1
Exhibit 1.1
THE DETROIT EDISON SECURITIZATION FUNDING LLC
THE DETROIT EDISON COMPANY
UNDERWRITING AGREEMENT
New York, New York
March [ ], 2001
To Xxxxxxx Xxxxx Xxxxxx Inc.
as representative of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
1. Introduction. The Detroit Edison Securitization Funding LLC, a
Michigan limited liability company (the "Issuer") and The Detroit Edison
Company, an operating electric public utility incorporated under the laws of the
State of Michigan (the "Company") as sole member and owner of the entire equity
interest in the Issuer, propose, subject to the terms and conditions stated
herein, that the Issuer issue and sell to the underwriters named in Schedule II
hereto (the "Underwriters"), for whom Xxxxxxx Xxxxx Barney Inc. is acting as
representative (the "Representative"), the principal amount of The Detroit
Edison Securitization Funding LLC Securitization Bonds, Series 2001-1 (the
"Securitization Bonds"), identified in Schedule I hereto.
The issuance of the Securitization Bonds is authorized by the Financing
Order, Case No. U-12478 (the "Financing Order"), issued by the Michigan Public
Service Commission (the "MPSC") on November 2, 2000, as further clarified in the
MPSC's Opinion and Order dated January 4, 2001, in accordance with the Customer
Choice and Electricity Reliability Act, 2000 PA 141 ("Act 141") and 2000 PA 142
("Act 142" and together with Act 141, the "Statute"), both of which became
effective on June 5, 2000. The Securitization Bonds will be issued pursuant to
an Indenture dated as of March [ ], 2001, as supplemented by the 2001-1 Series
Supplement thereto, between the Issuer and The Bank of New York, as trustee (the
"Trustee") (and as amended and supplemented from time to time, the "Indenture").
The Securitization Bonds will be secured primarily by the Securitization
Property created by the Financing Order (the "Securitization Property"), which
will be sold to the Issuer by the Company. The Company's sale of Securitization
Property to the Issuer will occur pursuant to a Sale Agreement dated as of
March [ ], 2001, between the Company and the Issuer (the "Sale Agreement") and a
related Xxxx of Sale of even date therewith (the "Xxxx of Sale"). The
Securitization Property will be serviced pursuant to a Servicing Agreement dated
as of March [ ], 2001, between the
2
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 the Indenture, the Issuer will grant to the Trustee, as trustee for
the benefit of the Securitization Bondholders, all of its right, title and
interest in and to the Securitization Property as security for the
Securitization Bonds.
Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Indenture, including Appendix A thereto.
2. Representations and Warranties. Each of the Company and the Issuer
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 2. Certain terms used in this Section 2 are defined in paragraph
(d) hereof.
(a) If the offering of the Securitization Bonds is a Delayed
Offering (as specified in Schedule I hereto), paragraph (i) below is
applicable and, if the offering of the Securitization Bonds is a
Non-Delayed Offering (as so specified), paragraph (ii) below is
applicable.
(i) The Issuer and the Securitization Bonds meet the
requirements for the use of Form S-3 under the Securities Act
of 1933 (the "Act"), and the Issuer has filed with the
Securities and Exchange Commission (the "Commission") a
registration statement on such Form (Registration No.
333-51066), including a basic prospectus, for registration
under the Act of the offering and sale of the Securitization
Bonds. The Issuer may have filed one or more amendments
thereto, and may have used a Preliminary Final Prospectus,
each of which has previously been furnished to you. Such
registration statement, as so amended, has become effective.
The offering of the Securitization Bonds is a Delayed Offering
and, although the Basic Prospectus may not include all the
information with respect to the Securitization Bonds and the
offering thereof required by the Act and the rules thereunder
to be included in the Final Prospectus, the Basic Prospectus
includes all such information required by the Act and the
rules thereunder to be included therein as of the Effective
Date. The Issuer will next file with the Commission pursuant
to Rules 415 and 424(b)(2) or (5) a final supplement to the
form of prospectus included in such registration statement
relating to the Securitization Bonds and the offering thereof.
As filed, such final prospectus supplement shall include all
required information with respect to the Securitization Bonds
and the offering thereof and, except to the extent the
Representative shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at
the Execution Time, shall contain only such specific
additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final
Prospectus) as the Issuer has advised you, prior to the
Execution Time, will be included or made therein.
2
3
(ii) The Issuer and the Securitization Bonds meet the
requirements for the use of Form S-3 under the Act and the
Issuer has filed with the Commission a registration statement
on such Form (Registration No. 333-51066), including a basic
prospectus, for registration under the Act of the offering and
sale of the Securitization Bonds. The Issuer may have filed
one or more amendments thereto, including a Preliminary Final
Prospectus, each of which has previously been furnished to
you. The Issuer will next file with the Commission either (x)
a final prospectus supplement relating to the Securitization
Bonds in accordance with Rules 430A and 424(b)(1) or (4), or
(y) prior to the effectiveness of such registration statement,
an amendment to such registration statement, including the
form of final prospectus supplement. In the case of clause
(x), the Issuer has included in such registration statement,
as amended at the Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules
thereunder to be included in the Final Prospectus with respect
to the Securitization Bonds and the offering thereof. As
filed, such final prospectus supplement or such amendment and
form of final prospectus supplement shall contain all Rule
430A Information, together with all other such required
information, with respect to the Securitization Bonds and the
offering thereof and, except to the extent the Representative
shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the
Issuer has advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final
Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of the Act, the Securities
Exchange Act of 1934 (the "Exchange Act") and the Trust Indenture Act
of 1939 (the "Trust Indenture Act") and the respective rules
thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the Effective
Date and on the Closing Date the Indenture did or will comply with the
requirements of the Trust Indenture Act and the rules thereunder; and,
on the Effective Date, the Final Prospectus, if not filed pursuant to
Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Final Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that neither the Issuer nor the Company makes any
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) of the Trustee under the Trust Indenture Act
or (ii) the
3
4
information contained in or omitted from the Registration Statement or
the Final Prospectus (or any supplement thereto) in reliance upon and
in conformity with information furnished in writing to the Issuer by or
on behalf of any Underwriter through the Representative specifically
for inclusion in the Registration Statement or the Final Prospectus (or
any supplement thereto).
(c) The documents incorporated by reference in the
Registration Statement and the Final Prospectus, when they became
effective or were filed (or, if an amendment with respect to any such
document was filed or became effective, when such amendment was filed
or became effective) with the Commission, as the case may be, conformed
in all material respects to the requirements of the Act, the Exchange
Act, the Trust Indenture Act and the rules and regulations thereunder,
and any further documents so filed and incorporated by reference will,
when they become effective or are filed with the Commission, as the
case may be, conform in all material respects to the requirements of
the Act, the Exchange Act, the Trust Indenture Act and the rules and
regulations thereunder; none of such documents, when it became
effective or was filed (or, if an amendment with respect to any such
documents was filed or became effective, when such amendment was filed
or became effective) 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, in light of the circumstances
under which they were made, not misleading;
(d) The terms which follow, when used in this Underwriting
Agreement, shall have the meanings indicated. The term "Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective and each date after the date hereof on which a document
incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Underwriting
Agreement is executed and delivered by the parties hereto. "Basic
Prospectus" shall mean the prospectus referred to in paragraph (a)
above contained in the Registration Statement at the Effective Date
including, in the case of a Non-Delayed Offering, any Preliminary Final
Prospectus. "Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Basic Prospectus which describes the
Securitization Bonds and the offering thereof and is used prior to
filing of the Final Prospectus. "Final Prospectus" shall mean the
prospectus supplement relating to the Securitization Bonds that is
first filed pursuant to Rule 424(b) after the Execution Time, together
with the Basic Prospectus or, if, in the case of a Non-Delayed
Offering, no filing pursuant to Rule 424(b) is required, shall mean the
form of final prospectus relating to the Securitization Bonds,
including the Basic Prospectus, included in the Registration Statement
at the Effective Date. "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including
incorporated documents, exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in
the form in which it shall become effective) and, in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date (as hereinafter defined), shall also mean such registration
statement as so amended.
