of the State of Michigan's sovereign powers and of a
character reasonable and appropriate to the public purpose
justifying such action;
(xliv) Under the Taking Clauses of the United
States and the State of Michigan Constitutions, the State of
Michigan, including the Michigan Public Service Commission,
could not repeal or amend the Customer Choice Act or the
Financing Order (including repeal or amendment by voter
initiative as defined in 63 Michigan Constitution, Article
2, Section 9, or by amendment of the Michigan Constitution)
or take any other action in contravention of the pledge set
forth in Section 10n(2) of the Customer Choice Act without
paying just compensation to the Securitization Bondholders,
as determined by a court of competent jurisdiction, if doing
so would constitute a permanent appropriation of a
substantial property interest of the Securitization
Bondholders in the Securitization Property and deprive the
Securitization Bondholders of their reasonable expectations
arising from their investments in the Securitization Bonds;
and
(xlv) The pledge set forth in Section 10n(2) of
the Customer Choice Act was validly enacted by the State of
Michigan and is enforceable.
In rendering any such opinion, Skadden, Arps, Slate, Meagher &
Flom LLP may rely as to matters involving the application of laws of the
State of Michigan, to the extent deemed proper and specified in such
opinion, upon the opinion of other counsel of good standing believed to be
reliable and who are satisfactory to counsel for the Underwriters, and such
counsel may rely as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Issuer and public officials.
References to the Prospectus in this paragraph (c) include any supplements
thereto at the Time of Purchase.
(d) The Representative and the Bond Trustee shall have
received on the Time of Purchase an opinion letter or letters of
Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel
to the Issuer, dated the Time of Purchase, in form and substance
reasonably satisfactory to the Representative, to the effect that:
(i) The Issuer LLC Agreement constitutes a valid
and binding agreement of the Company, as the sole member of
the Issuer, and is enforceable against the Company in
accordance with its terms;
(ii) If properly presented to a Delaware court,
a Delaware court applying Delaware law would conclude that
(i) compliance with Section 3.04(b)(iv) of the Issuer LLC
Agreement requiring a prior unanimous written consent of the
Issuer's Managers, including each of the Independent
Managers, to commence a voluntary case under Title 11 of the
United States Code (a "Voluntary Case") for the Issuer, is
necessary in order to commence a Voluntary Case, and (ii)
Section 3.04(b)(iv) of the Issuer LLC Agreement requiring a
prior written unanimous consent of the Issuer's Managers,
including each of the Independent Managers, to commence a
Voluntary Case for the Issuer, constitutes a legal, valid
and binding agreement of the Company, and is enforceable
against the Company, as the sole member of the Issuer, in
accordance with its terms;
(iii) Under the Delaware Limited Liability
Company Act, 6 Del. C. 18-101, et seq. (the "LLC Act"), and
the Issuer LLC Agreement, the bankruptcy or dissolution of
the Company would not, by itself, cause the Issuer to be
dissolved or its affairs to be wound up;
(iv) Under the LLC Act, a judgment creditor of
the Company may not attach specific assets of the Issuer
directly and may not satisfy its claims against the Company
by asserting a claim directly against the assets of the
Issuer;
(v) Under the LLC Act (i) the Issuer is a
separate legal entity, and (ii) the existence of the Issuer
as a separate legal entity will continue until the
cancellation of the Issuer Certificate of Formation;
(e) The Representative and the Bond Trustee shall have
received on the Time of Purchase an opinion letter or letters of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the
Issuer, dated the Time of Purchase, in form and substance
reasonably satisfactory to the Representative, to the effect that,
under federal law:
(i) In a properly presented and argued case, as
a legal matter, and based upon existing case law, a
bankruptcy court, would hold that compliance with those
provisions of the Issuer LLC Agreement requiring the prior
unanimous written consent of the Issuer's Managers to
commence a voluntary case under Title 11 of the United
States Code (a "Voluntary Case") is necessary in order to
commence a Voluntary Case;
(ii) The bankruptcy or dissolution of the
Company would not, by itself, cause the Issuer to be
dissolved or its affairs to be wound up;
(iii) A judgment creditor of the Company may not
satisfy its claims against the Company by asserting these
claims directly against the assets of the Issuer, and
(iv) (A) The Issuer is a separate legal entity,
and (B) the existence of the Issuer as a separate legal
entity will continue until the cancellation of its Issuer
Certificate of Formation.
(f) The Representative and the Issuer have received opinions
of Stradley, Ronon, Stevens & Young, LLP, counsel to the Bond
Trustee, Emmet, Marvin & Martin, LLP, counsel to the Bond Trustee,
and Miller, Canfield, Paddock and Stone, P.L.C., or such other
counsel as may be acceptable to the Representative, dated the Time
of Purchase, in form and substance reasonably satisfactory to the
Representative, to the effect that:
(i) the Bond Trustee is a banking corporation
validly existing under the laws of the State of New York;
(ii) the Bond Trustee has the requisite power
and authority to execute and deliver the Indenture and the
Intercreditor Agreement, and each of the Indenture and the
Intercreditor Agreement has been duly executed and delivered
by the Bond Trustee, and constitutes a legal, valid and
binding obligation of the Bond Trustee enforceable against
the Bond Trustee in accordance with its terms (subject, as
to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws
or equitable principles affecting creditors' rights
generally from time to time in effect); and
(iii) the Securitization Bonds have been duly
authenticated by the Bond Trustee.
(g) Representative shall have received from Orrick,
Herrington & Sutcliffe LLP, counsel for the Underwriters, such
opinion or opinions, dated the Time of Purchase, with respect to
the issuance and sale of the Securitization Bonds, the Indenture,
the Registration Statement, the Prospectus (together with any
supplement thereto) and other related matters as the
Representative may reasonably require, and the Company, the Seller
and the Issuer shall have furnished to such counsel such documents
as they request for the purpose of enabling them to pass upon such
matters.
(h) The Representative and the Bond Trustee shall have
received a certificate of the Issuer, signed by the President and
the principal financial or accounting officer of the Issuer, dated
the Time of Purchase, to the effect that the signers of such
certificate have carefully examined the Registration Statement,
the Prospectus, any supplement to the Prospectus, the Indenture
and this Agreement and that:
(i) the representations and warranties of the
Issuer in this Agreement and in the Indenture are true and
correct in all material respects on and as of the Time of
Purchase with the same effect as if made on the Time of
Purchase, and the Issuer has complied with all the
agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Time of
Purchase;
(ii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the
Issuer's best knowledge, threatened; and
(iii) since the dates as of which information is
given in the Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in (A)
the condition (financial or other), prospects, earnings,
business or properties of the Issuer, whether or not arising
from transactions in the ordinary course of business, or (B)
the Securitization Property, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement
thereto).
(i) The Representative and the Bond Trustee shall have
received a certificate of the Company, signed by a Vice President
and the Treasurer of the Company, dated the Time of Purchase, to
the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any
supplement to the Prospectus, the Sale Agreement, the Servicing
Agreement and this Agreement and that:
(i) the representations and warranties of the
Company in this Agreement, the Sale Agreement and the
Servicing Agreement are true and correct in all material
respects on and as of the Time of Purchase with the same
effect as if made on the Time of Purchase, and the Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Time of Purchase;
(ii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the
Company's best knowledge, threatened; and
(iii) since the dates as of which information is
given in the Prospectus (exclusive of any supplement
thereto), there has been no material adverse change in (A)
the condition (financial or other), prospects, earnings,
business or properties of the Company and its subsidiaries
taken as a whole, whether or not arising from transactions
in the ordinary course of business, or (B) the
Securitization Property, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement
thereto).
