EXHIBIT 10.1
Execution Copy
================================================================================
LOAN AGREEMENT
Between
MICHIGAN STRATEGIC FUND
And
THE DETROIT EDISON COMPANY
$119,175,000
MICHIGAN STRATEGIC FUND
VARIABLE RATE LIMITED OBLIGATION REFUNDING REVENUE BONDS
(THE DETROIT EDISON COMPANY EXEMPT FACILITIES PROJECT),
SERIES 2005DT
------------------------------
Dated as of
August 1, 2005
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INTERPRETATIONS........................................................ 1
Section 1.1. Definitions................................................................. 1
Section 1.2. Interpretations............................................................. 2
ARTICLEII REFUNDING OF PRIOR BONDS............................................................... 3
Section 2.1. Refunding Fund.............................................................. 3
Section 2.2. Refunding of Prior Bonds.................................................... 3
Section 2.3 Investment of Bond Fund; Non-Arbitrage Covenant............................. 3
ARTICLE III ISSUANCE OF THE BONDS; LOAN; DISPOSITION OF LOAN PROCEEDS............................ 3
Section 3.1. Issuance of the Bonds....................................................... 3
Section 3.2. Loan........................................................................ 4
Section 3.3. Procurement of Municipal Bond Insurance Policy.............................. 4
ARTICLE IV COMPANY OBLIGATIONS, LOAN PAYMENTS AND OTHER PECUNIARY OBLIGATIONS.................... 4
Section 4.1. Company Approval of Issuance of Bonds....................................... 4
Section 4.2. Refunding of Bonds.......................................................... 5
Section 4.3. Redemption of Bonds......................................................... 5
Section 4.4. Loan Payments............................................................... 5
Section 4.5. Purchase Price Payments of the Company...................................... 7
Section 4.6. Administrative Expenses..................................................... 8
Section 4.7. Payment of Other Costs of Issuer............................................ 8
Section 4.8. Obligations of the Company Absolute and Unconditional....................... 8
Section 4.9. Option to Prepay Amounts Under Agreement in Whole in Certain Events......... 8
Section 4.10. Company's Performance Under Indenture...................................... 9
Section 4.11. Credit Facility............................................................ 9
ARTICLE V RESERVED
ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER............................... 10
Section 6.1. Representations and Warranties of the Issuer................................ 10
Section 6.2. Covenants of the Issuer..................................................... 12
ARTICLE VII INDEMNIFICATION; REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY............ 12
-i-
Section 7.1. Indemnification of Issuer and Indemnified Persons........................... 12
Section 7.2. Filing and Recording........................................................ 14
Section 7.3. Removal of Liens............................................................ 14
Section 7.4. Federal Income Tax Exemption................................................ 14
Section 0.0.Xxxxxxx Representations and Covenants ....................................... 17
Section 7.6. Maintenance of Corporate Existence.......................................... 19
Section 7.7. Financial Information....................................................... 19
Section 7.8. Agreement of Issuer Not to Assign or Pledge................................. 19
Section 7.9. Reference to Bonds Ineffective After Bonds Paid............................. 19
Section 7.10. Assignments or Lease of Project............................................ 19
Section 7.11. Amendment of Agreement or Indenture........................................ 20
Section 7.12. Indemnification of the Trustee............................................. 20
ARTICLE VIII ASSIGNMENT.......................................................................... 20
Section 8.1. Assignment by the Company................................................... 20
Section 8.2. Issuer's Rights of Assignment............................................... 21
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES........................................................ 21
Section 9.1. Trustee and Remedies........................................................ 21
Section 9.2. Annulment of Acceleration................................................... 22
Section 9.3. Agreement to Pay Attorneys' Fees and Expenses............................... 22
Section 9.4. General Enforcement Provisions.............................................. 23
ARTICLE X GENERAL PROVISIONS..................................................................... 23
Section 10.1. Force Majeure.............................................................. 23
Section 10.2. Third Party Beneficiaries.................................................. 23
Section 10.3. Notices; Communications.................................................... 24
Section 10.4. Amendments, Governing Law, Etc............................................. 24
Section 10.5. Severability............................................................... 25
Section 10.6. Term of Agreement.......................................................... 25
Section 10.7. Company's Approval of Bond Documents....................................... 25
Section 10.8. Counterparts............................................................... 25
Section 10.9. Captions................................................................... 25
Section 10.10. Payments on Non-Business Days............................................. 25
-ii-
Execution Copy
LOAN AGREEMENT
between
MICHIGAN STRATEGIC FUND
and
THE DETROIT EDISON COMPANY
THIS LOAN AGREEMENT, dated as of August 1, 2005, is made and entered into
between MICHIGAN STRATEGIC FUND, a public body corporate and politic of the
State of Michigan (the "Issuer"), and THE DETROIT EDISON COMPANY, a Michigan
corporation (the "Company").
R E C I T A L S:
The Issuer is authorized and empowered under the Michigan Strategic Fund
Act, which is Act Xx. 000, Xxxxxx Xxxx xx Xxxxxxxx, 0000, as amended (the
"Act"), to issue bonds for the purposes of paying all or part of the cost of
construction and installation of certain pollution control facilities of the
Company or to refund bonds permitted to be refunded under the Act, and to enter
into loan agreements for the purpose of providing funds sufficient to pay the
principal of, and premium, if any, and interest on, such bonds; and
The Issuer proposes to issue and sell bonds to refund certain bonds issued
by the Issuer, for the benefit of the Company, all in accordance with the Bond
Resolution adopted by the governing body of the Issuer on July 21, 2005.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby
and in consideration of the premises, DO HEREBY AGREE as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1. Definitions. Terms used in this Agreement which are defined
in the Indenture and not defined in this Agreement have the same meanings which
are assigned to such terms in the Indenture (as defined below). The following
terms have the meanings assigned to them below whenever they are used in this
Agreement. Except where the context otherwise requires, words imparting the
singular number shall include the plural number and vice versa. Reference to any
Bond Document means that Bond Document as amended or supplemented from time to
time. Reference to any party in a Bond Document means that party and its
successors and assigns.
"Act" means the Michigan Strategic Fund Act, Act Xx. 000, Xxxxxx Xxxx xx
Xxxxxxxx, 0000, as amended.
"Agreement" means this Loan Agreement.