4
5
Such term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A. "Rule 415,"
"Rule 424," "Rule 430A" and "Regulation S-K" refer to such rules or
regulation under the Act. "Rule 430A Information" means information
with respect to the Securitization Bonds and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A. Any reference herein to the
Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue
date of the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be; and any reference herein to the
terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of the
Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein by
reference. A "Non-Delayed Offering" shall mean an offering of
securities which is intended to commence promptly after the effective
date of a registration statement, with the result that, pursuant to
Rules 415 and 430A, all information (other than Rule 430A Information)
with respect to the securities so offered must be included in such
registration statement at the effective date thereof. A "Delayed
Offering" shall mean an offering of securities pursuant to Rule 415
which does not commence promptly after the effective date of a
registration statement, with the result that only information required
pursuant to Rule 415 need be included in such registration statement at
the effective date thereof with respect to the securities so offered.
Whether the offering of the Securitization Bonds is a Non-Delayed
Offering or a Delayed Offering shall be set forth in Schedule I hereto.
(e) Deloitte & Touche LLP are independent public accountants
as required by the Act and the rules and regulations of the Commission
thereunder
(f) The financial statements included or incorporated by
reference in the Final Prospectus present fairly the financial position
and results of operations of the Company and the Issuer, respectively,
as of the respective dates and for the respective periods specified
and, except as otherwise stated in the Final Prospectus, such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods
involved. Neither the Company nor the Issuer has any material
contingent obligation which is not disclosed in the Final Prospectus.
(g) The Issuer has been duly formed and is validly existing as
a limited liability company under the laws of the State of Michigan,
has the power and authority to conduct its business as presently
conducted and as described in the Final Prospectus and is duly
qualified as a foreign limited liability company to do business and in
good standing in
5
6
every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in which
the failure to so qualify would have a materially adverse effect on the
Issuer; and the Issuer has all requisite power and authority to issue
the Securitization Bonds and purchase the Securitization Property as
described in the Final Prospectus.
(h) The Company is a validly existing corporation under the
laws of the State of Michigan; each of the Company's subsidiaries is a
validly existing corporation under the laws of its jurisdiction of
incorporation; the Company has all requisite power and authority to own
and occupy its properties and carry on its business as presently
conducted and as described in the Final Prospectus and is duly
qualified as a foreign corporation to do business and in good standing
in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary and in which
the failure to so qualify would have a materially adverse effect on the
Company.
(i) Each of the Basic Documents to which the Company or the
Issuer is a party has been duly authorized by the Company or the
Issuer, as applicable, and when executed and delivered by the Issuer or
the Company, as applicable, will constitute a valid and binding
obligation of the Company or the Issuer, as applicable, enforceable in
accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws or equitable principles affecting creditors' rights generally from
time to time in effect).
(j) The Securitization Bonds have been duly authorized by the
Issuer and will conform to the description thereof in the Final
Prospectus; and when the Securitization Bonds are executed by the
Issuer, authenticated by the Trustee and delivered to the Underwriters
and are paid for by the Underwriters in accordance with the terms of
this Underwriting Agreement, the Securitization Bonds will constitute
the legal, valid and binding obligations of the Issuer, enforceable in
accordance with their terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws or equitable principles affecting creditors' rights generally from
time to time in effect);
(k) The issue and sale of the Securitization Bonds by the
Issuer, the sale of the Securitization Property by the Company to the
Issuer, the execution, delivery and compliance by the Company and the
Issuer with all of the provisions of this Underwriting Agreement and
each of the other Basic Documents to which the Company or the Issuer,
as applicable, is a party, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any trust agreement, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Issuer or the Company is a party or by which the Issuer or the Company
is bound or to which any of the property or assets of the Issuer or the
Company is subject, which conflict, breach,
6
7
violation or default would be material to the issue and sale of the
Securitization Bonds or would have a material adverse effect on the
general affairs, management, prospects, financial position or results
of operations of the Issuer or the Company or on the stockholders'
equity of the Company, nor will such action result in any violation of
the provisions of the Restated Articles of Incorporation or Bylaws of
the Company or the Issuer Articles of Organization or Issuer LLC
Agreement or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Issuer or the
Company or any of their respective properties.
(l) Except for:
(i) the order of the Commission making the
Registration Statement effective,
(ii) permits and similar authorizations required
under the securities or blue sky laws of any jurisdiction,
(iii) the Financing Order and all filings required
thereunder,
no consent, approval, authorization or other order of any governmental
authority is legally required for the execution, delivery and
performance of this Underwriting Agreement by the Issuer and the
Company and the consummation of the transactions contemplated hereby.
(m) This Underwriting Agreement has been duly authorized,
executed and delivered by the Issuer and the Company and constitutes a
valid and binding obligation of the Company and the Issuer, enforceable
in accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws or equitable principles affecting creditors' rights
generally from time to time in effect and subject to the possible
unenforceability of the indemnity provisions contained herein).
(n) There is no pending or threatened suit or proceeding
before any court or governmental agency, authority or body or any
arbitration involving the Company or any of its subsidiaries or the
Issuer required to be disclosed in the Final Prospectus which is not
adequately disclosed in the Final Prospectus.
(o) The Indenture has been duly and validly authorized by all
necessary action by the Issuer and duly qualified under the Trust
Indenture Act; and the Indenture has been duly and validly executed and
delivered by the Issuer and is a valid and enforceable instrument of
the Issuer in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws or equitable principles affecting creditors'
rights generally from time to time in effect).
7
8
(p) The Securitization Bonds, when duly executed,
authenticated and delivered against payment of the agreed consideration
therefor, will be entitled to the benefits provided by the Indenture,
and the holders of the Securitization Bonds will be entitled to the
payment of principal and interest as therein provided; the
Securitization Bonds and the Indenture conform to the descriptions
thereof contained in the Final Prospectus.
Any certificate signed by any officer of the Company or any manager of
the Issuer and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company or the Issuer, as the case
may be, to each Underwriter as to the matters covered thereby.
3. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Issuer
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Issuer, at the purchase price set forth in
Schedule I hereto the principal amount of the Securitization Bonds set forth
opposite such Underwriter's name in Schedule II hereto.
4. Delivery and Payment. Delivery of and payment for the Securitization
Bonds shall be made on the date and at the time specified in Schedule I hereto
(or such later date not later than five business days after such specified date
as the Representative shall designate), which date and time may be postponed by
agreement between the Representative and the Issuer or as provided in Section 9
hereof (such date and time of delivery and payment for the Securitization Bonds
being herein called the "Closing Date"). Delivery of the Securitization Bonds
shall be made to the Representative for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to the Issuer by wire transfer of
immediately available funds. 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 Issuer shall have the Securitization Bonds available for
inspection, checking and packaging by the Representative in New York, New York,
not later than 1:00 PM Eastern Time on the business day prior to the Closing
Date.