(j) On the date of the Time of Purchase, the Representative
shall have received from Arthur Anderson LLP:
(i) a letter in form and substance satisfactory
to the Representative, dated as of such date, confirming
that they are independent public accountants within the
meaning of the Act and the applicable published rules and
regulations of the Commission thereunder and stating that
they have audited the financial statement of the Issuer
included in the Registration Statement and the Prospectus as
set forth in their report included therein and stating in
effect that they have performed certain specified procedures
as a result of which they determined that certain
information of an accounting, financial or statistical
nature (which is limited to accounting, financial or
statistical information derived from the general accounting
records of the Company and its subsidiaries) set forth in
the Registration Statement and the Prospectus agrees with
the accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation; and
(ii) the opinion or certificate, dated the Time
of Purchase, in form and substance satisfactory to the
Representative, satisfying the requirements of Section
2.10(b)(vi) of the Indenture.
References to the Prospectus in this paragraph (j) include any
supplement thereto at the date of the letter.
In addition, on the date execution of this Agreement, Arthur
Anderson LLP shall have furnished to the Representative a letter or
letters, dated the date of execution of this Agreement, in form and
substance satisfactory to the Representative, to the effect set forth
above.
(k) The Representative and the Issuer shall have received on
the Time of Purchase (A) an opinion letter or letters of Skadden,
Arps, Slate Meagher & Flom LLP, outside counsel to the Company and
the Issuer, dated the Time of Purchase, in form and substance
reasonably satisfactory to the Representative that, in the event
of the bankruptcy of the Company, (i) the transfer of the right,
title and interest of the Company in, to and under the
Securitization Property would be treated as a true sale to the
Issuer, such that (a) section 362(a) of the United States
Bankruptcy Code would not apply to prevent the Company in its
capacity as Servicer from paying collections of the Securitization
Charge to the Issuer and its assigns as provided in the Servicing
Agreement, and (b) the Securitization Property or collections of
the Securitization Charge imposed on account of Securitization
Property transferred by the Company to the Issuer would not become
property of the Company's bankruptcy estate under section
541(a)(1) or 541(a)(6) of the United States Bankruptcy Code, and
(ii) a creditor or trustee of the Company (or the Company as
debtor in possession) would not have valid grounds to have a court
disregard the limited liability company form of the Issuer so as
to cause a substantive consolidation of the assets and liabilities
of the Issuer with the assets and liabilities of the Company in a
manner prejudicial to the holders of Securitization Bonds; and (B)
an opinion letter of Miller, Canfield, Paddock and Stone, P.L.C.,
special Michigan counsel for the Issuer, dated the Time of
Purchase, in form and substance reasonably satisfactory to the
Representative, that the transfer of the Securitization Property
pursuant to the Sale Agreement constitutes a true sale to the
Issuer of the Securitization Property.
(l) Subsequent to the date of execution of this Agreement
or, if earlier, the dates as of which information is given in the
Registration Statement (exclusive of any amendment thereof) and
the Prospectus (exclusive of any supplement thereto), there shall
not have been any change, or any development involving a
prospective change, in or affecting either (i) the business,
business prospects, properties or financial condition of the
Company or the Issuer, or (ii) the Securitization Property, the
Securitization Bonds, the Financing Order or the Customer Choice
Act, the effect of which is, in the case of either clause (i) or
(ii), in the judgment of the Representative, so material and
adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the Securitization Bonds as
contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(m) Prior to the Time of Purchase, no stop order suspending
the effectiveness of the Registration Statement shall have been
issued under the Act by the Commission or proceedings therefor
initiated or threatened.
(n) The Company and the Issuer shall have performed such of
their respective obligations under this Agreement as are to be
performed at or before the Time of Purchase by the terms hereof.
(o) The Securitization Bonds shall have been rated in the
highest long-term rating category by each of the Rating Agencies.
(p) Any filing of the Prospectus and any supplements thereto
required pursuant to Rule 424 under the Act shall have been made
in compliance with Rule 424 in the time periods provided by Rule
424.
(q) On or prior to the Time of Purchase, the Issuer shall
have delivered to the Representative evidence, in form and
substance reasonably satisfactory to the Representative, that
appropriate filings have been made in accordance with applicable
law to perfect the grant of a security interest by the Issuer in
the Securitization Property, the other Collateral, and the
proceeds thereof to the Bond Trustee, including any necessary
filings with the Michigan Public Service Commission and the filing
of the UCC financing statements in the offices of the Secretaries
of State of the State of Michigan and the State of Delaware.
(r) On or prior to the Time of Purchase, the Issuer shall
have delivered to the Representative a copy of the Michigan Public
Service Commission's Financing Order relating to the
Securitization Property and the Company shall have furnished to
the Representative copies of the private letter ruling, dated
November 15, 2000 issued by the Internal Revenue Service to the
Company.
(s) On or prior to the Time of Purchase, the Issuer shall
have furnished to the Representative the documents required
pursuant to Section 2.10(b) of the Indenture.
(t) On or prior to the Time of Purchase, the Company shall
have delivered to the Representative evidence, in form and
substance reasonably satisfactory to the Representative, that
appropriate filings have been made in accordance with applicable
law to perfect the grant of a security interest by the Company in
the Securitization Property to the Issuer and to perfect the
transfer of the Securitization Property by the Company to the
Issuer pursuant to the Sale Agreement, including any necessary
filings with the Michigan Public Service Commission and the filing
of the UCC financing statements in the office of the Secretary of
State of the State of Michigan.
(u) On or prior to the Time of Purchase, the Issuer shall
have delivered to the Representative copies of the UCC search
reports referred to in Section 3(c) of this Agreement, along with
copies of all filings referenced in such search reports.
(v) On or prior to the Time of Purchase, the Issuer shall
have delivered to the Representative copies of (i) the RPA's (as
defined in the Intercreditor Agreement) as amended to reflect the
provisions specified in Exhibit A to the Intercreditor Agreement
and (ii) all filed amendments to UCC financing statements
necessary to reflect such amendments to the RPA's.
(w) Prior to the Time of Purchase, the Issuer and the
Company shall have furnished to the Representative such further
information,
certificates, opinions and documents as the Representative may
reasonably request, including any documents provided to the Rating
Agencies.
If any of the conditions specified in this Section 3 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representative and
counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the
Time of Purchase by the Representative. Notice of such cancellation shall
be given to the Issuer in writing or by telephone or telegraph confirmed in
writing.
The documents required to be delivered by this Section 3 shall be
delivered at the offices of Skadden, Arps, Slate, Meagher & Flom, LLP in
New York City on the Time of Purchase.
4. Conditions of the Issuer's Obligations: The obligation of the Issuer
hereunder to sell the Securitization Bonds are subject to the satisfaction of
the condition set forth in Section 3(m).
5. Certain Covenants of the Issuer: In further consideration of the
agreements of the Underwriters herein contained, the Issuer covenants as
follows:
(a) To use its best efforts to cause any post-effective
amendments to the Registration Statement to become effective as
promptly as possible. During the time when a Prospectus is
required to be delivered under the Act, the Issuer will comply so
far as it is able with all requirements imposed upon it by the Act
and the rules and regulations of the Commission to the extent
necessary to permit the continuance of sales of or dealings in the
Securitization Bonds in accordance with the provisions hereof and
of the Prospectus.