"Costs of Issuance" means any items of expense directly or indirectly
payable or reimbursable by the Company and directly or indirectly attributable
to the authorization, sale and issuance of the Bonds, including, but not limited
to, printing costs; costs of preparation and reproduction of documents; initial
fees and charges of the Trustee, the Registrar and the Paying Agent; legal fees
and charges, if any; underwriting discount or fees paid to the Underwriter in
connection with the initial offering and sale of the Bonds; the Issuer fees and
direct out-of-pocket expenses incurred in issuing and paying the Bonds and
loaning the proceeds of the Bonds to the Company; municipal bond insurance
premiums; fees and disbursements of Bond Counsel and other attorneys' fees; and
costs of credit ratings.
"Event of Default" means an Event of Default as defined in Section 9.1(b)
of this Agreement.
"Force Majeure" means acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, orders of any kind of the government of
the United States of America, or of any state thereof, or any civil or military
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, hurricanes, tornadoes, storms, floods, washouts, droughts, arrests,
restraining of government and people, civil disturbances, explosions, nuclear
accidents, wars, breakage or accidents to machinery, transmission pipes or
canals, partial or entire failure of utilities or energy suppliers, shortages of
labor, material, supplies or transportation, or any other cause not reasonably
within the control of the party claiming the inability to perform.
"Indemnified Persons" means the Issuer or any of its officers, members,
employees, agents, and any other Person acting for or on behalf of the Issuer.
"Indenture" means that certain Trust Indenture, dated as of the date of
this Agreement, between the Issuer and the Trustee, pursuant to which the Bonds
are issued.
"Loan Payments" means the payments to be made by the Company pursuant to
Section 4.4 of this Agreement.
"Organizational Documents" means as to the Company, its Articles of
Incorporation as filed with the Secretary of State of the State of Michigan, and
its Bylaws in effect on the date of this Agreement.
"State" means the State of Michigan.
Section 1.2. Interpretations. The table of contents and article and
section headings of this Agreement are for reference purposes only and shall not
affect its interpretation in any respect.
- 2 -
ARTICLE II
REFUNDING OF PRIOR BONDS
Section 2.1. Refunding Fund. The Issuer has authorized the issuance and
sale of the Bonds in the aggregate principal amount of $119,175,000. Upon
issuance and delivery thereof, the proceeds of the Bonds shall be deposited with
the Trustee in the Refunding Fund and the Bond Fund in accordance with the
Indenture. The obligations of the Issuer and the Company under this Agreement
are expressly conditioned upon delivery of the Bonds and receipt of the proceeds
thereof.
Section 2.2. Refunding of Prior Bonds. The Company agrees to pay all Costs
of Issuance and all costs of refunding the Prior Bonds which are not, or cannot
be, paid or reimbursed from the proceeds of the Bonds, including accrued
interest and redemption premiums, if any, and to make such payments in
compliance with its covenants in Section 7.4 of this Agreement. The Company
agrees that it shall not be entitled to reimbursement from the Issuer or from
any Owners for payment of the Costs of Issuance or costs of refunding the Prior
Bonds, nor shall it be entitled, as a consequence of such unreimbursed payments,
to any abatement, postponement or diminution of the amounts payable under this
Agreement.
Section 2.3 Investment of Bond Fund; Non-Arbitrage Covenant. Any moneys
held as part of the Bond Fund or Refunding Bond shall be invested, reinvested or
applied by the Trustee in accordance with and subject to the conditions of
Article VII of the Indenture. The Company and the Issuer shall make no use of
the proceeds of the Bonds, or any funds which may be deemed to be proceeds of
the Bonds pursuant to Section 148 of the Code and the applicable regulations
thereunder, which would cause the Bonds to be "arbitrage bonds" within the
meaning of such Section and such regulations, and the Company shall comply with
the requirements of such Section and such regulations while any Bonds remain
Outstanding.
In order to insure that interest on the Bonds is not and will not become
subject to Federal income taxes as a result of failure of the Bonds to satisfy
Section 103(b) of the Code, the Company covenants with the Issuer and the
Trustee that it will, on or before the date of issuance of the Bonds, supply to
the Issuer and the Trustee all information required under Internal Revenue
Service Form 8038, Information Return for Private Activity Bond Issues.
ARTICLE III
ISSUANCE OF THE BONDS;
LOAN; DISPOSITION OF LOAN PROCEEDS
Section 3.1. Issuance of the Bonds. The Issuer agrees that immediately
following the delivery of this Agreement it will execute and deliver the
Indenture and issue, sell and deliver the Bonds to the Underwriter. The Bonds
shall be limited obligations of the Issuer and shall be
- 3 -
payable by the Issuer solely out of the Revenues derived from or in connection
with the Bond Documents. The Bonds shall never be payable out of any other funds
of the Issuer or the State.
The Company agrees to pay, promptly following demand therefor, all Costs
of Issuance paid, incurred or charged by the Issuer, the Trustee, the Paying
Agent, the Remarketing Agent, the Auction Agent and the Registrar, including
without limitation all fees required to be paid to the Issuer by the Company,
and all out-of-pocket expenses and costs of issuance reasonably incurred by the
Issuer, the Trustee, the Paying Agent, the Remarketing Agent, the Auction Agent
and the Registrar in connection with the issuance and remarketing of the Bonds.
Section 3.2. Loan. Concurrently with the delivery of the Bonds, the Issuer
will, upon the terms and subject to the conditions of this Agreement, lend to
the Company, by deposit of the proceeds thereof with the Trustee in the
Refunding Fund in accordance with the Indenture, an amount equal to the proceeds
of the Bonds for application as provided in the Indenture to refund the Prior
Bonds. Interest and redemption premiums, if any, due on the Prior Bonds and
Costs of Issuance with respect to the Bonds shall be paid with money provided by
the Company, which may include investment income on amounts on deposit in the
Refunding Fund as provided in Section 6.01 of the Indenture.
Section 3.3 Procurement of Municipal Bond Insurance Policy. The Company,
at no cost to the Issuer, shall procure the Municipal Bond Insurance Policy so
that it is in full force and effect concurrent with the delivery of the Bonds by
the Issuer to secure the payment of the principal of and interest on the Bonds.
ARTICLE IV
COMPANY OBLIGATIONS, LOAN PAYMENTS
AND OTHER PECUNIARY OBLIGATIONS
Section 4.1. Company Approval of Issuance of Bonds. Simultaneously with
the authorization of this Agreement by the governing body of the Issuer, the
governing body has adopted the Bond Resolution and authorized the execution of
the Indenture. The Company hereby approves the Bond Resolution and the
Indenture. It is hereby agreed that the foregoing approval of the Bond
Resolution and the Indenture constitutes the acknowledgement and agreement of
the Company that the Bonds, when issued, sold and delivered as provided in the
Bond Resolution and the Indenture, will be issued in accordance with and in
compliance with this Agreement, notwithstanding any other provisions of this
Agreement or any other contract or agreement to the contrary. Any Owner is
entitled to rely fully and unconditionally on the foregoing approval.