5. Covenants.
(a) Covenants of the Issuer. The Issuer covenants and agrees
with the several Underwriters that:
(i) The Issuer will use its best efforts to cause the
Registration Statement, if not effective at the Execution
Time, and any amendment thereto, to become effective. Prior to
the termination of the offering of the Securitization Bonds,
the Issuer will not file any amendment of the Registration
Statement or
8
9
supplement (including the Final Prospectus or any Preliminary
Final Prospectus) to the Basic Prospectus unless the Issuer
has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing
sentence, the Issuer will cause the Final 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. The
Issuer will promptly advise the Representative (A) when the
Registration Statement, if not effective at the Execution
Time, and any amendment thereto, shall have become effective,
(B) when the Final Prospectus, and any supplement thereto,
shall have been filed with the Commission pursuant to Rule
424(b), (C) when, prior to termination of the offering of the
Securitization Bonds, any amendment to the Registration
Statement shall have been filed or become effective, (D) of
any request by the Commission for any amendment of the
Registration Statement or supplement to the Final Prospectus
or for any additional information, (E) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening
of any proceeding for that purpose, (F) of the receipt by the
Issuer of any notification with respect to the suspension of
the qualification of the Securitization Bonds for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (G) of the happening of any
event during the period mentioned in subparagraph (ii) below.
The Issuer will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to
the Securitization Bonds is required to be delivered under the
Act, any event occurs as a result of which the Final
Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading,
or if it shall be necessary to amend the Registration
Statement or supplement the Final Prospectus to comply with
the Act or the Exchange Act or the respective rules
thereunder, the Issuer promptly will (i) prepare and file with
the Commission an amendment or supplement which will correct
such statement or omission or effect such compliance and (ii)
supply any supplemented Final Prospectus to you in such
quantities as you may reasonably request.
(iii) As soon as practicable but no later than 12
months after the Closing Date, the Issuer will make generally
available to the Securitization Bondholders and to the
Representative an earnings statement or statements of the
Issuer that will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
9
10
(iv) The Issuer will furnish to the Representative
and counsel for the Underwriters, without charge, copies of
the Registration Statement (including exhibits thereto) and,
so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of any
Preliminary Final Prospectus and the Final Prospectus and any
supplement thereto as the Representative may reasonably
request. The Issuer shall furnish or cause to be furnished to
the Representative copies of all reports required by Rule 463
under the Act. The Issuer will pay the expenses of printing or
other production of all documents relating to the offering.
(v) The Issuer will arrange for the qualification of
the Securitization Bonds for sale under the laws of such
jurisdictions as the Representative may designate, will
maintain such qualifications in effect so long as required for
the distribution of the Securitization Bonds and will arrange
for the determination of the legality of the Securitization
Bonds for purchase by institutional investors; provided that
in no event shall the Issuer be obligated to qualify to do
business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of
process in suits in any jurisdiction where it is not now so
subject.
(vi) Until the business date set forth on Schedule I
hereto, the Issuer will not, without the consent of the
Representative, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering
of, any asset-backed securities (other than the Securitization
Bonds).
(vii) For a period from the date of this Underwriting
Agreement until the retirement of the Securitization Bonds, or
until such time as the Underwriters shall cease to maintain a
secondary market in the Securitization Bonds, whichever occurs
first, the Issuer will deliver to the Representative the
annual statements of compliance and the annual independent
auditor's servicing reports furnished to the Issuer or the
Trustee pursuant to the Servicing Agreement or the Indenture,
as applicable, as soon as such statements and reports are
furnished to the Issuer or the Trustee.
(viii) So long as any of the Securitization Bonds are
outstanding, the Issuer will furnish to the Representative,
(A) as soon as available, a copy of each report of the Issuer
filed with the Commission under the Exchange Act, or mailed to
Securitization Bondholders, (B) a copy of any filings with the
MPSC pursuant to the Statute and the Financing Order
including, but not limited to, any annual or more frequent SB
Charge Periodic Adjustment filings, and (C) from time to time,
any information concerning the Issuer as the Representative
may reasonably request.
(ix) To the extent, if any, that any rating necessary
to satisfy the condition set forth in Section 6(m) of this
Underwriting Agreement is conditioned
10
11
upon the furnishing of documents or the taking of other
actions by the Issuer on or after the Closing Date, the Issuer
shall furnish such documents and take such other actions.
(b) Covenants of the Company. The Company covenants and agrees
with the several Underwriters that, to the extent that the Issuer has
not already performed such act pursuant to Section 5(a):
(i) The Company will apply the proceeds of the sale
of the Securitization Property to the Issuer for the purposes
described in the Final Prospectus and in compliance with the
Act 142 and the Financing Order.
(ii) Until the business date set forth on Schedule I
hereto, the Company will not, without the consent of the
Representative, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering
of, any asset-backed securities similar to the Securitization
Bonds (other than the Securitization Bonds).
(iii) So long as any of the Securitization Bonds are
outstanding and the Company is the Servicer, the Company will
furnish to the Representative (A) as soon as available, a copy
of each report of the Company or the Issuer filed with the
Commission under the Exchange Act, or mailed to Securitization
Bondholders, (B) a copy of any filings with the MPSC pursuant
to the Statute and the Financing Order including, but not
limited to, any annual or more frequent SB Charge Periodic
Adjustment filings, and (C) from time to time, any information
concerning the Company as the Representative may reasonably
request.
(iv) To the extent, if any, that any rating necessary
to satisfy the condition set forth in Section 6(m) of this
Underwriting Agreement is conditioned upon the furnishing of
documents or the taking of other actions by the Company on or
after the Closing Date, the Company shall furnish such
documents and take such other actions.
(v) The initial SB Charge will be calculated in
accordance with the Financing Order.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Securitization Bonds shall be subject to the
accuracy of the representations and warranties on the part of the Issuer and the
Company contained herein as of the Execution Time and the Closing Date, on the
part of the Company contained in Article III of the Sale Agreement and in
Section 6.01 of the Servicing Agreement as of the Closing Date, to the accuracy
of the statements in the Securitization Bonds pursuant to the provisions hereof,
to the performance by the Issuer and the Company of their obligations hereunder,
and to the following additional conditions precedent:
11
12
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representative agrees in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM Eastern Time, on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM Eastern Time on such date, or (ii)
12:00 Noon Eastern Time on the business day following the day on which
the public offering price was determined, if such determination
occurred after 3:00 PM Eastern Time on such date; if filing of the
Final Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Final 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 opinions, each
dated as of the Closing Date, from Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx
LLP, each subject to customary qualifications, exceptions and
limitations, in form and substance satisfactory to the Representative,
to the effect set forth in Exhibits A, B, C, E, F, H, I, J and K
hereto.
(c) The Representative shall have received an opinion, dated
as of the Closing Date, from Xxxxx & Wood LLP, subject to customary
qualifications, exceptions and limitations, in form and substance
satisfactory to the Representative, to the effect set forth in Exhibit
G hereto.
(d) The Representative shall have received an opinion, dated
as of the Closing Date, from in-house counsel to the Company, subject
to customary qualifications, exceptions and limitations, in form and
substance satisfactory to the Representative, to the effect set forth
in Exhibit D hereto.
(e) The Representative shall have received an opinion letter
of, or a reliance letter thereon from, Xxxxxxxx Xxxxxx Xxxxxxxx and
Xxxx LLP, dated the Closing Date, in form and substance reasonably
satisfactory to the Representative, required to be delivered by such
counsel pursuant to Section 2.10(v) of the Indenture.