(b) To deliver to the Representative a conformed copy of the
Registration Statement and any amendments thereto (including all
exhibits thereto) and full and complete sets of all comments of
the Commission or its staff and all responses thereto with respect
to the Registration Statement and any amendments thereto, and to
furnish to the Representative, for each of the Underwriters,
conformed copies of the Registration Statement and any amendments
thereto, without exhibits.
(c) As soon as the Issuer is advised thereof, to advise the
Representative and confirm the advice in writing of: (i) the
effectiveness of any amendment to the Registration Statement, (ii)
any request made by the Commission for amendments to the
Registration Statement, the Preliminary Prospectus or Prospectus
or for additional information with respect thereto, (iii) when the
Prospectus, the Preliminary Prospectus, and any supplement
thereto, shall have been filed with the Commission pursuant to
Rule 424(b), (iv) the suspension of qualification of the
Securitization Bonds for sale under Blue Sky or state securities
laws, and (v) the entry of a stop order suspending the
effectiveness of the Registration Statement or of the initiation
or threat or any proceedings for that purpose. The Issuer will use
its best efforts to prevent the issuance of any such stop order
and, if issued, to make every reasonable effort to obtain the
lifting or removal thereof.
(d) To deliver to the Underwriters, without charge, as soon
as practicable, and from time to time during such period of time
as they are required by law to deliver a prospectus, as many
copies of the Preliminary Prospectus and the Prospectus (as
supplemented or amended if the Issuer shall have made any
supplements or amendments thereto) as the Representative may
reasonably request; and in case any Underwriter is required to
deliver a prospectus after the expiration of nine months after the
date of the Prospectus, to furnish to the Representative, upon
request, at the expense of such Underwriter, a reasonable quantity
of a supplemental prospectus or of supplements to the Prospectus
complying with Section 10(a)(3) of the Act. The Issuer shall
furnish or cause to be furnished to the Representative copies of
all reports on Form SR required by Rule 463 under the Act. The
Issuer will pay the expenses of printing or other production of
all documents specifically relating to the offering of the
Securitization Bonds under the Act.
(e) For such period of time after the date of the Prospectus
as the Underwriters are required by law to deliver a prospectus in
respect of the Securitization Bonds, if any event shall have
occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein,
in light of the circumstances when the Prospectus is delivered to
a purchaser, not misleading, or if it becomes necessary to amend
or supplement the Prospectus to comply with law, to forthwith
prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus and deliver to the Underwriters,
without charge, such number of copies thereof as may be reasonably
requested.
(f) To use its best efforts to qualify the Securitization
Bonds for offer and sale under the securities or Blue Sky laws of
such jurisdictions as the Representative may designate and to pay
(or cause to be paid), or reimburse (or cause to be reimbursed)
the Underwriters and their counsel for, reasonable filing fees and
expenses in connection therewith (including the reasonable fees
and disbursements of counsel to the Underwriters and filing fees
and expenses paid and incurred prior to the date hereof),
provided, however, that the Issuer shall not be required to
qualify to do business as a foreign corporation or as a securities
dealer or to file a general consent to service of process or to
file annual reports or to comply with any other requirements
reasonably deemed by the Issuer to be unduly burdensome.
(g) To pay all expenses, fees and taxes (other than transfer
taxes on sales by the respective Underwriters) in connection with
the issuance and delivery of the Securitization Bonds (including
the reasonable fees and disbursements of counsel to the
Underwriters).
(h) Prior to the termination of the offering of the
Securitization Bonds, to not file any amendment to the
Registration Statement or supplement to the Prospectus (including
the Basic Prospectus) unless the Issuer has furnished the
Representative and counsel to the Underwriters with a copy for
their review and comment a reasonable time prior to filing and has
reasonably considered any comments of the Representative, or any
such amendment or supplement to which such counsel shall
reasonably object on legal grounds in writing, after consultation
with the Representative. Subject to the foregoing sentence, the
Issuer will cause the Prospectus, properly completed, and any
supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the
Representative of such timely filing.
(i) So long as any of the Securitization Bonds are
outstanding, to furnish to the Representative (A) as soon as
available, a copy of each report filed with the Commission under
the Exchange Act, or mailed to Securitization Bondholders, (B) a
copy of any filings with the Michigan Public Service Commission or
any other governmental agency or instrumentality relating to the
Securitization Bonds, and (C) from time to time, any information
concerning the Company or the Issuer, as the Representative may
reasonably request.
(j) So long as may be required by law for the distribution
of the Securitization Bonds by the Underwriters or by any dealers
that participate in the distribution thereof, to comply with all
requirements under the Exchange Act relating to the timely filing
with the Commission of the Issuer's reports pursuant to Section 13
of the Exchange Act.
(k) To make generally available to the Securitization
Bondholders, as soon as practicable, an "earning statement" (which
need not be audited by independent public accountants) covering a
twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months
thereafter, which shall comply in all material respects with and
satisfy the provisions of Section 11(a) of the Act and Rule 158
under the Act.
(l) To the extent, if any, that any rating necessary to
satisfy the conditions set forth in Section 3 of this Agreement is
conditioned upon the furnishing of documents or the taking of
other actions by the Issuer on or after the Time of Purchase, to
furnish such documents and take such other actions as are
reasonably required.
(m) To file with the Commission a report on Form 8-K setting
forth all Computational Materials (as such term is defined in
Section 14) provided to the Issuer by an Underwriter and
identified by it as such within the time period allotted for such
filing pursuant to the No-Action Letters (as defined in Section
14); provided, however, that prior to any filing of the
Computational Materials by the Issuer, such Underwriter must
comply with its obligations pursuant to Section 14 and the Issuer
must receive a letter from Arthur Anderson LLP, certified public
accountants, satisfactory in form and substance to the Issuer and
such Underwriter, to the effect that such accountants have
performed specified procedures, all of which have been agreed to
by the Issuer and such Underwriter, as a result of which they have
determined that the information included in the Computational
Materials provided by such Underwriter to the Issuer for filing on
Form 8-K pursuant to Section 14 and this subsection (m), and which
the accountants have examined in accordance with such agreed upon
procedures, is accurate except as to such matters that are not
deemed by the Issuer and such Underwriter to be material. The
Issuer shall file any corrected Computational Materials described
in Section 14(a)(iii) as soon as practicable following receipt
thereof.
6. Certain Covenants of the Company: In further consideration of the
agreements of the Underwriters herein contained, the Company covenants as
follows:
(a) To use its best efforts to cause any post-effective
amendments to the Registration Statement to become effective as
promptly as possible. The Company will use its best efforts to
prevent the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) So long as any of the Securitization Bonds are
outstanding and the Company is the Servicer, to furnish to the
Representative (A) as soon as available, a copy of each report
filed by the Servicer or the Company with the Commission under the
Exchange Act, or mailed by the Servicer or the Company to
Securitization Bondholders, (B) a copy of any filings by the
Servicer or the Company with the Michigan Public Service
Commission or any other governmental agency or instrumentality
relating to the Securitization Bonds, and (C) from time to time,
any information concerning the Company and the Issuer as the
Representative may reasonably request.