Notwithstanding any provisions of this Agreement or any other contract or
agreement to the contrary, the Company's approval of the Bond Resolution and the
Indenture shall be the Company's agreement that all covenants and provisions in
this Agreement and the Indenture affecting the Company shall, upon the delivery
of the Bonds and the Indenture, become unconditional, valid and binding
covenants and obligations of the Company so long as the Bonds and the interest
thereon are outstanding and unpaid. Particularly, the obligation of the
- 4 -
Company to pay, promptly when due, all Loan Payments specified in this Agreement
and the Indenture shall be absolute and unconditional, and said obligation may
be enforced as provided in this Agreement and the Indenture.
Section 4.2. Refunding of Bonds. After the issuance of any Bonds, the
Issuer shall not refund any of the Bonds or change or modify the Bonds in any
way, except as provided for in the Indenture, without the prior written approval
of an Authorized Company Representative; nor shall the Issuer redeem any Bonds
prior to the Maturity Date except upon the request of an Authorized Company
Representative, unless such redemption is required by the Indenture.
Section 4.3. Redemption of Bonds. The Issuer, upon the written request of
the Company (and provided that the affected Bonds are subject to redemption
prior to maturity at the option of the Issuer, or the Company, and provided that
such request is received in sufficient time prior to the date upon which such
redemption is proposed), promptly shall take or cause to be taken all action
that may be necessary under the applicable redemption provisions to effect such
redemption prior to maturity, to the full extent of funds either made available
for such purpose by the Company or already on deposit in the Bond Fund and
available for such purpose. The redemption of any Outstanding Bonds prior to
maturity at any time shall not relieve the Company of its absolute and
unconditional obligation to pay each remaining Loan Payment, with respect to any
Outstanding Bonds, as specified in the Indenture. If a redemption of Bonds is
required pursuant to the provisions of the Indenture, the Company agrees as
provided herein to promptly make Loan Payments sufficient to pay the principal
of, premium, if any, and interest on the Bonds due on such redemption date.
Section 4.4. Loan Payments. (a) To repay the loan, the Company hereby
covenants and agrees to make the Loan Payments, as hereinafter provided in
subsections (b), (c), (f) and (h) of this Section, to the Trustee, or the Paying
Agent for the account of the Trustee, on behalf of the Issuer in accordance with
this Agreement.
(b) The Company shall make Loan Payments, subject to the limitations of
subsection (e) below of this Agreement, in immediately available funds directly
to the Trustee or the Paying Agent for deposit in the Bond Fund on or before
each day on which any payment of principal of, premium, if any, or interest on
the Bonds shall become due (whether at maturity or upon redemption or
acceleration or otherwise) in an amount which, together with other money held by
the Trustee under the Indenture and available therefor, will enable the Trustee
to make such payment in full when due in accordance with the Indenture.
(c) In the event the Company should fail to make any of the Loan Payments
required in this Section, the Loan Payment so in default shall continue as an
obligation of the Company until the amount in default shall have been fully
paid, and the Company agrees to pay the same with interest thereon at the rate
then borne by the Bonds, to the extent permitted by law and subject to the
provisions of subsection (e) below, from the date when such payment was due as
provided in the Indenture.
(d) If, subsequent to or on a date on which the Company is obligated to
pay the Loan Payments (subject to provisions of Article VIII of the Indenture),
losses (net of gains) shall be
- 5 -
incurred in respect of any investments, or any other event has occurred causing
the money in the Bond Fund, together with any other money then held by the
Trustee and available for the purpose of the Bond Fund, to be less than the
amount sufficient at the time of such occurrence or other event to pay, in
accordance with the provisions of the Indenture, all amounts due and payable or
to become due and payable, the Trustee shall notify the Company of such fact and
thereafter the Company, as and when required for purposes of such Bond Fund,
shall pay in immediately available funds to the Trustee for deposit in the Bond
Fund the amount of any such reduction below such sufficient amount.
(e) Notwithstanding any provision of the Bond Documents to the contrary,
in no event (including without limitation the acceleration of maturity of the
Bonds or the redemption of the Bonds pursuant to the Bond Documents) shall the
amount of interest contracted for, charged, received, reserved or taken in
connection with the loan made hereunder (together with any other costs or
considerations that constitute interest under applicable law which are
contracted for, charged, received, reserved or taken pursuant to the Bond
Documents) (collectively, "Interest") exceed the amount of interest which could
have been contracted for, charged, reserved, received or taken at the Maximum
Interest Rate. This provision shall be held to operate to deny the Owners the
right, in any event, to collect usury.
(f) The Company further agrees that in the event payment of the principal
of and the interest on the Bonds is accelerated upon the occurrence of an Event
of Default under the Indenture, all amounts payable under Section 4.4(b) for the
remainder of the term hereof (other than interest not yet due) shall be
immediately due and payable.
(g) Any amount held in the Bond Fund on any payment date specified in
subsection (b) above shall be credited against the Loan Payments required to be
made by the Company on such date.
(h) The Company shall be obligated to prepay in whole or in part the
amounts payable hereunder upon a Determination of Taxability (as defined below)
giving rise to a mandatory redemption of the Bonds pursuant to Section 4.03 of
the Indenture, by paying an amount equal to, when added to other funds on
deposit in the Bond Fund, the aggregate principal amount of the Bonds to be
redeemed pursuant to the Indenture plus accrued interest to the redemption date.
(i) The Company shall cause a mandatory redemption to occur within 180
days after a Determination of Taxability (as defined below) shall have occurred.