(f) The Representative shall have received an opinion or
opinions of counsel to the Trustee dated the Closing Date, in form and
substance reasonably satisfactory to the Representative, to the effect
that:
(i) the Trustee is validly existing as a banking
corporation in good standing under the laws of the State of
New York;
(ii) the Indenture has been duly authorized, executed
and delivered by the Trustee and constitutes the legal, valid
and binding agreement enforceable against the Trustee in
accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or
12
13
other laws or equitable principles affecting creditors' rights
generally from time to time in effect); and
(iii) the Securitization Bonds have duly
authenticated and delivered by the Trustee.
(g) The Representative shall have received from Xxxxx & Xxxx
LLP, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, to the effect set forth in Exhibit L and other related
matters as the Representative may reasonably require, and the Company
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 shall have received a certificate of
the Issuer, signed by a duly authorized manager of the Issuer, to the
effect that the signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any supplement to the
Final Prospectus and this Underwriting Agreement and that:
(i) the representations and warranties of the Issuer
in this Underwriting Agreement and in the Sale Agreement and
the Indenture are true and correct on and as of the Closing
Date with the same effect as if made on the Closing Date, 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 Closing Date;
(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
knowledge, threatened; and
(iii) since the dates as of which information is
given in the Final 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 contemplated by the Final Prospectus or in the
ordinary course of business, or (B) the Securitization
Property or any right related thereto under the Statute or the
Financing Order, except as set forth in or contemplated in the
Final Prospectus (exclusive of any supplement thereto).
(i) The Representative shall have received a certificate of
the Company, signed by the Chief Executive Officer, the President or a
Vice President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Final Prospectus, any supplement to the Final Prospectus and this
Underwriting Agreement and that:
13
14
(i) the representations and warranties of the Company
in this Underwriting Agreement, the Sale Agreement, the
Servicing Agreement and the Administration Agreement are true
and correct on and as of the Closing Date with the same effect
as if made on the Closing Date, 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
Closing Date;
(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
knowledge, threatened; and
(iii) since the dates as of which information is
given in the Final 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 contemplated
by the Final Prospectus or in the ordinary course of business,
or (B) the Securitization Property or any right related
thereto under the Statute or the Financing Order, except as
set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(j) At the Closing Date, Deloitte & Touche LLP shall have
furnished to the Representative (A) a letter or letters (which may
refer to letters previously delivered to the Representative), dated as
of the Closing Date, in form and substance satisfactory to the
Representative, confirming that they are independent accountants within
the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder 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 set forth in the
Registration Statement and the Final Prospectus, agrees with the
accounting records of the Company and its subsidiaries, excluding any
questions of legal interpretation, and (B) the opinion or certificate,
dated as of the Closing Date, in form and substance satisfactory to the
Representative, satisfying the requirements of Section 2.10(vi) of the
Indenture.
References to the Final Prospectus in this paragraph (j)
include any supplement thereto at the date of the letter.
In addition, except as provided in Schedule I hereto, at the
Execution Time, Deloitte & Touche LLP shall have furnished to the
Representative a letter or letters, dated as of the Execution Time, in
form and substance satisfactory to the Representative, to the effect
set forth above.
(k) There shall not have occurred any change, or any
development involving a prospective change, in or any event subsequent
to the Execution Time or, if earlier, the dates as of which information
is given in the Registration Statement and the Final Prospectus
(exclusive of any supplement thereto relating to such change,
development or
14
15
event) affecting either (i) the 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 Statute, the effect of which is, in the case of either (i) or
(ii) above, 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 relating to
such change, development or event) and the Final Prospectus (exclusive
of any supplement thereto relating to such change, development or
event).
(l) On or prior to the Closing Date, the Issuer shall have
delivered to the Representative evidence, in form and substance
reasonably satisfactory to the Representative, of compliance with
Section 2.10 of the Indenture, together with such reliance letters as
the Representative shall request.
(m) The Securitization Bonds shall have been rated in the
highest long-term rating category by each of the Rating Agencies, and
on or after the date hereof (i) no downgrade shall have occurred in the
rating accorded to the debt securities of the Company by any Rating
Agency, and (ii) no such organization shall have publicly announced
that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
(n) On or prior to the Closing Date, the Issuer shall have
delivered to the Representative evidence, in form and substance
reasonably satisfactory to the Representative, that appropriate filings
have been, are being or will be made, as applicable, pursuant to
Section 3.08 of the Sale Agreement and in accordance with the Statute
and other applicable law reflecting the Issuer's first priority
perfected ownership interest in the Securitization Property.
(o) The Representative shall have received an opinion, or
reliance letter thereon, from Xxxxx & Wood LLP, special federal income
tax counsel to the Issuer, substantially to the effect of Exhibit 8.1
to the Registration Statement.
(p) The Representative shall have received an opinion, or
reliance letter thereon, from Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP,
special Michigan tax counsel to Company and the Issuer, substantially
to the effect of Exhibit 8.2 to the Registration Statement.
(q) Prior to the Closing Date, the Company and the Issuer
shall have furnished to the Representative such further information,
certificates, opinions and documents as the Representative may
reasonably request, including such certificates, opinions and documents
as the Representative may reasonably request to evidence the
enforceability of any interest rate swap agreement entered into in
connection with any class of floating rate Securitization Bonds and the
qualification or listing of any floating rate Securitization Bonds as
contemplated by the Final Prospectus.
15
16
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this
Underwriting Agreement, or if any of the opinions and certificates mentioned
above or elsewhere in this Underwriting Agreement shall not be in all material
respects reasonably satisfactory in form and substance to the Representative and
counsel for the Underwriters, this Underwriting Agreement and all obligations of
the Underwriters hereunder may be canceled at, or at any time prior to, the
Closing Date by the Representative. Notice of such cancellation shall be given
to the Issuer in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the offices of Xxxxx & Wood LLP in The City of New York on the
Closing Date.
7. Expenses.
(a) Upon the Sale of the Securitization Bonds, the Company and
the Issuer will pay, or cause to be paid, all reasonable costs and
expenses incident to the performance of the obligations of the Company,
the Issuer, the Trustee and the Underwriters hereunder, including,
without limiting the generality of the foregoing, (A) all costs, taxes
and expenses incident to the issue and delivery of the Securitization
Bonds to the Underwriters, (B) all costs and expenses incident to the
preparation, printing, reproduction and distribution of the
Registration Statement as originally filed with the Commission and each
amendment thereto, any Preliminary Final Prospectus, the Basic
Prospectus and the Final Prospectus (including any amendments and
supplements thereto), (C) all fees, disbursements and expenses of the
Company's, the Issuer's, the Trustee's and the Underwriters' counsel
and the Company's and the Issuer's accountants, (D) all fees charged by
the Rating Agencies in connection with the rating of the Securitization
Bonds, (E) all fees of DTC in connection with the book-entry
registration of the Securitization Bonds, (F) all costs and expenses
incurred in connection with the qualification of the Securitization
Bonds for sale under the laws of such jurisdictions in the United
States as the Representative may designate, together with costs and
expenses in connection with any filing with the National Association of
Securities Dealers with respect with the transactions contemplated
hereby, and (G) and all costs and expenses of printing and distributing
all of the documents in connection the Securitization Bonds.
(b) If the sale of the Securitization Bonds provided for
herein is not consummated because any condition set forth in Section 6
hereof is not satisfied, because of any termination pursuant to Section
10 hereof or because of any refusal, inability or failure on the part
of the Company or the Issuer to perform any agreement herein or comply
with any provision hereof other than by reason of a default (including
under Section 9) by any of the Underwriters, the Company and the
Issuer, jointly and severally, will reimburse the Underwriters upon
demand for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securitization
Bonds.
