EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
$[---------------]
Consumers Funding LLC
Securitization Bonds Series 2001-1
Consumers Energy Company
Underwriting Agreement
[_________], 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 [______________], 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
[__________________], 2001 (the "Sale Agreement"). The Securitization
Property will be serviced pursuant to a Servicing Agreement, dated on or
about [_____________________], 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 [___________], 2001 (the "Administration Agreement"), the Company
will provide certain administrative services for the benefit of the Issuer.
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 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 [_______________], 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 the Registration Statement has not become effective
prior to the date of this Agreement, unless the Representative
agrees in writing to a later time, the Registration Statement will
become effective not later than (i) 6:00 PM New York City time, on
the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time
on such date, or (ii) 12:00 Noon on the business day following the
day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such
date; 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), 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 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 Sale Agreement, the Servicing
Agreement, the Administration Agreement, each of the other
Basic Documents and each other instrument or agreement
necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby;
(ii) 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 by the Company;
(iii) 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 constitute
valid and legally binding obligations of the Company
enforceable according to their 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);
(iv) there is no pending or, to the best knowledge of
such counsel, 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;
(v) 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;
(vi) 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 and Electric Reliability Act (2000 PA 141 and 142 (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;
(vii) 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;
(viii) 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; and
(ix) the statements included in the Prospectus under the
captions "Consumers Energy Company" and "The Seller and
Servicer of the Securitization Property" are accurate in all
material respects.
(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 as a limited liability company and is in good
standing under the laws of the State of Delaware and the State
of Michigan, with power and authority (corporate and other) to
execute, deliver and perform its obligations under this
Agreement, the Servicing Agreement, the Sale Agreement, the
Administration Agreement and the other Basic Documents and to
own its properties and conduct its business 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, the other Basic Documents and
each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the
transactions contemplated hereby;
(ii) this Agreement, the Sale Agreement, the Servicing
Agreement, the Administration Agreement, the Indenture and the
other Basic Documents have been duly authorized, executed and
delivered by the Issuer and constitute legal, valid and
binding instruments enforceable against the Issuer in
accordance with their 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);
(iii) the Securitization Bonds have been duly authorized
and executed by the Issuer, and 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, will constitute legal, valid and
binding obligations of the Issuer entitled to the benefits of
the Indenture and enforceable against the Issuer in accordance
with their 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);
(iv) the Indenture has been duly qualified under the
Trust Indenture Act, and neither the Sale Agreement nor the
Servicing Agreement is required to be registered under the
Trust Indenture Act;
(v) 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 relating to
the Securitization Bonds, the Customer Choice Act, 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"), or the
use and enjoyment of Securitization Property of a character
required to be disclosed in the Registration Statement which
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, which is not described or filed
as required;
(vi) the Registration Statement has become effective
under the Act; any required filing of the Basic Prospectus,
the Preliminary Prospectus and the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel (and after being advised by
the staff of the Commission to such effect), no stop order
suspending the effectiveness of the Registration Statement has
been issued, 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 the notes and schedules thereto 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, the Exchange Act and the Trust Indenture Act and