A "Determination of Taxability" shall be deemed to have occurred if, as a result
of the failure of the Company to observe any covenant, agreement or
representation in this Agreement, an opinion of Bond Counsel obtained by the
Company, or a final decree or judgment of any federal court or a final action of
the Internal Revenue Service determines that interest paid or payable on any
Bond is or will be includible in the gross income of an Owner of the Bonds for
federal income tax purposes under the Code (other than an Owner who is a
"substantial user" or "related person" within the meaning of Section 103(b)(13)
of the 1954 Code). However, no such decree or action will be considered final
for this purpose unless the Company has been given written notice of the same,
either directly or in the name of any Owner of a Bond, and, if it so desires and
is legally allowed,
- 6 -
has been afforded the opportunity to contest the same, either directly or in the
name of any Owner of a Bond, and until conclusion of any appellate review, if
sought. If the Trustee receives written notice from the Issuer or any Owner of a
Bond stating (a) that the Issuer or the Owner has been notified in writing by
the Internal Revenue Service that it proposes to include the interest on any
Bond in the gross income of such Owner for the reasons described therein or any
other proceeding has been instituted against the Issuer or such Owner which may
lead to a final decree or action as described herein, and (b) that the Issuer or
such Owner will afford the Company the opportunity to contest the same, either
directly or in the name of the Issuer or the Owner, until a conclusion of any
appellate review, if sought, then the Trustee shall promptly give notice thereof
to the Company, the Issuer, the Provider, if any, and the Owner of each Bond
then Outstanding. If a final decree or action as described above thereafter
occurs and the Trustee has received written notice thereof, the Trustee promptly
shall request prepayment from the Company of the amounts payable hereunder and
give notice of the redemption of the Bonds at the earliest practical date, but
not later than the date specified in this Article, and in the manner provided by
Section 4.05 of the Indenture.
At the time of any such prepayment of the amounts payable hereunder
pursuant to this Section, the prepayment amount shall be applied, together with
other available moneys in the Bond Fund, to the redemption of the Bonds on the
date specified in the notice as provided in the Indenture, whether or not such
date is an Interest Payment Date, to the Trustee's fees and expenses under the
Indenture accrued to such redemption of the Bonds, and to all sums due to the
Issuer under this Agreement.
Notwithstanding any provision herein or in the Insurance Agreement to the
contrary, no payments of principal of or interest on the Bonds shall be due or
paid by the Company hereunder to the extent that such amounts have been paid by
or on behalf of the Municipal Bond Insurer pursuant to the Municipal Bond
Insurance Policy and applied by the Trustee for such payment in accordance with
the Indenture and the Company has provided sufficient funds for reimbursement to
the Municipal Bond Insurer under the Insurance Agreement for such payment.
Whenever any notice of prepayment of the amounts payable hereunder
pursuant to this Article IV has been given, which includes a notice for
redemption of the Bonds pursuant to the Indenture, all amounts payable under the
first paragraph of this Section 4.4(i) shall become due and payable on the date
fixed for redemption of such Bonds.
Section 4.5. Purchase Price Payments of the Company. (a) In addition to
the amounts payable by the Company under Section 4.4, on or prior to each date
on which the Paying Agent is required to disburse the purchase price for any
Bond tendered or deemed tendered in accordance with Article III of the
Indenture, the Company will pay or cause to be paid, as necessary, by the time
and in the manner specified in the Indenture, to the extent remarketing proceeds
are unavailable therefor, the purchase price of bonds tendered to the Paying
Agent (as agent for the Owners) pursuant to Article III of the Indenture, in
lawful money of the United States of America (as required by the Indenture),
which will be held in trust for the benefit of the tendering Owners or Owners
that are deemed to have been tendered in an amount which, together with any
amounts available to the Paying Agent for said purpose, will be sufficient to
pay the purchase price for all Bonds which are to be purchased on such date.
- 7 -
(b) The Issuer shall have no obligation, financial or otherwise, with
respect to payment of the purchase price of any Bonds required to be purchased
pursuant to the Indenture, or for arrangements therefor, except that the Issuer
shall generally cooperate with the Company, the Trustee, the Paying Agent and
the Remarketing Agent, as contemplated in the Indenture.
Section 4.6. Administrative Expenses. The Company shall pay, or cause to
be paid, an amount equal to (i) the reasonable fees and charges of the Trustee
for services rendered as Trustee under the Indenture and its reasonable expenses
incurred as Trustee under the Indenture, including reasonable fees of its
counsel, and (ii) the reasonable fees and charges of the Paying Agent and the
reasonable expenses incurred by the Paying Agent as and when the same become
due, including the reasonable fees of its counsel.
Section 4.7. Payment of Other Costs of Issuer. The Company shall pay to
the Issuer, upon receipt of statements therefor from time to time, such amounts
as are necessary to pay or reimburse the Issuer for its reasonable and necessary
expenses and costs attributable to the Bonds.
Section 4.8. Obligations of the Company Absolute and Unconditional. The
obligations of the Company to make the payments required in Sections 2.2, 3.1,
4.4, 4.5, 4.6, 4.7, 7.1 and 9.3 and to perform and observe the other agreements
on its part contained herein shall be absolute and unconditional and shall not
be subject to diminution by set-off, counterclaim, abatement or otherwise. Until
payment of all principal of, premium, if any, and interest on the Bonds, and
payment in full of the purchase price of any Bonds purchased pursuant to the
Indenture, and payment of all other amounts payable by the Company hereunder,
the Company (a) will not suspend or discontinue any payments provided for in
this Agreement, except to the extent the same have been prepaid, (b) will
perform and observe all its other agreements contained herein, and (c) except as
provided in Section 7.6, will not terminate this Agreement for any cause,
including, without limiting the generality of the foregoing, any acts or
circumstances that may constitute failure of consideration, sale, loss, eviction
or constructive eviction, destruction of or damage to the Project, commercial
frustration of purpose, any change in the tax or other laws of the United States
of America or of the State or any political subdivision of either, or any
failure of the Issuer to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or in connection
herewith or with the Indenture. Nothing contained in this Section shall be
construed to release the Issuer from the performance of any of the agreements on
its part herein contained and in the event the Issuer shall fail to perform any
such agreement on its part, the Company may take such action as the Company may
deem necessary to perform or compel performance, provided that no such action
shall violate the agreements on the part of the Company contained in this
Agreement or postpone or diminish the amounts required to be paid by the Company
pursuant to this Agreement. Upon the issuance and delivery of the Bonds to the
initial purchasers thereof, the Company shall have received, and the Issuer
shall have given, full and complete consideration for the Company's obligation
hereunder to make Loan Payments.
Section 4.9. Option to Prepay Amounts Under Agreement in Whole in Certain
Events. The Company shall have, and is hereby granted, the option to prepay the
amounts required to be paid by the Company under Section 4.4 in whole and to
direct the Trustee to redeem the Bonds
- 8 -
in whole if any of the events described in the Indenture permitting such
redemption shall have occurred. The Company may at any time deliver money,
and/or Government Obligations to the Trustee with instructions to the Trustee to
hold such money and Government Obligations pursuant to Article VIII of the
Indenture in connection with a discharge of the Indenture.