16
17
8. Indemnification and Contribution.
(a) The Company and the Issuer, jointly and severally, will
indemnify and hold harmless each Underwriter, the directors, officers,
members, employees and agents of each Underwriter, and each person who
controls any Underwriter within the meaning of either the Act or 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 Statute, the Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of, directly or indirectly, the complete
or partial judicial invalidation of the Statute, or the repeal,
revocation or complete or partial judicial invalidation of the
Financing Order, or (ii) arise out of, directly or indirectly, or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally
filed or in any amendment thereof, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of, directly or
indirectly, or are based upon the omission or alleged omission to state
therein 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 will reimburse each such
indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which the
Company and the Issuer may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company and the Issuer, each of their directors or
managers, each of their officers or managers who signs the Registration
Statement, and each person who controls the Company or the Issuer
within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company and the Issuer to
each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Issuer or the Company by
or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to
any liability which any Underwriter may otherwise have. The Issuer and
the Company acknowledge that the statements set forth under the heading
"Underwriting the Series 2001-1 Securitization Bonds" or "Plan of
Distribution for the Securitization Bonds" in any Preliminary Final
Prospectus or the Final 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 in
all material respects.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the
17
18
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of
the indemnifying party's choice at the indemnifying party's expense to
represent the indemnified party in any action for which indemnification
is sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel retained
by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory
to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel
if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of
interest, (ii) 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, (iii) 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, or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all
such indemnified parties. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise
or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent (i) includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or
failure to act, by or on behalf of any indemnified party. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall
not be unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company, the Issuer
and the Underwriters agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably
18
19
incurred in connection with investigating or defending same)
(collectively "Losses") to which the Issuer and one or more of the
Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Issuer and by the
Underwriters from the offering of the Securitization Bonds; provided,
however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering
of the Securitization Bonds) be responsible for any amount in excess of
the underwriting discount or commission applicable to the
Securitization Bonds purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company, the Issuer and the
Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of
the Company, the Issuer and the Underwriters respectively in connection
with the statements or omissions which resulted in such Losses as well
as any other relevant equitable considerations. Relative fault shall be
determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company, the Issuer or
the Underwriters, as the case may be. The Company, the Issuer and the
Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method
of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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. For purposes of this Section 8, 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 manager
or officer of the Issuer or the Company who shall have signed the
Registration Statement and each manager or 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 paragraph (d). The Underwriters' obligations in this
Section 8 to contribute are several in proportion to the respective
principal amounts of Securitization Bonds set forth opposite their
names in Schedule II hereto and not joint.
9. 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 Underwriting 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
19
20
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 Underwriting 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 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representative shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Underwriting 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.
10. Termination. This Underwriting Agreement shall be subject to
termination in the absolute discretion of the Representative, by notice given to
the Company and the Issuer prior to delivery of and payment for the
Securitization Bonds, if prior to such time (i) there shall have occurred any
change, or any development involving a prospective change, in or affecting
either (A) the business, prospects, properties or financial condition of the
Issuer or the Company or (B) the Securitization Property, the Securitization
Bonds, the Financing Order or the Statute, the effect of which, 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, (ii) trading in the Company's common stock shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (iii) a
banking moratorium shall have been declared either by federal, State of New York
or State of Michigan authorities or (iv) there shall have occurred any outbreak
or escalation of hostilities, declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make 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 Final Prospectus (exclusive of any
supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, the Issuer or its managers or officers and of the
Underwriters set forth in or made pursuant to this Underwriting Agreement shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or of the Company, the Issuer or any of the officers,
directors, managers or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securitization Bonds. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Underwriting Agreement and the complete or partial judicial
invalidation of the Statute.
12. Notices. Unless otherwise specifically provided herein, all
notices, directions, consents and waivers required under the terms and
provisions of this Underwriting Agreement shall be in English and in writing,
and any such notice, direction, consent or waiver may be given by United States
first class mail, reputable overnight courier service, facsimile transmission or
20
21
electronic mail (confirmed by telephone, United States first class mail or
reputable overnight courier service in the case of notice by facsimile
transmission or electronic mail) or any other customary means of communication,
and any such notice, direction, consent or waiver shall be effective when
delivered or transmitted, or if mailed, three days after deposit in the United
States mail with proper first class postage prepaid: (a) in the case of the
Representative, to it at the address specified in Schedule I hereto, (b) in the
case of the Company, to it at The Detroit Edison Company, 0000 0xx Xxxxxx, 000
XXX, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Secretary, and (b) in the
case of the Issuer, to it at The Detroit Edison Securitization Funding LLC, 0000
0xx Xxxxxx, 000 XXX, Xxxxxxx, Xxxxxxxx 00000, Attention: Managers; or, as to
each of the foregoing, at such other address as shall be designated by written
notice to the other parties.
13. Successors. This Underwriting Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers, managers and directors and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Underwriting Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. Counterparts. This Underwriting Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, which taken
together shall constitute one and the same instrument.
21
22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Issuer and the several Underwriters.
Very truly yours,
THE DETROIT EDISON COMPANY
By:
----------------------------------
Name:
Title:
THE DETROIT EDISON SECURITIZATION
FUNDING LLC
By:
-----------------------------------
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
specified in Schedule I hereto.
XXXXXXX XXXXX XXXXXX INC.
By:
-------------------------------
Name:
Title:
For itself and the other several
Underwriters, if any, named in
Schedule II to the foregoing
Underwriting Agreement.
23
SCHEDULE I
Underwriting Agreement dated March [ ], 2001
Registration Statement No. 333-51066
Representative:
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Title, Purchase Price and Description of Securitization Bonds:
Title: The Detroit Edison Securitization Funding LLC
Securitization Bonds, Series 2001-1
Principal Amount, Price to Public,
Underwriting Discounts and
Commissions and Proceeds to
Issuer:
Underwriting
Total Principal Discounts and
Amount of Class Price to Public Commissions Proceeds to Issuer
--------------- --------------- -------------- ------------------
Per Class A-1
Securitization Bond $ % % %
Per Class A-2
Securitization Bond
Per Class A-3
Securitization Bond
Per Class A-4
Securitization Bond
Per Class A-5
Securitization Bond
Per Class A-6
Securitization Bond
Total
$ $ $ $
=========== =========== =========== ===========
24
Original Issue Discount (if any):
Redemption provisions: At the Issuer's option when the
outstanding principal balance of
the Securitization Bonds has been
reduced to less than 5% of the
original principal balance and
provided there is no interest
rate swap agreement in effect
with respect to any class of the
Securitization Bonds, as set
forth in Section 10.01 of the
Indenture.
Floating Rate Class:
Other provisions:
Closing Date, Time and Location: March [ ], 2001, 10:00 AM;
offices of Xxxxx & Xxxx LLP,
New York, New York
Type of Offering: Delayed Offering
Date referred to in Section 5(a)(vi) and 5(b)(ii) after which the Company and
the Issuer may offer or sell, or do other acts regarding, asset-backed
securities without the consent of the Representative: [ ], 2001
25
SCHEDULE II
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6
Securitization Securitization Securitization Securitization Securitization Securitization
Underwriters Bonds Bonds Bonds Bonds Bonds Bonds
------------------------- -------------- -------------- -------------- -------------- -------------- --------------
Xxxxxxx Xxxxx Barney Inc. $ $ $ $ $ $
Total $ $ $ $ $ $
============== ============= ============= ============= ============== =============
Underwriters Total
------------------------- ---------------
Xxxxxxx Xxxxx Xxxxxx Inc. $
Total $
=============
26
EXHIBIT A
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Opinion Regarding Security Interest
Granted by Issuer to Trustee Under UCC]
The opinion will consist of the following:
1. The provisions of the Indenture are effective to create, in
favor of the Trustee pursuant to the Act and the Financing Order, a valid
security interest (as such term is defined in Section 1-201 of the Michigan UCC)
in the SPE's rights as the owner of the Securitization Property and of that
portion (the ""INTANGIBLE COLLATERAL") of the Collateral (as defined in the
Indenture) consisting of "accounts" (other than Securitization Property) or
"general intangibles (as each term is defined in Article 9 of the Michigan UCC).