the respective rules thereunder;
(vii) 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 Customer Choice Act 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;
(viii) neither the execution and delivery of this
Agreement, the Sale Agreement, the Servicing Agreement, the
Administration Agreement, the Indenture and the other Basic
Documents, nor the issue and sale of the Securitization Bonds,
nor the consummation of the transactions contemplated by this
Agreement, the Sale Agreement, the Servicing Agreement, the
Administration Agreement, the Indenture and the other Basic
Documents, 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 Issuer LLC
Agreement, 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, agreement or other
instrument known to such counsel and 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;
(ix) the Issuer is not an "investment company" or under
the "control" of an "investment company" as such terms are
defined under the Investment Company Act of 1940, as amended;
(x) the Issuer will not be subject to utility gross
receipts taxes or any other taxes imposed by the State of
Michigan or by any of its agencies, instrumentalities or
political subdivisions, other than [---------------------];
(xi) the Securitization Bonds, the Indenture, the Sale
Agreement, the Servicing Agreement and the Issuer LLC
Agreement conform to the descriptions thereof contained in the
Prospectus;
(xii) the statements included in the Prospectus under the
captions "Introduction - Tax Status", "The Series 2001
Securitization Bonds", "Credit Enhancement - Collection
Account and Subaccounts", "Payments of Interest and
Principal", "Consumers Funding LLC, the Issuer", "The
Securitization Bonds" (other than the statements under the
subheading "Securitization Bonds Will Be Issued in Book-Entry
Form"), "The Sale Agreement", "The Servicing Agreement", "The
Indenture", "Material Income Tax Consequences for the
Securitization Bonds" (other than the statements under the
subheading "Material State of Michigan Tax Consequences") and
"ERISA Considerations", to the extent that they constitute
matters of law or legal conclusions with respect thereto,
provide a fair and accurate summary of such law and
conclusions;
(xiii) such counsel has no reason to believe that on the
effective date thereof, the Registration Statement contained
any untrue statement of a material fact or omitted to state
any 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 Prospectus as of the Time of Purchase includes any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (other than the financial statements and other
financial and statistical information contained therein as to
which such counsel need express no opinion);
(xiv) the Customer Choice Act is authorized by, validly
enacted, and presently effective pursuant to the Michigan
Constitution and is not the subject of any pending appeal or
litigation;
(xv) the Securitization Bonds are "securitization bonds"
within the meaning of the Customer Choice Act, the
Securitization Bonds are entitled to the protections provided
in Sections 10i, 10j, 10k, 10l, 10m, 10n, 10o, and 10z of the
Customer Choice Act, and the issuance and sale of the
Securitization Bonds and the consummation of the transactions
contemplated by the Basic Documents comply in all respects
with the requirements of the Customer Choice Act and the
Financing Order;
(xvi) the Issuer is an "assignee" within the meaning of
Section 10h(a) of the Customer Choice Act, and the transfer of
the Securitization Property from the Company to the Issuer
pursuant to the Sale Agreement is being effected in compliance
with the Customer Choice Act;
(xvii) the Financing Order authorizes (A) the issuance of
up to $[_____] aggregate principal amount of Securitization
Bonds, (B) the transfer of Securitization Property from the
Company to the Issuer, (C) the imposition of Securitization
Charges and the collection thereof from consumers of
electricity who take bundled sale or retail open access
service through Michigan Public Service Commission-approved
rate schedules within the Company's electric service area as
it existed on the initial date of issuance of the
Securitization Bonds and who receive electric distribution
service from the Company or its successors or affiliates, (D)
periodic adjustments to the Securitization Charges, and (E)
the appointment of the Company as servicer for a specified
contractual fee; the sections of the Financing Order
authorizing the preceding matters have been declared
irrevocable and are entitled to the protection of Section
10i(4) of the Customer Choice Act, which prohibits the
Michigan Public Service Commission from reducing, impairing or
adjusting such an order or the Securitization Charges
authorized to be imposed and collected under such an order by
its subsequent action;
(xviii) until the principal, interest and premium, and
any other charges incurred and contracts to be performed in
connection with the Securitization Bonds have been paid and
performed in full, the Customer Choice Act and the Financing