(c) To the extent, if any, that any rating necessary to
satisfy the conditions set forth in Section 3 of this Agreement is
conditioned upon the furnishing of documents or the taking of
other actions by the Company on or after the Time of Purchase, to
furnish such documents and take such other actions as are
reasonably required.
7. Representations and Warranties of the Company: The Company represents
and warrants to, and agrees with, each of the Underwriters that, as of the
date hereof and as of the Time of Purchase:
(a) The Registration Statement has become effective under
the Act; a true and correct copy of the Registration Statement in
the form in which it became effective has been delivered to the
Representative and to the Representative for each of the
Underwriters (except that copies delivered for the Underwriters
excluded exhibits to such Registration Statement); any filing of
the Prospectus and any supplements thereto required pursuant to
Rule 424(b) has been or will be made in the manner and within the
time period required by Rule 424(b); no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purposes are pending before or, to the
knowledge of the Company, threatened by the Commission. On the
effective date of the Registration Statement, the Registration
Statement and the Basic Prospectus complied, or were deemed to
have complied, and on its respective issue date, each preliminary
prospectus filed pursuant to Rule 424(b) complied, and the Basic
Prospectus complied, and on its issue date, the Prospectus will
comply, or will be deemed to comply, in all material respects with
the applicable provisions of the Act, the Trust Indenture Act and
the published rules and regulations of the Commission; on the
effective date of the Registration Statement and at the Time of
Purchase the Indenture did or will comply in all material respects
with the requirements of the Trust Indenture Act and the rules
thereunder; none of the Registration Statement, the Basic
Prospectus, or any other preliminary prospectus, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended
or supplemented, if applicable, as of the Time of Purchase, will
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the Company makes no warranty or
representation to any Underwriter with respect to any statements
or omissions made therein in reliance upon and in conformity with
information furnished in writing to the Company or the Issuer by,
or through the Representative on behalf of, any Underwriter
expressly for use therein, or to any statements in or omissions
from that part of the Registration Statement that shall constitute
the Statement of Eligibility and Qualification under the Trust
Indenture Act of the Bond Trustee under the Indenture;
(b) The documents incorporated by reference in the
Registration Statement, any preliminary prospectus, the Basic
Prospectus and the Prospectus, when they were filed (or, if an
amendment with respect to any such document was filed, when such
amendment was filed) with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder,
and any further documents so filed and incorporated by reference
will, when they are filed with the Commission, conform in all
material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder;
none of such documents, when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment
was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and no
such further document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading;
(c) the Company has been duly incorporated and is validly
existing as a corporation in good standing under laws of the State
of Michigan, with power and authority (corporate and other) to own
its properties and conduct its businesses as described in the
Registration Statement and the Prospectus, and is duly qualified
to do business in all jurisdictions (and is in good standing under
the laws of all such jurisdictions) to the extent that such
qualification and good standing is or shall be necessary to
protect the validity and enforceability of this Agreement, the
Servicing Agreement, the Sale Agreement, the Administration
Agreement and each other instrument or agreement necessary or
appropriate to the proper administration of this Agreement and the
transactions contemplated hereby;
(d) this Agreement, the Servicing Agreement, the Sale
Agreement, the Administration Agreement and each of the other
Basic Documents to which the Company is a party have been duly
authorized, executed and delivered, and constitute valid and
legally binding obligations of the Company enforceable according
to their terms;
(e) there is no pending or threatened action, suit or
proceeding before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its
subsidiaries (other than the Issuer) of a character required to be
disclosed in the Registration Statement that is not adequately
disclosed in the Prospectus, and there is no franchise, contract
or other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an
exhibit, that is not described or filed as required;
(f) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated herein and by the
Basic Documents, except such as have been obtained under the
Michigan law and such as may be required under the blue sky laws
of any jurisdiction in connection with the purchase and
distribution of the Securitization Bonds by the Underwriters and
such other approvals as have been obtained;
(g) neither the execution and delivery of this Agreement,
the Servicing Agreement, the Sale Agreement, the Administration
Agreement, and the other Basic Documents nor the consummation of
the transactions contemplated thereby nor the fulfillment of the
terms thereof by the Company, will (A) conflict with, result in
any breach of any of the terms or provisions of, or constitute
(with or without notice or lapse of time) a default under the
articles of incorporation, bylaws or other organizational
documents of the Company, or conflict with or breach any of the
terms or provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, material agreement
or other material instrument to which the Company is a party or by
which the Company is bound, (B) result in the creation or
imposition of any lien upon any properties of the Company pursuant
to the terms of any such indenture, agreement or other instrument
(other than as contemplated by the Indenture and the Customer
Choice Act, or (C) violate any law or any order, rule or
regulation applicable to the Company of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Company
or any of its properties;
(h) except as described in the Registration Statement and
the Prospectus, the Company holds all franchises, certificates of
public convenience, licenses and permits necessary to carry on the
utility business in which it is engaged;
(i) there has not been any material and adverse change in
(A) the condition (financial or other), prospects, earnings,
business or properties of the Company, whether or not arising from
transactions in the ordinary course of business, or (B) the
Securitization Property, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto); and
(j) except as set forth in the Basic Prospectus, no event or
condition exists that constitutes, or with the giving of notice or
lapse of time or both would constitute, a default or any breach or
failure to perform by the Company in any material respect under
any indenture, mortgage, loan agreement, lease or other material
agreement or instrument to which the Company is a party or by
which it or any of its properties may be bound.