2. The security interest in favor of the Trustee in the
Securitization Property and, to the extent a security interest therein can be
perfected by filing a financing statement under the Michigan UCC, in the
Intangible Collateral which is described in the SPE Financing Statement has been
perfected.
3. No other security interest of any other creditor of the SPE is
equal or prior to the security interest of the Trustee in the Securitization
Property and in that portion of the Intangible Collateral described in the SPE
Financing Statement.
A-1
27
EXHIBIT B
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Opinion Regarding True Sale Under Statute]
The opinion will consist of the following:
1. The provisions of the Sale Agreement and the Xxxx of Sale are
effective to constitute a sale or other absolute transfer to the Issuer of all
of Detroit Edison's right, title and interest in and to the Securitization
Property, and not a borrowing secured by the Securitization Property, other than
for federal, state and local tax purposes and financial accounting purposes; and
2. Such transfer of the Securitization Property has been
perfected as against third parties in accordance with the Act and the Michigan
UCC.
B-1
28
EXHIBIT C
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Opinion Regarding Security Enforceability
of Michigan LLC Provisions Under Federal Bankruptcy Law]
The opinion will consist of the following:
1. Under the Michigan Limited Liability Company Act and the
Issuer LLC Agreement, the bankruptcy or dissolution of Detroit
Edison would not, by itself, cause the Issuer to be dissolved
or its affairs to be wound up.
2. Upon application by a judgment creditor of Detroit Edison and
the issuance of an order of a court of competent jurisdiction
charging Detroit Edison's interest as a member of the Issuer
with payment of the unsatisfied amount of the judgment
creditor's judgment with interest, the judgment creditor would
be entitled to receive, as an assignee, Detroit Edison's share
of distributions from the Issuer to the extent charged, but
such judgment creditor would not be entitled to an interest in
any specific property of the Issuer.
3. (A) The Issuer is a separate legal entity, and
(B) the existence of the Issuer as a separate legal entity
will continue until dissolution.
4. A bankruptcy court would hold that compliance with those
provisions of the Issuer LLC Agreement and the Issuer Articles
of Organization requiring the prior unanimous written consent
of the Issuer's Managers to commence a Voluntary Case is
necessary in order to commence a Voluntary Case.
C-1
29
EXHIBIT D
[Detroit Edison Corporate General Counsel Opinion]
The opinion will consist of the following:
1. Detroit Edison has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan, and is duly qualified to do business in each jurisdiction where the
nature of Detroit Edison's business requires such qualification to the extent
such qualification and good standing is necessary to protect the validity and
enforceability of the Transaction Documents. Detroit Edison has the power and
authority to execute, deliver and perform its obligations under the Transaction
Documents and to own its properties and conduct its business as described in the
Registration Statement and the Final Prospectus.
2. The execution, delivery and performance by Detroit Edison of
the Transaction Documents and the consummation by Detroit Edison of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of Detroit Edison and each of the Transaction
Documents has been duly executed and delivered by Detroit Edison.
3. Each of the Transaction Documents (other than the Underwriting
Agreement) constitutes the valid and binding obligation of Detroit Edison,
enforceable against Detroit Edison in accordance with its terms under the laws
of the State of Michigan.
4. The Underwriting Agreement constitutes the valid and binding
obligation of Detroit Edison, enforceable against Detroit Edison in accordance
with its terms under the laws of the State of New York.
5. Detroit Edison holds all franchises, certificates of public
convenience, licenses and permits necessary to carry on the utility business in
which it is engaged, the absence of which would have a material adverse effect
on the financial condition of Detroit Edison or on the validity of the
Transaction Documents. All consents, approvals, authorizations of, or filings or
registrations with, any governmental body, authority or agency applicable to
Detroit Edison and required as a condition to the validity of the Transaction
Documents or in connection with the execution, delivery and performance by
Detroit Edison of the Transaction Documents have been obtained or made.
6. The execution, delivery and performance by Detroit Edison of
the Transaction Documents, each in accordance with its terms, do not (a)
conflict with the Restated Articles of Incorporation or Bylaws of Detroit
Edison, (b) conflict with or breach any of the material terms or provisions of,
or constitute (with or without notice or lapse of time) a default under any
indenture, material agreement or instrument to which Detroit Edison is a party
or by which Detroit Edison or any of its property is bound, (c) result in the
creation or imposition of any security interest or lien on any properties of
Detroit Edison pursuant to the terms of any such agreement or instrument, except
as provided in the Sale Agreement, (d) violate any law or any consent, order,
rule, regulation or decree of any court or federal or state regulatory body,
D-1
30
administrative agency or other governmental authority having jurisdiction over
Detroit Edison or any of its properties, or (e) violate any law, rule or
regulation applicable to Detroit Edison.
7. There is no pending and, to the best of my knowledge, no
threatened action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator involving Detroit Edison or any of its
subsidiaries, or involving or relating to the Financing Order or the collection
of the SB Charge or the use and enjoyment of the Securitization Property under
the Statute, of a character required to be disclosed in the Registration
Statement or the Final Prospectus that is not adequately disclosed in the Final
Prospectus, and there is no franchise, contract or document of a character
required to be described in the Registration Statement or the Final Prospectus
or be filed as an exhibit to the Registration Statement that is not described or
filed as required.
8. The Underwriting Agreement constitutes the valid and binding
obligation of Detroit Edison, enforceable against the Detroit Edison in
accordance with its terms under the laws of the State of New York.
9. The statements set forth in the final prospectus dated
March __, 2001 relating to the Securitization Bonds (together with the
Prospectus Supplement relating to the Securitization Bonds dated March __,
2001, the "Final Prospectus") (a) under the headings, "The Securitization Bonds"
(other than the statements under the subheading "Securitization Bonds Will Be
Issued in Book-Entry Form") and "The Series 2000-1 Securitization Bonds", "The
Sale Agreement", "The Servicing Agreement" and "The Indenture", insofar as they
purport to summarize certain provisions of the Issuer LLC Agreement, the
Securitization Bonds, the Sale Agreement, the Servicing Agreement and the
Indenture, respectively, constitute fair summaries of such provisions, and (b)
under the headings "The Detroit Edison Company" and "The Seller and Servicer of
the Securitization Property" are accurate in all material respects.
10. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and neither the
Sale Agreement nor the Servicing Agreement is required to be registered under
the Trust Indenture Act.
11. The Registration Statement has become effective under the
Securities Act; any required filing of the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by Rule 424(b); to the best of our
knowledge after due inquiry with the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened; and the Registration
Statement and the Final Prospectus (other than the financial statements and
other financial and statistical information contained therein, as to which we
express no opinion) comply as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder.
12. The Issuer is not, and after giving effect to the offering and
sale of the Securitization Bonds and the application of the proceeds thereof as
described in the Final Prospectus, will not be required to be registered as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
X-0
00
00. No facts have come to its attention that have led it to
believe that the Registration Statement at the effective date thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Final Prospectus contained as of its date or contains as
of the Closing Date an untrue statement of a material fact or omitted or omits,
as the case may be, to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that we express no opinion or belief with respect to (i) the
numerical, statistical and financial information included therein or excluded
therefrom, (ii) the Trustee's Statement of Eligibility and Qualification under
the Trust Indenture Act, on Form T-1 or (iii) the statements under the
subheading "The Securitization Bonds -- Securitization Bonds Will Be Issued in
Book-Entry Form".