Order require the State of Michigan and the Michigan Public
Service Commission to require the imposition of Securitization
Charges at times and in amounts that are designed to ensure
the collection of Securitization Charge revenues sufficient to
discharge the Securitization Bonds in accordance with their
terms;
(xix) the Customer Choice Act is severable; the
invalidation of any provision of the Customer Choice Act that
does not adversely affect the holders of the Securitization
Bonds would not invalidate the provisions that do affect the
holders of the Securitization Bonds;
(xx) 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, referendum, initiative 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;
(xxi) all filings with the Michigan Public Service
Commission pursuant to the Customer Choice Act that are
necessary to transfer the Securitization Property to the
Issuer have been executed and filed; all filings, including
filings with the Michigan Public Service Commission pursuant
to the Customer Choice Act, that are necessary to fully
preserve and protect the interests of the Issuer in the
Securitization Property have been executed and filed;
(xxii) the Financing Order has been duly authorized and
adopted by the Michigan Public Service Commission;
(xxiii) the Financing Order and the process by which it
was issued comply with all applicable laws, rules and
regulations;
(xxiv) the Financing Order is in full force and effect
and is final and nonappealable;
(xxv) neither the Financing Order nor the Securitization
Charges authorized to be imposed and collected pursuant to the
Financing Order may be revoked, reduced, postponed, impaired
or terminated by any subsequent action of the Michigan Public
Service Commission, and the decisions of the Michigan Public
Service Commission adopting the Financing Order are
non-appealable;
(xxvi) the Indenture creates in favor of the Bond Trustee
a security interest in the Securitization Property, the other
Collateral, and the proceeds thereof; such security interest
is enforceable against the Issuer with respect to such
collateral; such security interest is perfected; such security
interest takes precedence over any subsequent judicial and
other lien creditors; and the priority of such security
interest is determined by the date of filing with the filing
office described in such opinion of the financing statement
described in such opinion;
(xxvii) the UCC search report described in such opinion
sets forth the proper filing office(s) and the proper debtors
necessary to identify those persons who under the Michigan UCC
or 2000 PA 142 have on file financing statements against the
Company or the Issuer covering the Securitization Property,
the other Collateral, or the proceeds thereof as of the search
date set forth in such UCC search report; the UCC search
report identifies no person who has filed with the filing
offices set forth in such UCC search report a financing
statement describing the Securitization Property, the other
Collateral, or the proceeds thereof prior to the search date
set forth in such UCC search report;
(xxviii) the Securitization Property constitutes an
account under the Michigan UCC;
(xxix) the Sale Agreement creates in favor of the Issuer
a security interest in the Securitization Property; such
security interest is enforceable against the Company with
respect to such collateral, and such security interest is
perfected; the transfer of the Securitization Property by the
Company to the Issuer pursuant to the Sale Agreement is
perfected against all third parties, including subsequent
judicial and other lien creditors;
(xxx) 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, or that would otherwise
substantially impair the rights vested in the Securitization
Bondholders pursuant to the Financing Order, unless such
action is a reasonable exercise of the State of Michigan's
sovereign powers involving a significant and legitimate public
purpose and of a character reasonable and appropriate to the
public purpose justifying such action;
(xxxi) 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;
(xxxii) holders of the Securitization Bonds are entitled
to the protections provided in the first sentence of Section
10n(2) of the Customer Choice Act, and the Pledge set forth in
Section 10n(2) of the Customer Choice Act and in Finding of
Fact (dd) of the Financing Order was validly enacted by the
State of Michigan and is enforceable according to its terms
pursuant to Michigan law; and
(xxxiii) the statements included in the Prospectus under
the captions "Payments of Interest and Principal - Material
Income Tax Considerations", "The Customer Choice Act", "The
MPSC Financing Order and the Securitization Charge", "How a
Bankruptcy of the Seller or Servicer May Affect Your
Investment" and "Material Income Tax Consequences for the
Securitization Bonds - Material State of Michigan Tax
Consequences", to the extent that they constitute matters of
law or legal conclusions with respect thereto, and all other
portions of the Prospectus, 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.