The Issuer agrees that, at the request at any time of the Company, it will
cooperate with the Company to cause the Bonds or any portion thereof to be
redeemed to the extent permitted by the Indenture.
Section 4.10. Company's Performance Under Indenture. The Company agrees,
for the benefit of the Owners, to do and perform all acts and things
contemplated in the Indenture to be done or performed by it and to not interfere
with the exercise of the power and authority granted to the Trustee in the
Indenture. The Company further agrees to aid in furnishing to the Issuer or the
Trustee any documents, certificates or opinions that may be required under the
Indenture.
Section 4.11 Credit Facility. (a) Initially, there shall be no Credit
Facility. The Company, after receiving the written consent of the Municipal Bond
Insurer (unless a Municipal Bond Insurer Default shall have occurred and be
continuing), may at any time provide for a Change of Credit Facility, provided
that the Company delivers to the Trustee, the Auction Agent, the Municipal Bond
Insurer and the Remarketing Agent, not less than five Business Days prior to the
date on which the Trustee must notify the Owners of a Change of Credit Facility
pursuant to Section 2.18 of the Indenture and prior to the effective date of any
such Change of Credit Facility, the following:
(1) a notice which (A) states the effective date of the delivery of
the Credit Facility or the date of the Change of Credit Facility, (B)
describes the terms of the Change of Credit Facility, and (C) directs the
Trustee to give notice pursuant to Section 2.18(a) of the Indenture;
(2) a Favorable Opinion of Bond Counsel with respect to such Change
of Credit Facility and stating, in effect, that such Change of Credit
Facility is authorized under this Agreement;
(3) a certificate of an Authorized Company Representative as to
whether the Bonds are then rated by either Moody's or S&P, or both; and
(4) written evidence from Moody's, if the Bonds are then rated by
Moody's, and from S&P, if the Bonds are then rated by S&P, in each case to
the effect that such rating agency has reviewed the proposed Change of
Credit Facility and that such Change of Credit Facility will not, by
itself, result in a reduction, suspension or withdrawal of its rating or
ratings of the Bonds.
(b) In lieu of satisfying the requirements of subsection (a) above, the
Company, after receiving the written consent of the Municipal Bond Insurer
(unless a Municipal Bond Insurer Default shall have occurred and be continuing),
may provide for a Change of Credit Facility at any time that the Bonds are
subject to optional redemption pursuant to Section 4.02(b) of the
- 9 -
Indenture, provided that the Company delivers to the Trustee, the Municipal Bond
Insurer, the Auction Agent and the Remarketing Agent not less than 30 days
before the effective date of the Change of Credit Facility:
(1) a notice which (A) states the effective date of the Change of
Credit Facility, (B) describes the terms of the Change of Credit Facility,
(C) directs the Trustee to give notice pursuant to Section 2.18(b) of the
Indenture that the Bonds are subject to mandatory purchase, in whole, on
or before the effective date of the Change of Credit Facility in
accordance with Section 3.02(a)(iii) of the Indenture, and (D) directs the
Trustee to take any other action as shall be necessary for the Trustee to
take to effect the Change of Credit Facility; and
(2) on or before the effective date of the Change of Credit
Facility, the Company shall furnish to the Trustee a Favorable Opinion of
Bond Counsel satisfying the requirements of Section 4.11(a)(2) above.
(c) The Company, after receiving the written consent of the Municipal Bond
Insurer (unless a Municipal Bond Insurer Default shall have occurred and be
continuing), may provide for one or more extensions of a Credit Facility for any
period commencing after its then-current expiration date without complying with
the foregoing provisions of this Section.
(d) The Company may rescind its election to make a Change of Credit
Facility at any time prior to the effective date thereof.
ARTICLE V
RESERVED
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER
Section 6.1. Representations and Warranties of the Issuer. The Issuer
represents and warrants that:
(a) The Issuer is a public body corporate and politic of the State
of Michigan duly created under the Act.
(b) The Issuer has full power and authority under the Act and the
Constitution and laws of the State to adopt the Bond Resolution, to issue
the Bonds, to execute and deliver the Bond Documents to be executed and
delivered by it and to perform its obligations under the Bond Documents.
- 10 -
(c) The Issuer has duly adopted the Bond Resolution, and has duly
authorized the execution and delivery of the Bond Documents to be executed
and delivered by it. All action required on the part of the Issuer for the
authorization of the issuance of the Bonds and the execution and delivery
of the Bond Documents to be executed and delivered by it has been duly and
effectively taken.
(d) The Bond Documents to which the Issuer is a party constitute
valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms (except that (i) the enforceability
of such Bond Documents may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws of general application
relating to the enforcement of creditors' rights, (ii) certain equitable
remedies, including specific performance, may be unavailable and (iii) the
indemnification provisions contained therein may be limited by applicable
securities laws and public policy).
(e) All filings with, or approvals or consents of, governmental
authorities (other than approvals or consents required under the Blue Sky
or other securities laws of any jurisdiction) required to be made or
obtained by the Issuer for (i) the valid adoption of the Bond Resolution,
(ii) the valid authorization, execution and delivery by the Issuer of the
Bond Documents to which it is a party and (iii) the valid issuance of the
Bonds, have been, or prior to the issuance of the Bonds, will be, duly
made or obtained.
(f) There is no pending action, suit, proceeding or investigation at
law or in equity before or by any court, either state or federal, or
public board or body served upon the Issuer or, to the Issuer's knowledge,
threatened, calling into question the creation or existence of the Issuer,
the validity of the Bond Resolution and the Bond Documents to be executed
and delivered by it, the authority of the Issuer to execute and deliver
the Bond Documents to be executed and delivered by it and to perform its
obligations under the Bond Documents, or the title of any person to the
office held by that person with the Issuer.
(g) The execution and delivery by the Issuer of the Bond Documents
to be executed and delivered by it, and the performance of its obligations
under the Bond Resolution and the Bond Documents, will not violate any
provision of law or regulation, or of any judgment, decree, writ, order or
injunction, and will not contravene the provisions of, or constitute a
default under, or result in the creation of a lien, charge or encumbrance
under, any agreement (other than the Indenture) to which the Issuer is a
party or by which any of its properties constituting a part of the Trust
Estate are bound.
(h) No event has occurred, and no condition currently exists, which
constitutes or may, with the passage of time or the giving of notice, or
both, constitute an Event of Default on the part of the Issuer.
(i) Neither this Agreement nor the Loan Payments have been pledged
or hypothecated in any manner or for any purpose other than as provided in
the Indenture as security for the payment of the Bonds.