D-3
32
EXHIBIT E
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Regulatory Opinion]
The opinion will consist of the following:
1. The Financing Order issued by the Commission authorizing the
issuance and sale of the securitization bonds is in effect and is a final
non-appealable order. The statutory period for timely appeal of the Commission's
decision in Case No. U-12478 has expired and no claim of appeal is outstanding.
2. The Commission has the necessary statutory authority to issue
the Financing Order, and the Financing Order conforms to and is in accordance
with its statutory authority, and the process by which it was issued complies
with the applicable laws, and rules and regulations, including Act 142. Act 142
has been duly enacted by the Michigan Legislature in accordance with the
Constitution and the applicable laws of Michigan, and is in full force and
effect. The Financing Order is effective in accordance with its terms, and the
Financing Order, together with the securitization charges authorized in the
order are irrevocable, and not subject to reduction, impairment or adjustment by
further action of the Commission, except as provided under Section 10k(3) of Act
142.
3. No other approval, authorization, consent, or order of the
Commission or any other state or local commission or governmental authority in
Michigan (other than under the securities or Blue Sky laws of the State of
Michigan, as to which no opinion is expressed) is required for the issuance and
sale of the securitization bonds or the performance by the Company of its
obligations and duties pursuant to the Financing Order.
4. The LLC constitutes an "Assignee" within the meaning of Act
142, to which an interest in the securitization property may be transferred. A
holder of securitization bonds, including trustees acting for the benefit of
bondholders is a "[f]inancing party" within the meaning of Act 142.
5. Once issued in conformance with the Financing Order and the
Act, the proposed securitization bonds will be "[s]ecuritization bonds" within
the meaning of Act 142.
X-0
00
XXXXXXX X
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Constitutional Opinion Regarding Michigan
Contract Clause and Takings Clause]
The opinion will consist of the following:
1. Based on interpretation of existing case law, in our opinion,
under the Contract Clauses of the Michigan Constitution, the State of Michigan,
including the Michigan Public Service Commission, could not constitutionally
take any action of a legislative character, including the repeal or amendment of
the Statute, which would substantially limit, alter or impair the Securitization
Property or other rights vested in the Securitization Bondholders pursuant to
the Financing Order, or substantially limit, alter, impair or reduce the value
or amount of the Securitization Property, unless such action is a reasonable
exercise of the State of Michigan's sovereign powers and of a character
reasonable and appropriate to the public purpose justifying such action.
2. Under the Takings Clauses of the Michigan Constitution, the
State of Michigan could not repeal or amend the Statute or take any other action
in contravention of its pledge and agreement (to be quoted) 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.
F-1
34
EXHIBIT G
[Xxxxx & Xxxx LLP Constitutional Opinion Regarding U.S. Contract
Clause and Takings Clause]
The opinion will consist of the following:
1. Under the Contract Clause, the State of Michigan, including
the electorate acting through its powers of referendum or initiative, and the
Michigan Public Service Commission, could not constitutionally take any action
of a legislative character, including the repeal or amendment of the Act, that
would substantially impair the Securitization Property or other rights vested in
the Securitization Bondholders pursuant to the Financing Order or reduce, alter,
or impair the Securitization Charges to be imposed, collected and remitted
pursuant to the Financing Order, unless such action is a reasonable exercise of
the State of Michigan's sovereign powers and of a character reasonable and
appropriate to the public purpose justifying such impairment of the State's own
obligation.
2. Under the Takings Clauses of the United States Constitution,
the State of Michigan could not repeal or amend the Act or take any other action
in contravention of its pledge quoted above 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. There is no assurance, however, that even if a court were to award just
compensation it would be sufficient to pay the full amount of principal of and
interest on the Securitization Bonds.
G-1
35
EXHIBIT H
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Opinion Regarding Mortgage Indenture]
The opinion will consist of the following:
1. The Securitization Property is not and will not be subject to
the lien and security interest of the Mortgage or part of the Trust Estate (as
defined therein) established under the Mortgage.
2. Without any notice to, consent of or release from the Mortgage
Trustee, the Company will be able to assign and sell the Securitization Property
to the Issuer free and clear of any lien or security interest under the
Mortgage.
3. Upon purchasing the Securitization Property from the Company
and without any notice to or consent of the Mortgage Trustee, the Issuer will be
able to xxxxx x xxxx and security interest in the Securitization Property to the
Bond Trustee as security for the payment of the Bonds free and clear of any lien
or security interest under the Mortgage.
4. Even if, contrary to certain reasoning and conclusions set
forth in the opinion letter, the language of the Mortgage were interpreted to
cover the Securitization Property, the Act does not result in a taking in
violation of the United States Constitution or the Michigan Constitution.
H-1
36
EXHIBIT I
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Corporate Opinion Regarding Issuer]
The opinion will consist of the following:
1. The Issuer is a duly formed and validly existing Michigan
limited liability company.
2. The Issuer LLC Agreement constitutes a valid and binding
agreement of Detroit Edison, as the member of the Issuer, and is enforceable
against Detroit Edison in accordance with its terms.
3. The Issuer has the limited liability company power and
authority to execute, deliver and perform its obligations under the Transaction
Documents and the Securitization Bonds and to own its properties and conduct its
business as described in the Registration Statement and the Final Prospectus.
4. The execution and delivery of each of the Transaction
Documents and the Securitization Bonds and the consummation by the Issuer of the
transactions contemplated thereby have been duly authorized by all requisite
limited liability company action on the part of the Issuer and each of the
Transaction Documents and the Securitization Bonds has been duly executed and
delivered by the Issuer.
5. The issue and sale of the Securitization Bonds by the Issuer,
the execution and delivery by the Issuer of each of the Transaction Documents
and the performance by the Issuer of its obligations under each of the
foregoing, each in accordance with its terms, do not (a) violate, 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 Articles of Organization or
the Issuer LLC Agreement, (b) violate any Applicable Law applicable to the
Issuer or (c) to the current actual knowledge of such counsel (i) violate or
breach any of the material terms or provisions of, or constitute (with or
without notice or lapse of time) a default under any indenture, material
agreement or instrument to which the Issuer is a party or by which the Issuer is
bound (the "Issuer Applicable Contracts"), (ii) result in the creation or
imposition of any security interest or lien on any properties of the Issuer
pursuant to the terms of any of the Issuer Applicable Contracts (other than as
contemplated by the Transaction Documents) or (iii) violate any consent, order
or decree of any court or federal or state regulatory body, administrative
agency or other governmental authority having jurisdiction over the Issuer or
any of its properties.
6. No consent, approval, license, authorization or validation of,
giving of notice to, or filing, recording or registration with, any governmental
authority pursuant to Applicable Law which has not been obtained or taken and is
not in full force and effect, is required under Applicable Law to authorize, or
is required under Applicable Law in connection with, the execution, delivery or
performance by the Issuer of any of the Transaction Documents or the
Securitization Bonds, or the performance by the Issuer of the transactions
contemplated by the Transaction Documents and the Securitization Bonds.
I-1
37
7. Each of the Transaction Documents (other than the Underwriting
Agreement) constitutes the valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms.