8. Representations and Warranties of the Issuer: The Issuer represents
and warrants to, and agrees with, each of the Underwriters that, as of the
date hereof and as of the Time of Purchase:
(a) The Registration Statement has become effective under
the Act; a true and correct copy of the Registration Statement in
the form in which it became effective has been delivered to the
Representative and to the Representative for each of the
Underwriters (except that copies delivered for the Underwriters
excluded exhibits to such Registration Statement); any filing of
the Prospectus and any supplements thereto required pursuant to
Rule 424(b) has been or will be made in the manner and within the
time period required by Rule 424(b); no stop order suspending the
effectiveness of the Registration Statement is in effect, and no
proceedings for such purposes are pending before or, to the
knowledge of the Issuer, threatened by the Commission. On the
effective date of the Registration Statement, the Registration
Statement and the Basic Prospectus complied, or were deemed to
have complied, and on its respective issue date, each preliminary
prospectus filed pursuant to Rule 424(b) complied, and the Basic
Prospectus complied, and on its issue date, the Prospectus will
comply, or will be deemed to comply, in all material respects with
the applicable provisions of the Act, the Trust Indenture Act and
the published rules and regulations of the Commission; on the
effective date of the Registration Statement and at the Time of
Purchase the Indenture did or will comply in all material respects
with the requirements of the Trust Indenture Act and the rules
thereunder; none of the Registration Statement, the Basic
Prospectus, or any other preliminary prospectus, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended
or supplemented, if applicable, as of the Time of Purchase, will
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the Issuer makes no warranty or
representation to any Underwriter with respect to any statements
or omissions made therein in reliance upon and in conformity with
information furnished in writing to the Company or the Issuer by,
or through the Representative on behalf of, any Underwriter
expressly for use therein, or to any statements in or omissions
from that part of the Registration Statement that shall constitute
the Statement of Eligibility and Qualification under the Trust
Indenture Act of the Bond Trustee under the Indenture;
(b) The documents incorporated by reference in the
Registration Statement, any preliminary prospectus, the Basic
Prospectus and the Prospectus, when they were filed (or, if an
amendment with respect to any such document was filed, when such
amendment was filed) with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder,
and any further documents so filed and incorporated by reference
will, when they are filed with the Commission, conform in all
material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder;
none of such documents, when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment
was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and no
such further document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading;
(c) the Issuer has been duly organized and is validly
existing as a limited liability company in good standing under
laws of the State of Delaware, with power and authority (corporate
and other) to own its properties and conduct its businesses as
described in the Registration Statement and the Prospectus, and is
duly qualified to do business in all jurisdictions (and is in good
standing under the laws of all such jurisdictions) to the extent
that such qualification and good standing is or shall be necessary
to protect the validity and enforceability of this Agreement, the
Sale Agreement, the Indenture, the Servicing Agreement, the
Administration Agreement and each other instrument or agreement
necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby;
(d) this Agreement, the Servicing Agreement, the Indenture,
the Administration Agreement, the Sale Agreement and each of the
other Basic Documents to which the Issuer is a party have been
duly authorized, executed and delivered, and constitute valid and
legally binding obligations of the Issuer enforceable according to
their terms;
(e) there is no pending or threatened action, suit or
proceeding before any court or governmental agency, authority or
body or any arbitrator involving the Issuer or any of its
subsidiaries of a character required to be disclosed in the
Registration Statement that is not adequately disclosed in the
Prospectus, and there is no franchise, contract or other document
of a character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit, that is not
described or filed as required;
(f) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated herein and by the
Basic Documents, except such as have been obtained under the
Michigan law and such as may be required under the blue sky laws
of any jurisdiction in connection with the purchase and
distribution of the Securitization Bonds by the Underwriters and
such other approvals as have been obtained;
(g) neither the execution and delivery of this Agreement,
the Servicing Agreement, the Sale Agreement, the Indenture, the
Administration Agreement and the other Basic Documents nor the
consummation of the transactions contemplated thereby nor the
fulfillment of the terms thereof by the Issuer, will (A) conflict
with, result in any breach of any of the terms or provisions of,
or constitute (with or without notice or lapse of time) a default
under the certificate of formation, operating agreement or other
organizational documents of the Issuer, or conflict with or breach
any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, material
agreement or other material instrument to which the Issuer is a
party or by which the Issuer is bound, (B) result in the creation
or imposition of any lien upon any properties of the Issuer
pursuant to the terms of any such indenture, agreement or other
instrument (other than as contemplated by the Indenture and the
Customer Choice Act, or (C) violate any law or any order, rule or
regulation applicable to the Issuer of any court or of any federal
or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Issuer
or any of its properties;
(h) except as described in the Registration Statement and
the Prospectus, the Issuer holds all franchises, certificates of
public convenience, licenses and permits necessary to carry on the
utility business in which it is engaged;
(i) there has not been any material and adverse change in
(A) the condition (financial or other), prospects, earnings,
business or properties of the Issuer, whether or not arising from
transactions in the ordinary course of business, or (B) the
Securitization Property, except as set forth in or contemplated in
the Prospectus (exclusive of any supplement thereto); and
(j) except as set forth in the Basic Prospectus, no event or
condition exists that constitutes, or with the giving of notice or
lapse of time or both would constitute, a default or any breach or
failure to perform by the Issuer in any material respect under any
indenture, mortgage, loan agreement, lease or other material
agreement or instrument to which the Issuer is a party or by which
it or any of its properties may be bound.
9. Representation and Warranties of Underwriters:
---------------------------------------------
Each Underwriter warrants and represents that the information, if
any, furnished in writing to the Company through the
Representative expressly for use in the Registration Statement and
Prospectus is correct in all material respects as to such
Underwriter. Each Underwriter, in addition to other information
furnished to the Company for use in the Registration Statement and
Prospectus, herewith furnishes to the Company for use in the
Registration Statement and Prospectus, the information stated
herein with regard to the public offering, if any, by such
Underwriter and represents and warrants that such information is
correct in all material respects as to such Underwriter.
10. Indemnification:
---------------
(a) Each of the Company and the Issuer agrees jointly and
severally, to the extent permitted by law, to indemnify
and hold harmless each Underwriter, the directors,
officers, members, employees and agents of each
Underwriter, and each person, if any, who controls any
such Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any and
all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject
under the Act or otherwise, and to reimburse the
Underwriters and such persons, if any, for any legal or
other expenses incurred by them in connection with
defending any action, suit or proceeding (including
governmental investigations) as provided in Section 10(c)
hereof, insofar as such losses, claims, damages,
liabilities or actions, suits or proceedings (including
governmental investigations) arise out of or are based
upon any untrue statement or alleged untrue statement of
a material fact contained in (i) the Securitization
Property Information and the Computational Materials
delivered to investors by any Underwriter to the extent
such loss, claim, damage or liability arises from the
Securitization Property Information or (ii) the
Registration Statement, the Basic Prospectus, any
Preliminary Prospectus, the Prospectus, or in any
amendment or supplement thereto or arise out of or are
based upon any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any
such untrue statement or alleged untrue statement or
omission or alleged omission which was made in such
Registration Statement, Basic Prospectus, Preliminary
Prospectus or Prospectus, or in the Prospectus as so
amended or supplemented, in reliance upon and in
conformity with information furnished in writing to the
Company by, or through the Representative on behalf of,
any Underwriter expressly for use therein or with
statements in or omissions from that part of the
Registration Statement that shall constitute the
Statement of Eligibility and Qualification under the
Trust Indenture Act of the Bond Trustee under the
Indenture, and except that this indemnity shall not inure
to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses,
claims, damages, liabilities or actions, suits or
proceedings arising from the sale of the Securitization
Bonds to any person if a copy of the Prospectus, as the
same may then be supplemented or amended (excluding,
however, any document then incorporated or deemed
incorporated therein by reference), was not sent or given
by or on behalf of such Underwriter to such person (i)
with or prior to the written confirmation of sale
involved or (ii) promptly after being provided to the
Representative by the Company or the Issuer after such
written confirmation, relating to an event occurring
prior to the payment for and delivery to such person of
the Securitization Bonds involved in such sale, and the
omission or alleged omission or untrue statement or
alleged untrue statement was corrected in the Prospectus
as supplemented or amended at such time. As used herein,
the term "Securitization Property Information" means
information, whether in written or electronic format or
otherwise, regarding the Securitization Property provided
to the Underwriters by or on behalf of the Company or the
Issuer.
The Company's indemnity agreement contained in this
Section 10(a), and the covenants, representations and warranties of the
Company contained in this Agreement, shall remain in full force and effect
regardless of any investigation made by or on behalf of any person, and
shall survive the delivery of and payment for the Securitization Bonds
hereunder, and the indemnity agreement contained in this Section 10(a)
shall survive any termination of this Agreement. The liabilities of the
Company in this Section 10(a) are in addition to any other liabilities of
the Company under this Agreement or otherwise.
(b) Each Underwriter agrees, severally and not jointly, to
the extent permitted by law, to indemnify, hold harmless
and reimburse the Company and the Issuer, the directors,
officers, members, managers, employees and agents of the
Company and the Issuer, and each person, if any, who
controls the Company or the Issuer within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act,
and such of the officers of the Issuer as shall have
signed the Registration Statement or any amendment
thereof, to the same extent and upon the same terms as
the indemnity agreement of the Company and the Issuer set
forth in Section 10(a) hereof, but only with respect to
alleged untrue statements or omissions made in the
Registration Statement, the Basic Prospectus or in the
Prospectus, as amended or supplemented (if applicable),
in reliance upon and in conformity with information
furnished in writing to the Company or the Issuer by such
Underwriter expressly for use therein.