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) if properly presented to a Delaware court, a Delaware
court applying Delaware law would conclude that (A) in order
for a person to file a voluntary bankruptcy petition on behalf
of the Issuer, the prior unanimous written consent of the
Issuer's Managers (including each of the Independent
Managers), as provided in Section 3.04(b)(iv) of the Issuer
LLC Agreement, is required, and (B) such provision, contained
in Section 3.04(b)(iv) of the Issuer LLC Agreement, that
requires the unanimous written consent of the Issuer's
Managers (including each of the Independent Managers) in order
for a person to file a voluntary bankruptcy petition on behalf
of the Issuer, constitutes a legal, valid and binding
agreement of the Member and is enforceable against the Member,
in accordance with its terms;
(ii) the bankruptcy or dissolution of Consumers would
not, by itself, cause the Issuer to be dissolved or its
affairs to be wound up;
(iii) a judgment creditor of Consumers may not satisfy
its claims against Consumers by asserting these claims
directly against the assets of the Issuer;
(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;
(v) the Issuer LLC Agreement constitutes a legal, valid
and binding agreement of the Member, and is enforceable
against the Member in accordance with its terms;
(vi) to the extent that Article 9 of the Delaware UCC
applies, the security interest in the Securitization Property,
the other Collateral, and the proceeds thereof created by the
Indenture in favor of the Bond Trustee is perfected; and
(vii) the UCC search report described in such opinion
sets forth the proper filing office(s) and the proper debtors
necessary to identify those persons who under the Delaware UCC
have on file financing statements against the Company or the
Issuer covering the Securitization Property, the other
Collateral, or the proceeds thereof as of the search date set
forth in such UCC search report; the UCC search report
identifies no person who has filed with the filing offices set
forth in such UCC search report a financing statement
describing the Securitization Property, the other Collateral,
or the proceeds thereof prior to the search date set forth in
such UCC search report.
(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) if properly presented to a bankruptcy court, a
bankruptcy court would conclude that in order for a person to
file a voluntary bankruptcy petition on behalf of the Issuer,
the prior unanimous written consent of the Issuer's Managers
(including each of the Independent Managers), as provided in
Section 3.04(b)(iv) of the Issuer LLC Agreement, is required;
(ii) the bankruptcy or dissolution of Consumers would
not, by itself, cause the Issuer to be dissolved or its
affairs to be wound up;
(iii) a judgment creditor of Consumers may not satisfy
its claims against Consumers 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 an opinion
of [_______________], counsel to the Bond Trustee, 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
Securities Account Control Agreement, and each of the
Indenture and the Securities Account Control 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 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, should the
Company become the debtor in case under the United States
Bankruptcy Code, (i) the Securitization Property and the proceeds
thereof would not be property of the estate of the Company under
Sections 541(a)(1) or (6) of the Bankruptcy Code, and thus such
Securitization Property and the proceeds thereof would not be
subject to the automatic stay of Section 362(a) of the Bankruptcy
Code as it applies to "property of the estate," and (ii) the court
would not order, over the objection of the holders of the
Securitization Bonds, the substantive consolidation of the assets
and liabilities of the Issuer with those of the Company; 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
Servicer Commission's Financing Order relating to the
Securitization Property and the Company shall have furnished to
the Representative (i) copies of the private letter ruling, dated
[________, 200_,] issued by the Internal Revenue Service to the
Company and (ii) copies of the order issued by the Commission to
the Company on [____________, 200_,] under the Public Utility
Holding Company Act of 1935.
(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) Application will have been made to the Luxembourg Stock
Exchange for the Securitization Bonds that pay interest at a
floating rate to be admitted to the official list, all relevant
requirements of the listing rules will have been satisfied, and,
as of the Time of Purchase, such application will not have been
rejected.
(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 and ABS Term Sheets (as such
terms are 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 and ABS Terms Sheets 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 and ABS Term Sheets (if any),
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 or ABS
Term Sheets described in Section 14(a)(iii) as soon as practicable
following receipt thereof.
(n) To cause the Securitization Bonds that pay interest at a
floating rate to be listed on the Luxembourg Stock Exchange and to
use its best efforts to maintain such listing for as long as any
of such Securitization Bonds are outstanding; provided, however,
if such listing becomes impossible to maintain, the Issuer will
use its best efforts to obtain, and will thereafter use its best
efforts to maintain a quotation for, or listing of, such
Securitization Bonds on such other exchange as is commonly used
for the quotation or listing of debt securities as they may, with
the approval of the Representative, decide.