8. The Underwriting Agreement constitutes the valid and binding
obligation of the Issuer, enforceable against the Issuer in accordance with its
terms; provided, however, that the opinions expressed are limited to the laws of
Michigan and where applicable, the laws of the United States, and no opinion is
expressed concerning the laws of any other jurisdiction; and provided, further,
that such counsel note that the Underwriting Agreement provides that it is
governed by the law of the State of New York and have assumed, with the
addressee's permission, that the law of the State of New York is identical to
the law of Michigan in all respects material to such opinions, and such counsel
expresses no opinion concerning the validity of the governing law provisions of
the Underwriting Agreement.
9. The Securitization Bonds have been duly authorized and
executed, 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 the Underwriting Agreement, will constitute the valid and binding
obligations of the Issuer enforceable against the Issuer in accordance with
their respective terms and will be entitled to the benefits of the Indenture.
10. Neither the execution, delivery or performance by the Issuer
of the Transaction Documents or the Securitization Bonds nor the compliance by
the Issuer with the terms and provisions thereof nor the issuance and sale by
the Issuer of the Securitization Bonds, will contravene any provisions of any
Applicable Law of the State of Michigan or the United States of America (other
than securities or "blue sky" laws of Michigan or federal securities laws, as to
which no opinion is expressed).
I-2
38
EXHIBIT J
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP 10b-5/Fair Summary Letter]
The letter will consist of the following:
1. The statements set forth in the final prospectus dated
March __, 2001 relating to the Securitization Bonds (together with the
Prospectus Supplement relating to the Securitization Bonds dated March __, 2001,
the "Final Prospectus") (a) under the heading "The Detroit Edison Securitization
Funding LLC, The Issuer" are accurate in all material respects, (b) under the
heading "How a Bankruptcy of the Seller or Servicer May Affect Your Investment",
fairly summarize the matters described therein, and (c) under the heading
"Material Income Tax Consequences for the Securitization Bonds -- Material State
of Michigan Tax Consequences", fairly summarize the matters described therein,
and
2. The statements included in the Final Prospectus under the
headings "The Act" and "The MPSC Financing Order and the Securitization Bond
Charge", to the extent they purport to summarize provisions of the Statute and
the Financing Order, fairly summarize provisions of the Statute and the
Financing Order.
3. Other than as stated in paragraphs 1 and 2 above, without
having undertaken to determine independently the accuracy, completeness or
fairness of, or to verify, the information contained in the Registration
Statement, but on the basis of our participation in certain correspondence and
discussions held for the purposes of preparing the Formation Documents, the Sale
Agreement, the Servicing Agreement, the Administration Agreement, the Indenture
and the Underwriting Agreement (but not any Interest Rate Swap Agreement),
certain portions of the Registration Statement and related documents and for the
purpose of reviewing the summaries thereof contained in the Registration
Statement, in which correspondence and discussions representatives of the
Issuer, the Company, Xxxxxxx Xxxxx Barney and the Trustee, and their respective
counsel, were at various times participating, and on the basis of our review of
the above-mentioned documents, no facts have come to our attention that have led
us to believe that the Registration Statement at the effective date thereof
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Final Prospectus contained as of its date or
contains as of the Closing Date an untrue statement of a material fact or
omitted or omits, as the case may
J-1
39
be, to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that we express no opinion or belief with respect to (i) the numerical,
statistical and financial information included therein or excluded therefrom,
(ii) the Trustee's Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, on Form T-1, (iii) the statements under the
subheadings "The Securitization Bonds -- Securitization Bonds Will Be Issued in
Book-Entry Form" and "Certificated Securitization Bonds", or (iv) any statements
or information included therein or excluded therefrom with respect in any way to
(u) floating rate Securitization Bonds, (v) hedging, interest rate swap or other
such agreements or transactions, (w) any financial, payment or redemption terms
or provisions of the Securitization Bonds, (x) the Luxembourg Stock Exchange or
any other securities exchange or market on or in which the Securitization Bonds
may be listed or traded, (y) federal taxation, or (z) any opinions of counsel
(other than Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP) or opinions or reports of
other professionals.
J-2
40
EXHIBIT K
[Xxxxxxxx Xxxxxx Xxxxxxxx Xxxx LLP Opinion Regarding True Sale of
Securitization Property from Detroit Edison to Issuer Under
Federal Bankruptcy Law and Substantive Consolidation of
Detroit Edison and Issuer]
The opinion will consist of the following:
(i) In the event of a case under the Bankruptcy Code in which
Detroit Edison was a debtor, the court would find that the transfer of the
Securitization Property by Detroit Edison to the Issuer constituted an absolute
sale of such assets by Detroit Edison to the Issuer so that (a) such
Securitization Property (including the collections thereon) would not be
property of the bankruptcy estate of Detroit Edison under Section 541(a) of the
Bankruptcy Code, (b) the bankruptcy court would not compel the turnover of such
Securitization Property or the proceeds thereof to Detroit Edison under Section
542 of the Bankruptcy Code, and (c) the Issuer's rights in the Securitization
Property and the proceeds thereof would not be impaired by the operation of
Section 362(a) of the Bankruptcy Code.
(ii) In the event of a case under the Bankruptcy Code in which
Detroit Edison was a debtor, the court would not disregard the separate
existence of Detroit Edison and the Issuer so as to order substantive
consolidation of the assets and liabilities of the Issuer with the assets and
liabilities of Detroit Edison, where the Issuer was not also a debtor under the
Bankruptcy Code and where the Issuer and its creditors actively opposed
substantive consolidation.
K-1
41
EXHIBIT L
[Xxxxx & Wood LLP Opinion]
The opinion will consist of the following:
1. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and neither the
Sale Agreement nor the Servicing Agreement is required to be registered under
the Trust Indenture Act.
2. The Registration Statement has become effective under the
Securities Act; any required filing of the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by Rule 424(b); to the best of our
knowledge after due inquiry with the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened; and the Registration
Statement and the Final Prospectus (other than the financial statements and
other financial and statistical information contained therein, as to which we
express no opinion) comply as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder.
3. The Issuer is not, and after giving effect to the offering and
sale of the Securitization Bonds and the application of the proceeds thereof as
described in the Final Prospectus, will not be required to be registered as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
4. The statements set forth in the final prospectus dated
March __, 2001 relating to the Securitization Bonds (together with the
Prospectus Supplement relating to the Securitization Bonds dated March __, 2001,
the "Final Prospectus") (a) under the headings, "The Securitization Bonds" other
than the statements under the subheading "Securitization Bonds Will Be Issued in
Book-Entry Form") and "The Series 2001 Securitization Bonds", "The Sale
Agreement", "The Servicing Agreement" and "The Indenture", insofar as they
purport to summarize certain provisions of the Issuer LLC Agreement, the
Securitization Bonds, the Sale Agreement, the Servicing Agreement and the
Indenture, respectively, constitute fair summaries of such provisions, (b) under
the heading "ERISA Considerations", fairly summarize the matters described
therein, (c) under the heading "Material Income Tax Consequences for the
Securitization Bonds" but excluding the statements under the subheading
"Material State of Michigan Tax Consequences", fairly summarize the matters
described therein, and (d) to the extent they purport to summarize the Interest
Rate Swap Agreement fairly summarize the provision thereof.
5. No facts have come to our attention that have led us to
believe that the Registration Statement at the effective date thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Final Prospectus contained as of its date or contains as
of the Closing Date an untrue statement of a material fact or omitted or omits,
as the case may
L-1
42
be, to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that we express no opinion or belief with respect to (i) the numerical,
statistical and financial information included therein or excluded therefrom,
(ii) the Trustee's Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, on Form T-1 or (iii) the statements under the
subheading "The Securitization Bonds -- Securitization Bonds Will Be Issued in
Book-Entry Form".
L-2