- 11 -
(j) All of the proceedings approving this Agreement and the
Indenture were conducted by the Issuer at meetings which complied with the
Open Xxxxxxxx Xxx, 0000 PA 267.
Each of the foregoing representations and warranties shall be deemed
to have been made as of the date of delivery of the Bonds.
Section 6.2. Covenants of the Issuer. The Issuer covenants and
agrees that:
(a) The Issuer will faithfully perform all of its obligations under
the Bond Documents.
(b) The Issuer will not knowingly take any action, which action will
adversely affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds.
(c) To the extent that it is within its power to do so, the Issuer
will maintain the validity and effectiveness of the Bond Documents, and of
the Issuer's pledge and assignment to the Trustee thereunder, and (except
as expressly permitted by such Bond Documents) will not take any action,
the taking of which will release the Company from its obligations under
such Bond Documents or result in the surrender, termination or
modification (except as permitted by the Bond Documents) of, or impair the
validity of, such Bond Documents.
(d) The Issuer will observe the covenants made by it in the
Indenture; it will use its best efforts to cause the Company to have and
exercise all the rights, powers and benefits stated to be in the Company
in this Agreement and the Indenture; and so long as no Event of Default
exists, it will not join in the modification of the Bond Documents in any
manner without the prior written consent of the Company and the Trustee.
ARTICLE VII
INDEMNIFICATION; REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE COMPANY
Section 7.1. Indemnification of Issuer and Indemnified Persons.
(a) The Issuer and the Indemnified Persons shall not be liable to the
Company for any reason. The Company shall indemnify and hold the Issuer and the
Indemnified Persons harmless from any loss, expense (including reasonable
counsel fees), or liability of any nature due to any and all suits, actions,
legal or administrative proceedings, or claims arising or resulting from, or in
any way connected with:
(i) the financing, installation, operation, use, or maintenance of the
Project,
- 12 -
(ii) the refunding of the Prior Bonds,
(iii) any act, failure to act, or misrepresentation by any person, firm,
corporation or governmental agency, including the Issuer, in
connection with the issuance, sale, delivery or remarketing of the
Bonds, or
(iv) any act, failure to act, or misrepresentation by the Issuer in
connection with this Agreement, the other Bond Documents or any
other document involving the Issuer in this matter.
If any suit, action or proceeding is brought against the Issuer or any
Indemnified Person relating to clauses (i) through (iv) above, that action or
proceeding shall be defended by counsel to the Issuer or the Company, as the
Issuer shall determine. If the defense is by counsel to the Issuer, which is the
Attorney General of the State of Michigan or may, in some instances, be private,
retained counsel, the Company shall indemnify the Issuer and the Indemnified
Persons for the reasonable cost of that defense including reasonable counsel
fees. If the Issuer determines that the Company shall defend the Issuer or
Indemnified Person, the Company shall immediately assume the defense at its own
cost. The Company shall not be liable for any settlement of any proceeding made
without its consent (which consent shall not be unreasonably withheld).
(b) The Company shall not be obligated to indemnify the Issuer or any
Indemnified Person under subsection (a), if a court with competent jurisdiction
finds that the liability in question was caused by the willful misconduct or
sole gross negligence of the Issuer or the involved Indemnified Person, unless
the court determines that, despite the adjudication of liability but in view of
all circumstances of the case, the Issuer or the Indemnified Person(s) is (are)
fairly and reasonably entitled to indemnity for the expenses which the court
considers proper.
(c) The Company shall also indemnify the Issuer for all reasonable costs
and expenses, including reasonable counsel fees, incurred in:
(i) enforcing any obligation of the Company under this Agreement, the
other Bond Documents or any related agreement,
(ii) taking any action requested by the Company,
(iii) taking any action required by this Agreement, the other Bond
Documents or any related agreement, or
(iv) taking any action considered necessary by the Issuer and which is
authorized by this Agreement, the other Bond Documents or any
related agreement.
(d) The obligations of the Company under this section shall survive any
assignment or termination of this Agreement.
- 13 -
Section 7.2. Filing and Recording. The Company covenants that if required
by statute: (i) from time to time, it will cause any Bond Document and each
amendment and supplement thereto (or a memorandum with respect thereto or to
such amendment or supplement) to be filed, registered and recorded and to be
refiled, reregistered and rerecorded in such manner and in such places as may be
required in order to publish notice of and fully to protect the liens, if any,
or to perfect or continue the perfection of the security interests, if any,
created thereby and (ii) it shall perform or cause to be performed from time to
time any other act as required by law, and it will execute or cause to be
executed any and all instruments of further assurance that may be necessary for
such publication, perfection, continuation and protection.
Section 7.3. Removal of Liens. If any lien, encumbrance or charge of any
kind based on any claim of any kind (including, without limitation, any claim
for income, franchise or other taxes, whether federal, state or otherwise) shall
be asserted or filed against the Trust Estate, or any amount paid or payable by
the Company under or pursuant to this Agreement or any order (whether or not
valid) of any court shall be entered with respect to the Trust Estate, or any
such amount by virtue of any claim of any kind, in either case so as to:
(a) interfere with the due payment of such amount to the Trustee or
the due application of such amount by the Trustee pursuant to the
applicable provisions of the Indenture,
(b) subject the Owners to any obligation to refund any money applied
to payment of principal of, and premium, if any, and interest on, the
Bonds, or
(c) result in the refusal of the Trustee to make such due
application because of its reasonable determination that liability might
be incurred if such due application were to be made,
then the Company will promptly take such action (including, but not limited to,
the payment of money) as may be necessary to prevent, or to nullify the cause or
result of, such interference, obligation or refusal, as the case may be.
Section 7.4. Federal Income Tax Exemption. The Company covenants to take
such action to assure and to refrain from any action which would adversely
affect the treatment of the Bonds as obligations described in Section 103 of the
Code, the interest on which is not includable in the "gross income" of the
holder (other than the income for a "substantial user" of the Project or a
"related person" within the meaning of Section 147(a) of the Code) for purposes
of federal income taxation. In particular, but not by way of limitation thereof,
the Company hereby covenants and represents as follows:
(a) Substantially all (i.e., at least 95%) of the net proceeds of
the sale of the Prior Bonds (which for the purposes of this subparagraph
shall include the bonds refunded with the proceeds of Prior Bonds when
Prior Bonds were refunding bonds) have been used to provide "water and/or
air pollution control facilities" within the meaning of Section
103(b)(4)(F) of the 1954 Code, and all of the costs of the Project paid
with the proceeds of the Prior Bonds constitute costs which are properly
chargeable to a capital account of the Company for Federal income tax
purposes or would be so chargeable
- 14 -
either with a proper election by the Company or but for a proper election
by the Company to deduct such costs. All of the proceeds of the Prior
Bonds have been expended.