The indemnity agreement on the part of each Underwriter
contained in this Section 10(b) and the representations and warranties of
such Underwriter contained in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any other person, and shall survive the delivery of and payment for the
Securitization Bonds hereunder, and the indemnity agreement contained in
this Section 10(b) shall survive any termination of this Agreement. The
liabilities of each Underwriter in this Section 10(b) are in addition to
any other liabilities of such Underwriter under this Agreement or
otherwise.
(c) If a claim is made or an action, suit or proceeding
(including governmental investigations) is commenced or
threatened against any person as to which indemnity may
be sought under Section 10(a) or 10(b), such person (the
"Indemnified Person") shall notify the person against
whom such indemnity may be sought (the "Indemnifying
Person") promptly after any assertion of such claim
threatening to institute an action, suit or proceeding or
if such an action, suit or proceeding is commenced
against such Indemnified Person, promptly after such
Indemnified Person shall have been served with a summons
or other first legal process, giving information as to
the nature and basis of the claim. Failure to so notify
the Indemnifying Person shall not, however, relieve the
Indemnifying Person from any liability which it may have
on account of the indemnity under Section 10(a) or 10(b)
if the Indemnifying Person has not been prejudiced in any
material respect by such failure. Subject to the
immediately succeeding sentence, the Indemnifying Person
shall assume the defense of any such litigation or
proceeding, including the employment of counsel and the
payment of all expenses, with such counsel being
designated, subject to the immediately succeeding
sentence, in writing by the Representative in the case of
parties indemnified pursuant to Section 10(b) and by the
Company and the Issuer in the case of parties indemnified
pursuant to Section 10(a); provided, however, that such
counsel shall be reasonably satisfactory to the
Indemnified Person. Any Indemnified Person shall have the
right to participate in such litigation or proceeding and
to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any
such proceeding (including any impleaded parties) include
(x) the Indemnifying Person and (y) the Indemnified
Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the
same counsel would be inappropriate due to actual or
likely conflicts of interest between them, in either of
which cases the reasonable fees and expenses of counsel
(including disbursements) for such Indemnified Person
shall be reimbursed by the Indemnifying Person to the
Indemnified Person. If there is a conflict as described
in clause (ii) above, and the Indemnified Persons have
participated in the litigation or proceeding utilizing
separate counsel whose fees and expenses have been
reimbursed by the Indemnifying Person and the Indemnified
Persons, or any of them, are found to be solely liable,
such Indemnified Persons shall repay to the Indemnifying
Person such fees and expenses of such separate counsel as
the Indemnifying Person shall have reimbursed. It is
understood that the Indemnifying Person shall not, in
connection with any litigation or proceeding or related
litigation or proceedings in the same jurisdiction as to
which the Indemnified Persons are entitled to such
separate representation, be liable under this Agreement
for the reasonable fees and out-of-pocket expenses of
more than one separate firm (together with not more than
one appropriate local counsel) for all such Indemnified
Persons. Subject to the next paragraph, all such fees and
expenses shall be reimbursed by payment to the
Indemnified Persons of such reasonable fees and expenses
of counsel promptly after payment thereof by the
Indemnified Persons. In furtherance of the requirement
above that fees and expenses of any separate counsel for
the Indemnified Persons shall be reasonable, the
Representative, the Issuer and the Company agree that the
Indemnifying Person's obligations to pay such fees and
expenses shall be conditioned upon the following:
(1) in case separate counsel is proposed to be
retained by the Indemnified Persons pursuant to
clause (ii) of the preceding paragraph, the
Indemnified Persons shall in good faith fully
consult with the Indemnifying Person in advance
as to the selection of such counsel;
(2) reimbursable fees and expenses of such separate
counsel shall be detailed and supported in a
manner reasonably acceptable to the Indemnifying
Person (but nothing herein shall be deemed to
require the furnishing to the Indemnifying
Person of any information, including without
limitation, computer print-outs of lawyers'
daily time entries, to the extent that, in the
judgment of such counsel, furnishing such
information might reasonably be expected to
result in a waiver of any attorney-client
privilege); and
(3) the Issuer, the Company, the Representative and
the Underwriters shall cooperate in monitoring
and controlling the fees and expenses of
separate counsel for Indemnified Persons for
which the Indemnifying Person is liable
hereunder, and the Indemnified Person shall use
every reasonable effort to cause such separate
counsel to minimize the duplication of
activities as between themselves and counsel to
the Indemnifying Person.
The Indemnifying Person shall not be liable for any
settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Person, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person
agrees, subject to the provisions of this Section 10, to indemnify the
Indemnified Person from and against any loss, damage, liability or expenses
by reason of such settlement or judgment. The Indemnifying Person shall
not, without the prior written consent of the Indemnified Persons, effect
any settlement of any pending or threatened litigation, proceeding or claim
in respect of which indemnity has been properly sought by the Indemnified
Persons hereunder, unless such settlement includes an unconditional release
by the claimant of all Indemnified Persons from all liability with respect
to claims which are the subject matter of such litigation, proceeding or
claim.
11. Contribution: If the indemnification provided for in Section 10
above is unavailable to or insufficient to hold harmless an Indemnified
Person under such Section in respect of any losses, claims, damages or
liabilities (or actions, suits or proceedings (including governmental
investigations) in respect thereof) referred to therein, then each
Indemnifying Person under Section 10 shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the
Indemnifying Person on the one hand and the Indemnified Person on the other
from the offering of the Securitization Bonds. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law, then each Indemnifying Person shall contribute to such
amount paid or payable by such Indemnified Person in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of each Indemnifying Person, if any, on the one hand and the
Indemnified Person on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions, suits or proceedings (including governmental investigations) in
respect thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Issuer on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Issuer and the total underwriting discounts and
commission received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus, bear to the aggregate public
offering price of the Securitization Bonds. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Issuer on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company,
the Issuer and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section
11. The amount paid or payable by an Indemnified Person as a result of the
losses, claims, damages or liabilities (or actions, suits or proceedings
(including governmental proceedings) in respect thereof) referred to above
in this Section 11 shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Person in connection with
investigating or defending any such action, suits or proceedings (including
governmental proceedings) or claim, provided that the provisions of Section
10 have been complied with (in all material respects) in respect of any
separate counsel for such Indemnified Person. Notwithstanding the
provisions of this Section 11 and except as may be provided in any
agreement among underwriters relating to the offering of the Securitization
Bonds, no Underwriter shall be required to contribute any amount in excess
of the underwriting discount or commission applicable to the Securitization
Bonds purchased by such Underwriter hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
Section 11 to contribute are several in proportion to their respective
underwriting obligations and not joint.
The agreement with respect to contribution contained in
this Section 11 shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any Underwriter, and
shall survive delivery of and payment for the Securitization Bonds
hereunder and any termination of this Agreement.
For purposes of this Section 11, each person who controls
an Underwriter within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who
controls the Issuer or the Company within the meaning of either the Act or
the Exchange Act, each officer of the Issuer or the Company who shall have
signed the Registration Statement and each director of the Issuer or the
Company shall have the same rights to contribution as the Issuer or the
Company, subject in each case to the applicable terms and conditions of
this Section 11.