(o) To furnish, from time to time, copies of the Prospectus
and any and all documents, instruments, information and
undertakings (in addition to any already published or lodged with
the Luxembourg Stock Exchange) and publish all advertisements or
other material and comply with any other requirements of the
Luxembourg Stock Exchange that may be necessary in order to effect
and maintain such listing.
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.
(d) To cause the Securitization Bonds that pay interest at a
floating rate to be listed on the Luxembourg Stock Exchange and to
use its best efforts to maintain such listing for as long as any
of such Securitization Bonds are outstanding; provided, however,
if such listing becomes impossible to maintain, the Company will
use its best efforts to obtain, and will thereafter use its best
efforts to maintain a quotation for, or listing of, such
Securitization Bonds on such other exchange as is commonly used
for the quotation or listing of debt securities as they may, with
the approval of the Representative, decide.
(e) To furnish, from time to time, copies of the Prospectus
and any and all documents, instruments, information and
undertakings (in addition to any already published or lodged with
the Luxembourg Stock Exchange) and publish all advertisements or
other material and comply with any other requirements of the
Luxembourg Stock Exchange that may be necessary in order to effect
and maintain such listing.
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 of
1939, as amended (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);
(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;
(k) the Preliminary Prospectus and the Prospectus, each as of
their respective dates, complies in all material respects with the
listing rules of the Luxembourg Stock Exchange Limited in the
context of offers and sales of the Securitization Bonds to any
person (A) who is outside the "United States" (as defined in
Regulation S under the Act) or (B) who is not a "U.S. person" (as
defined in Regulation S under the Act); and
(l) an application satisfying all relevant requirements of the
listing rules has been made to the Luxembourg Stock Exchange for
the Securitization Bonds to be admitted to the official list.
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);
(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;
(k) the Preliminary Prospectus and the Prospectus, each as of
their respective dates, complies in all material respects with the
listing rules of the Luxembourg Stock Exchange Limited in the
context of offers and sales of the Securitization Bonds to any
person (A) who is outside the "United States" (as defined in
Regulation S under the Act) or (B) who is not a "U.S. person" (as
defined in Regulation S under the Act); and
(l) an application satisfying all relevant requirements of the
listing rules has been made to the Luxembourg Stock Exchange for
the Securitization Bonds to be admitted to the official list.
9. Representation and Warranties of Underwriters:
(a) 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.
(b) Each Underwriter represents and agrees that (a) it only
issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue
of any floating rate class to a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or who is a person to whom
the document may otherwise lawfully be issued or passed on, (b) it
has complied and will comply with all applicable provisions of the
Financial Services Act 1986 of Great Britain with respect to
anything done by it in relations to any floating rate class in,
from or otherwise involving the United Kingdom and (c) if that
underwriter is an authorized person under the Financial Services
Act 1986, it has only promoted and will only promote (as that term
is defined in Regulation 1.02 of the Financial Services (Promotion
of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme described herein if that person is of a
kind described either in Section 76(2) of the Financial Services
Act 1986 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulation 1991.
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 and ABS Term Sheets
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, 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
any untrue statement or omission of material fact made in any
Preliminary Prospectus under the circumstance where it shall have
been determined by a court of competent jurisdiction by final and
nonappealable judgment that (i) the Company or the Issuer had
previously furnished copies of the Prospectus to the
Representative, (ii) delivery of the Prospectus was required by
the Act to be made to such person, (iii) the untrue statement or
omission of a material fact contained in the Preliminary
Prospectus was corrected in the Prospectus and (iv) there was not
sent or given to such person, at or prior to the written
confirmation of the sale of such Securitization Bonds to such
person, a copy of the Prospectus. 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,
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, 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 Issuer and the Company acknowledge that the
statements set forth under the heading "Underwriting the Series
2001-1 Securitization Bonds" in any Preliminary Prospectus or the
Prospectus constitute the only information furnished in writing by
or on behalf of the several Underwriters for inclusion in the
documents referred to in the foregoing indemnity, and you, as the
Representative, confirm that such statements are correct.