(b) The principal amount of the Bonds does not exceed the combined
aggregate outstanding principal amount of the Prior Bonds on the date
hereof. The original proceeds of the Bonds shall be fully utilized within
90 days of the Issue Date to pay the principal of the Prior Bonds.
(c) No portion of the proceeds of the Bonds or the Prior Bonds were
or will be used to provide the following: airplanes, skyboxes or other
private luxury boxes, any health club facility, any facility primarily
used for gambling or any store the principal business of which is the sale
of alcoholic beverages for consumption off premises. (Code Section. 147(e)
provides and 1954 Code Section. 103(b)(18) provided that interest on any
obligation issued as part of an issue will not be excluded from gross
income for Federal income tax purposes if any portion of the proceeds of
such issue is to be used to provide any airplane, skybox or other private
luxury box, any health club facility, any facility primarily used for
gambling or any store the principal business of which is the sale of
alcoholic beverages for consumption off premises).
(d) Less than 25% of the proceeds of the Prior Bonds were used
directly or indirectly for the acquisition of land used for other than
farming purposes, and no portion of the Bond proceeds is to be used,
directly or indirectly, for the acquisition of land used for farming
purposes (Code Sections. 144(a)(11) and 147(c) provide and 1954 Code
Section 103(b)(16) provided that interest with respect to any obligation
issued as part of an issue will not be excluded from gross income for
Federal income tax purposes if any portion of the proceeds of such issue
is to be used (directly or indirectly) for the acquisition of land (or an
interest therein) to be used for farming purposes, or 25% or more of the
proceeds of such issue is to be used (directly or indirectly) for the
acquisition of land not used for farming purposes).
(e) No portion of the Bond proceeds or the proceeds of the Prior
Bonds was used for the acquisition of any property (or an interest
therein) the first use of which property is not pursuant to such
acquisition unless the rehabilitation requirements of 1954 Code Section
103(b)(17) are met with respect to the Project or the property financed
with proceeds of the Prior Bonds. (Code Section. 147(d) provides and 1954
Code Section. 103(b)(17) provided that interest with respect to any
obligation issued as part of an issue will not be excluded from gross
income for Federal income tax purposes if any portion of the proceeds of
such issue is to be used for the acquisition of any property (or an
interest therein) unless the first use of such property is pursuant to
such acquisition, or unless certain rehabilitation requirements are met).
(f) Except as is permitted by Code Section. 149(b) and 1954 Code
Section. 103(h), the Bonds are not federally guaranteed within these
provisions.
(g) The weighted average maturity of the Bonds does not exceed 120%
of the weighted average of the expected economic life of the Project
originally financed with
- 15 -
the proceeds of the Prior Bonds reduced by the period of time which has
elapsed between the date such property was placed in service and the Issue
Date. For purposes of this representation, the term "expected economic
life" means (a) the lives used in the Company's long-range planning
studies of the retirement dates for its steam-driven electric generation
property, or (b) the life for which such property is designed and
licensed.
(h) Section 103(o) of the 1954 Code provides that interest on any
"consumer loan bond" is not exempt from Federal income taxation. "Consumer
loan bond" is defined as any obligation which is issued as part of an
issue all or a significant portion of the proceeds of which are reasonably
expected to be used directly or indirectly to make or finance loans,
except as otherwise allowed to persons who are not exempt persons within
Section 103(o) of the 1954 Code, but does not include, inter alia, any
industrial development bond. The Company hereby certifies that all or a
major portion of the proceeds of the Bonds will be used directly or
indirectly in the trade or business of the Company, and the payment of the
principal of or interest on the Bonds, under the terms of the Bonds, is,
in whole or in major part, secured by an interest in property used or to
be used in the trade or business of the Company or in payments in respect
of such property, or to be derived from payments in respect of property,
or borrowed money, used or to be used in the trade or business of the
Company.
(i) None of the proceeds of the Bonds will be used to finance Costs
of Issuance.
(j) The Company covenants and represents that it has not taken, or
permitted to be taken on its behalf, or failed to take and agrees that it
will not take, or permit to be taken on its behalf, or fail to take any
action which, if taken or omitted to be taken, would adversely affect the
exclusion from gross income for federal income tax purposes of the
interest paid on the Bonds and that it will take, or require to be taken,
such acts as may from time to time be required under applicable law or
regulation to preserve the exclusion from gross income for federal income
tax purposes of the interest on the Bonds, except to the extent that the
Bonds are held by a substantial user of the Project or a related person
thereto as those terms are used in Section 147 of the Code. In furtherance
of the foregoing, the Company also agrees on behalf of the Issuer to
comply with all arbitrage rebate requirements and procedures as may become
applicable to the Bonds.
(k) The Company will not sell or cause to be sold any other
obligations issued by or on behalf of any state, territory or possession
of the United States, or political subdivision of the preceding, or the
District of Columbia on behalf of or for the benefit of the Company or any
related person to the Company which are private activity bonds (within the
meaning of Section 103(b) of the Code) within 15 days of the date of sale
of the Bonds pursuant to a common plan of marketing with the Bonds without
(a) delivering a certificate to Miller, Canfield, Paddock and Stone,
P.L.C., and the Attorney General of the State of Michigan to the effect
that such obligations meet all applicable requirements of the Code such
that their aggregation will not cause the Bonds or the aggregate issue to
fail to meet such requirements thereby impairing the tax-exempt status of
the interest on
- 16 -
such obligations, and the tax-exempt status of the obligations as a whole,
is maintained, and (b) obtaining an opinion of nationally recognized bond
counsel, which may be Miller, Canfield, Paddock and Stone, P.L.C., in a
form acceptable to Miller, Canfield, Paddock and Stone, P.L.C. and the
Attorney General of the State of Michigan, that the interest on such
obligations is excluded from gross income for Federal income tax purposes,
unless the foregoing requirements are waived by Miller, Canfield, Paddock
and Stone, P.L.C. and by the Attorney General of the State of Michigan.