12. Default by an Underwriter: If any one or more Underwriters shall
fail to purchase and pay for any of the Securitization Bonds agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the nondefaulting Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the amount of Securitization Bonds set forth opposite their names in
Schedule II hereto bears to the aggregate amount of Securitization Bonds
set forth opposite the names of all the remaining Underwriters) the
Securitization Bonds which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that
the aggregate amount of Securitization Bonds which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10%
of the aggregate amount of Securitization Bonds set forth in Schedule II
hereto, the nondefaulting Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the
Securitization Bonds, and if such nondefaulting Underwriters do not
purchase all the Securitization Bonds, this Agreement will terminate
without liability to any nondefaulting Underwriter, the Issuer or the
Company. In the event of a default by any Underwriter as set forth in this
Section 12, the Time of Purchase shall be postponed for such period, not
exceeding three days, as the Representative shall determine in order that
the required changes in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Underwriter of its liability,
if any, to the Issuer and the Company and any nondefaulting Underwriter for
damages occasioned by its default hereunder.
13. Termination of Agreement: This Agreement may be terminated at any
time prior to the Time of Purchase by the Representative in the absolute
discretion of the Representative, if, prior to such time (A) there shall
have occurred any change, or any development involving a prospective
change, in or affecting either (x) the business, business prospects,
properties or financial condition of the Issuer or the Company (as most
recently disclosed in documents filed with the Commission and publicly
available as of the date and time this Agreement is executed by the
Representative) or (y) the Securitization Property, the Securitization
Bonds, the Financing Order or the Customer Choice Act, the effect of which,
in the case of either clause (x) or (y), in the judgment of the
Representative, materially impairs the investment quality of the
Securitization Bonds or makes it impractical or inadvisable to market the
Securitization Bonds, or (B) (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the National Association of Securities Dealers,
Inc., the Chicago Board of Options Exchange or the Chicago Mercantile
Exchange, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities shall have been
declared by federal, New York State or Michigan State authorities or (iv)
the United States shall have become engaged in hostilities, there shall
have been an escalation of hostilities involving the United States, there
shall have been a declaration by the United States of a national emergency
or war or there shall have occurred any change in financial markets or any
calamity or crisis that, in the judgment of the Representative, is material
and adverse, and, in the case of any of the events specified in clauses
(B)(i) through (iv), such event singly or together with any other such
event makes it, in the judgment of the Representative, impracticable or
inadvisable to proceed with the offering or delivery of the Securitization
Bonds as contemplated by the Prospectus (exclusive of any supplement
thereto).
If the Representative elects to terminate this Agreement,
as provided in this Section 13, the Representative will promptly notify the
Company and each other Underwriter by telephone or telecopy, confirmed by
letter.
Notwithstanding the foregoing, the provisions of Sections
5(g), 10 and 11 shall survive any termination of this Agreement.
14. Computational Materials:
-----------------------
(a) In connection with the offering of the Securitization
Bonds, each Underwriter may prepare and provide to prospective
investors items similar to computational materials ("Computational
Materials") as defined in the no-action letter of May 20, 1994
issued by the Commission to Kidder, Peabody Acceptance Corporation
I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset
Corporation, as made applicable to other issuers and underwriters
by the Commission in response to the request of the Public
Securities Association dated May 24, 1994, as well as the
no-action letter of February 17, 1995 issued by the Commission to
the Public Securities Association (collectively, the "No-Action
Letters"), subject to the following conditions:
(i) All Computational Materials provided to
prospective investors that are required to be filed pursuant
to the No-Action Letters shall bear a legend substantially
in the form attached hereto as Exhibit A. The Issuer shall
have the right to require additional specific legends or
notations to appear on any Computational Materials, the
right to require changes regarding the use of terminology
and the right to determine the types of information
appearing therein. Notwithstanding the foregoing, this
subsection (i) will be satisfied if all Computational
Materials referred to herein bear a legend in a form
previously approved in writing by the Issuer.
(ii) Such Underwriter shall provide to the
Issuer, for approval by the Issuer, representative forms of
all Computational Materials at least two business days prior
to their first use. Such Underwriter shall provide to the
Issuer, for filing on Form 8-K as provided in Section 5(m),
copies (in such format as required by the Issuer) of all
Computational Materials that are required to be filed with
the Commission pursuant to the No-Action Letters. The
Underwriter may provide copies of the foregoing in a
consolidated or aggregated form including all information
required to be filed if filing in such format is permitted
by the No-Action Letters. All Computational Materials
described in this subsection (ii) must be provided to the
Issuer not later than 10:00 a.m. New York City time at least
two business days before filing thereof is required pursuant
to the terms of this Agreement. Such Underwriter shall not
provide to any investor or prospective investor in the
Securitization Bonds any Computational Materials on or after
the day on which Computational Materials are required to be
provided to the Issuer pursuant to this paragraph (ii)
(other than copies of Computational Materials previously
submitted to the Issuer in accordance with this paragraph
(ii) for filing pursuant to Section 5(m)), unless such
Computational Materials are preceded or accompanied by the
delivery of a Prospectus to such investor or prospective
investor.
(iii) The Issuer shall not be obligated to file
any Computational Materials that have been determined to
contain any material error or omission, provided that, at
the request of any Underwriter, the Issuer will file
Computational Materials that contain a material error or
omission if clearly marked "SUPERSEDED BY MATERIALS DATED
_________" and accompanied by corrected Computational
Materials that are marked, "MATERIAL PREVIOUSLY DATED
_________, AS CORRECTED." If, within the period during which
a prospectus relating to the Securitization Bonds is
required to be delivered under the Act, any Computational
Materials are determined, in the reasonable judgment of the
Issuer or such Underwriter, to contain a material error or
omission, such Underwriter shall prepare a corrected version
of such Computational Materials, shall circulate such
corrected Computational Materials to all recipients of the
prior versions thereof that either indicated orally to such
Underwriter they would purchase all or any portion of the
Securitization Bonds, or actually purchased all or any
portion thereof, and shall deliver copies of such corrected
Computational Materials (marked "AS CORRECTED") to the
Issuer for filing with the Commission in a subsequent Form
8-K submission (subject to the Issuer's obtaining an
accountant's comfort letter in respect of such corrected
Computational Materials).
(b) Each Underwriter shall be deemed to have represented, as
of the Time of Purchase, that, except for Computational Materials
provided to the Issuer pursuant to subsection (a) above and except
for the Preliminary Prospectus, such Underwriter did not provide
any prospective investors with any information in written or
electronic form in connection with the offering of the
Securitization Bonds that is required to be filed with the
Commission in accordance with the No-Action Letters.
(c) In the event of any delay in the delivery by any
Underwriter to the Issuer of all Computational Materials required
to be delivered in accordance with subsection (a) above, or in the
delivery of the accountant's comfort letter in respect thereof
pursuant to Section 5(m), the Issuer shall have the right to delay
the release of the Prospectus to investors or to any Underwriter,
to delay the Time of Purchase and to take other appropriate
actions, in each case set forth in Section 5(m), to file the
Computational Materials by the time specified therein.
(d) Each Underwriter further represents and warrants that,
if and to the extent it has provided any prospective investors
with any Computational Materials prior to the date hereof in
connection with the offering of the Securitization Bonds, all of
the conditions set forth in clause (a) of this Section 14 have
been satisfied with respect thereto.