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 use of counsel chosen by
the Indemnifying Party to represent the Indemnified Party would
present such counsel with a conflict of interest, (iii) the actual
or potential defendants in, or targets of, any such action include
both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties
which are different from or additional to those available to the
Indemnifying Party, or (iv) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party
to represent the Indemnified Party within a reasonable time after
notice of the institution of such action, in which cases the
Indemnifying Party shall bear the reasonable fees, costs and
expenses of such separate counsel. 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 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 Luxembourg Stock Exchange, the New York Stock
Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (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 and ABS Term Sheets:
(a) In connection with the offering of the Securitization
Bonds, each Underwriter may prepare and provide to prospective
investors (i) 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 PSA Letter referred to below (collectively, the
"No-Action Letters"), and (ii) items similar to ABS term sheets
("ABS Term Sheets") as defined in the no-action letter of February
17, 1995 issued by the Commission to the Public Securities
Association (the "PSA Letter"), subject to the following
conditions:
(i) All Computational Materials and ABS Terms Sheets
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
or ABS Terms Sheets, 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 and ABS Term Sheets 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 and ABS Term Sheets 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 and ABS Term Sheets
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 and ABS Term Sheets 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 or ABS Term Sheets on or after the day
on which Computational Materials or ABS Term Sheets are
required to be provided to the Issuer pursuant to this
paragraph (ii) (other than copies of Computational Materials
or ABS Term Sheets previously submitted to the Issuer in
accordance with this paragraph (ii) for filing pursuant to
Section 5(m)), unless such Computational Materials or ABS Term
Sheets 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 or ABS Term Sheets 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 or ABS Term Sheets that contain a
material error or omission if clearly marked "SUPERSEDED BY
MATERIALS DATED _________" and accompanied by corrected
Computational Materials or ABS Term Sheets 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 or ABS Term Sheets 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 or ABS Term Sheets, shall circulate
such corrected Computational Materials or ABS Term Sheets 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 or ABS Term Sheets
(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 or ABS Term Sheets).
(b) Each Underwriter shall be deemed to have represented, as
of the Time of Purchase, that, except for Computational Materials
and ABS Term Sheets 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 and ABS
Term Sheets 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 and ABS Term Sheets 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 or ABS Term Sheets 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 and ABS Term Sheets.
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,
[_________________________________], Attention: [___________]; and if sent
to the Issuer, to it at Consumers Funding LLC, [______________________],
Attention: [__________].
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:____________________________
Name:
Title:
CONSUMERS FUNDING LLC
By:____________________________
Name:
Title:
Confirmed and accepted as
of the date first written above:
MORGAN STANLEY & CO. INCORPORATED
by
-----------------------------
Name:
Title:
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
Class A-1 Class A-2 Class A-3 Class A-4
Underwriters Securitization Securitization Securitization Securitization
Bonds Bonds Bonds Bonds Total
Morgan Stanley & Co.
Incorporated
Schedule III
Information Regarding the Securitization Bonds
Title, Purchase Price and Description of Securitization Bonds:
Title: Consumers Funding LLC $[_____________] Securitization Bonds,
Series 2001-1
Principal Amount, Price to Public, Underwriting Discounts and
Commissions, Purchase Price to the Issuer, and Required Ratings:
Required
Underwriting Ratings
Total Principal Price to Discounts and Proceeds to (Moody's/S&P)
Amount of Class Public Commissions the Issuer
Class A-1
Securitization Bonds
Class A-2
Securitization Bonds
Class A-3
Securitization Bonds
Class A-4
Securitization Bonds
Total $
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.