(e) Each Underwriter severally agrees that it shall comply
with all applicable laws and regulations in connection with the
use of Computational Materials.
15. Notices: All notices hereunder shall, unless otherwise
expressly provided, be in writing and be delivered at or mailed to the
following addresses or be sent by telecopy as follows: if to the
Underwriters or the Representative, to the Representative at the address or
number, as appropriate, designated in Schedule I hereto, and, if to the
Company, to it at, Consumers Energy Company, 212 W. Michigan Avenue,
Jackson, Michigan 49201, Attention: Thomas McNish, Corporate Secretary; and
if sent to the Issuer, to it at Consumers Funding LLC, 212 W. Michigan
Avenue, Suite M-1029, Jackson, Michigan 49201, Attention: Managers.
16. Parties in Interest: The Agreement herein set forth has been
and is made solely for the benefit of the Underwriters, the Company
(including the directors thereof and such of the officers thereof as shall
have signed the Registration Statement), and the controlling persons, if
any, referred to in Section 10 hereof, and their respective successors,
assigns, executors and administrators, and no other person shall acquire or
have any right under or by virtue of this Agreement.
17. Miscellaneous: All obligations of the Underwriters hereunder
are several and not joint. The term "successors" as used in this Agreement
shall not include any purchaser, as such purchaser, of any of the
Securitization Bonds from any of the respective Underwriters.
18. Governing Law: This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
19. Counterparts: This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
If the foregoing is in accordance with your
understanding, please sign and return to us counterparts hereof, and upon
the acceptance hereof by you, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the
Company.
Very truly yours,
CONSUMERS ENERGY COMPANY
By: /s/ Laura L. Mountcastle
------------------------------------
Name: Laura L. Mountcastle
Title: Vice President and Treasurer
CONSUMERS FUNDING LLC
By: /s/ Laura L. Mountcastle
------------------------------------
Name: Laura L. Mountcastle
Title: President, Chief Executive
Officer, Chief Financial Officer
and Treasurer
Confirmed and accepted as
of the date first written above:
MORGAN STANLEY & CO. INCORPORATED
by: /s/ Gail McDonnell
----------------------------------
Name: Gail McDonnell
Title: Managing Director
for themselves and the other several Underwriters,
if any, named in Schedule I to the foregoing Agreement.
Schedule I:_Representative
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Schedule II: Underwriters
-------------------------
Principal Amount of Securitization Bonds to be Purchased
Morgan Banc One
Stanley & Co. Capital Barclays J.P. Morgan
Loop Capital
Incorporated Markets, Inc. Capital Securities Inc.
Markets, LLC
------------ ------------- -------- ---------------
- -------------
Class A-1
Securitization Bonds $ 15,600,000 $ 3,640,000 $ 3,640,000 $ 2,340,000
$ 780,000
Class A-2
Securitization Bonds 50,400,000 11,760,000 11,760,000 7,560,000
2,520,000
Class A-3
Securitization Bonds 18,600,000 4,340,000 4,340,000
2,790,000 930,000
Class A-4
Securitization Bonds 57,000,000 13,300,000 13,300,000 8,550,000
2,850,000
Class A-5
Securitization Bonds 70,200,000 16,380,000 16,380,000 10,530,000
3,510,000
Class A-6
Securitization Bonds 69,355,200 16,182,880 16,182,880 10,403,280
3,467,760
Total $281,155,200 $65,602,880 $65,602,880 $42,173,280
$14,057,760
Schedule III
Information Regarding the Securitization Bonds
Title, Purchase Price and Description of Securitization Bonds:
Title: Consumers Funding LLC $468,592,000 Securitization Bonds,
Series 2001-1
Principal Amount, Price to Public, Underwriting Discounts and
Commissions, Purchase Price to the Issuer, and Required Ratings:
Total Principal Underwriting
Required
Amount of Price to Discounts and Proceeds to
Ratings
Class Public Commissions the Issuer
(Fitch/Moody's/S&P)
--------------- -------- ------------- -----------
- -------------------
Class A-1
Securitization Bonds $ 26,000,000 99.99590% 0.370% $ 25,902,845
AAA/Aaa/AAA
Class A-2
Securitization Bonds 84,000,000 99.99182% 0.462% 83,605,169
AAA/Aaa/AAA
Class A-3
Securitization Bonds 31,000,000 99.95901% 0.662% 30,782,193
AAA/Aaa/AAA
Class A-4
Securitization Bonds 95,000,000 99.96793% 0.782% 94,226,753
AAA/Aaa/AAA
Class A-5
Securitization Bonds 117,000,000 99.97673% 0.817% 116,017,004
AAA/Aaa/AAA
Class A-6
Securitization Bonds 115,592,000 99.98053% 0.897% 114,532,754
AAA/Aaa/AAA
Total $468,592,000 $465,066,718
EXHIBIT A
---------
This information has been prepared in connection with the issuance of the
securities described herein, and is based on information provided by
Consumers Funding LLC and Consumers Energy Company with respect to the
expected characteristics of the securitization property securing these
securities. The actual characteristics and performance of the
securitization property will differ from the assumptions used in preparing
these materials, which are hypothetical in nature. Changes in the
assumptions may have a material impact on the information set forth in
these materials. No representation is made that any performance or return
indicated herein will be achieved. This information may not be used or
otherwise disseminated in connection with the offer or sale of these or any
other securities, except in connection with the initial offer or sale of
these securities to you to the extent set forth below. NO REPRESENTATION IS
MADE AS TO THE APPROPRIATENESS, USEFULNESS, ACCURACY OR COMPLETENESS OF
THESE MATERIALS OR THE ASSUMPTIONS ON WHICH THEY ARE BASED. The
underwriters disclaim any and all liability relating to this information,
including without limitation any express or implied representations and
warranties for statements contained in, and omissions from, this
information. Additional information is available upon request. These
materials do not constitute an offer to buy or sell or a solicitation of an
offer to buy or sell any security or instrument or to participate in any
particular trading strategy. ANY SUCH OFFER TO BUY OR SELL ANY SECURITY
WOULD BE MADE PURSUANT TO A DEFINITIVE PROSPECTUS AND PROSPECTUS SUPPLEMENT
PREPARED BY THE ISSUER WHICH WOULD CONTAIN MATERIAL INFORMATION NOT
CONTAINED IN THESE MATERIALS. SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT
WILL CONTAIN ALL MATERIAL INFORMATION IN RESPECT OF ANY SUCH SECURITY
OFFERED THEREBY AND ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE
MADE SOLELY IN RELIANCE UPON SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. ANY
CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN ARE TO BE READ IN CONJUNCTION
WITH SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. In the event of any such
offering, these materials, including any description of the securitization
property contained herein, shall be deemed superseded, amended and
supplemented in their entirety by such Prospectus and Prospectus
Supplement. To Our Readers Worldwide: In addition, please note that this
information has been provided by Morgan Stanley & Co., Incorporated and
approved by Morgan Stanley & Co. International Limited, a member of the
Securities and Futures Authority, and Morgan Stanley Japan Ltd. We
recommend that investors obtain the advice of their Morgan Stanley & Co.
International Limited or Morgan Stanley Japan Ltd. representative about the
investment concerned. NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED
BY THE U.K. SECURITIES AND FUTURES AUTHORITY.