(l) The Company agrees to follow the remedial action requirements of
Treas. Reg. Section. 1.142-2 with respect to any actions which cause the
Bonds or the Prior Bonds not to meet the requirements of Sections
103(b)(4)(F) of the 1954 Code (such Section requires that substantially
all of the proceeds of the obligations qualifying thereunder must be used
for air or water pollution control facilities). Any proceeds received upon
the sale or other disposition of any of the property which is included in
the Project or constitutes property financed or refinanced with the
proceeds of the Prior Bonds prior to the final maturity of the Bonds will
be invested at a yield not greater than the yield on the Bonds, as defined
in Exhibit A to the Tax Certificate of the Company, and used as required
by Treas. Reg. Section. 1.142-2, unless in the opinion of Bond Counsel
some other use of such proceeds will not impair the exclusion from gross
income of the interest on the Bonds.
(m) The Company is aware of no facts or circumstances which would
cause the original approving opinions issued with respect to the Prior
Bonds to have been improperly issued.
(n) The Company has complied with and intends to comply with its
obligations, covenants and representations under the documents related to
the Prior Bonds and the Bond Documents to the extent such obligations
affect the Tax-Exempt status of the Bonds.
(o) The Company shall agree at the time of the delivery of the
Bonds, in accordance with the provisions of Rule 15c2-12 (the "Rule")
promulgated by the Securities and Exchange Commission (the "SEC") pursuant
to the Securities Exchange Act of 1934 (the "Exchange Act"), to provide or
cause to be provided to each nationally recognized municipal securities
information repository ("NRMSIR") and to the appropriate state information
repository, if any, for the State of Michigan ("SID"), in each case as
designated by the SEC in accordance with the Rule, the information
required to be periodically disclosed pursuant to such Rule 15c2-12.
Failure by the Company to comply with the continuing disclosure
undertaking shall not constitute a default or an Event of Default under
this Agreement or the Indenture.
Section 7.5. Company Representations and Covenants.
(a) The Company represents and warrants: (i) that it has no present
intention of disposing of or abandoning the Project nor of directing the
Project to a use other than the purposes represented to the Issuer; (ii)
that it intends to cause the Project to be operated as a "project" as
defined in Section 4(f) of the Act; (iii) that the Project is in
- 17 -
furtherance of the public purposes of the Act, to wit: the promotion and
development of industrial and manufacturing enterprises to promote and
encourage employment and the public welfare; and (iv) that it has all
necessary licenses and permits to operate the Project, and that the
Project has been approved by all necessary governmental bodies or agencies
having jurisdiction.
(b) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of and is qualified to do
business in the State of Michigan, with full corporate power to own its
properties and conduct its business and has full legal right, power and
authority to enter into this Agreement and any other Bond Documents to
which it is a party and to carry out and consummate all transactions
contemplated by this Agreement and any other Bond Documents to which it is
a party.
(c) The execution and delivery of this Agreement and any other Bond
Documents to which it is a party and the consummation of the transactions
herein contemplated will not conflict with or constitute on the part of
the Company a breach of or default under the Organizational Documents, and
do not and will not constitute on the part of the Company a breach or a
default under any material indenture, mortgage, deed of trust, lease, note
agreement or other agreement or instrument to which the Company is a party
or by which it or its properties are bound, or any statute, order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its activities or properties.
(d) This Agreement or any other Bond Documents to which it is a
party have been duly authorized, executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, (except that (i) the
enforceability of this Agreement and such other Bond Documents may be
limited by bankruptcy, reorganization, insolvency, moratorium or other
similar laws of general application relating to the enforcement of
creditors' rights, (ii) certain equitable remedies, including specific
performance, may be unavailable and (iii) the indemnification provisions
contained therein may be limited by applicable securities laws and public
policy).
(e) Neither the Company nor any of its business or properties, nor
any relationship between the Company and any other person, nor any
circumstances in connection with the execution, delivery and performance
by the Company of this Agreement or the offer, issue, sale or delivery by
the Issuer of the Bonds, is such as to require the consent, approval or
authorization of, or the filing, registration or qualification with, any
governmental authority on the part of the Company, other than those
already obtained as of the Issue Date; provided, however, no
representation is made herein as to compliance with the securities or
"blue sky" laws of any jurisdiction.
(f) No event has occurred and no condition exists with respect to
the Company that would constitute an Event of Default under the Indenture
or which, with the lapse of time or by giving of notice or both, would
become an Event of Default under the Indenture.
- 18 -
(g) The Project was for the purpose of constructing and installing
certain pollution control facilities at the Plant.
(h) The refinancing of the Project will not have the effect of
transferring employment from one municipality of the State of Michigan to
another except for any transfer of employment consented to by any
municipality from which that employment is transferred.
Section 7.6. Maintenance of Corporate Existence. The Company agrees that
during the term of this Agreement it will maintain its corporate existence, will
not dissolve or otherwise dispose of all or substantially all of its assets and
will not consolidate with or merge into another corporation; provided, however,
that the Company may, without violating the agreement contained in this Section,
consolidate with or merge into another corporation, or sell or otherwise
transfer to another corporation all or substantially all of its assets as an
entirety and thereafter dissolve, if the surviving, resulting or transferee
corporation, as the case may be, assumes in a writing delivered to the Trustee
all of the obligations of the Company herein and is duly qualified to do
business in the State.
Section 7.7. Financial Information. The Company agrees to furnish to the
Issuer and the Municipal Bond Insurer (unless a Municipal Bond Insurer Default
shall have occurred and be continuing), at either of their written request, a
copy of the Company's most recent annual report to its stockholders and to
furnish the Trustee, the Paying Agent, the Municipal Bond Insurer (unless a
Municipal Bond Insurer Default shall have occurred and be continuing) or the
Issuer a copy of the Company's most recent Form 10-K Annual Reports and Form
10-Q Quarterly Reports filed with the United States Securities and Exchange
Commission.
Section 7.8. Agreement of Issuer Not to Assign or Pledge. Except for the
assignment and pledge described in the Indenture, the Issuer agrees that it will
not attempt to further assign, pledge, transfer or convey its interest in or
create any assignment, pledge, lien, charge or encumbrance of any form or nature
with respect to the rights and interests therein described.
Section 7.9. Reference to Bonds Ineffective After Bonds Paid. Upon payment
of all principal of, premium, if any, and interest due and owing on the Bonds,
payment in full of the purchase price of Bonds required to be purchased pursuant
to the Indenture, and payment of all fees and charges of the Issuer, the
Trustee, the Registrar and the Paying Agent, all references herein to the Bonds
and the Trustee shall be ineffective and neither the Issuer, the Trustee nor the
holders of any of the Bonds shall thereafter have any rights hereunder and the
Company shall have no further obligation hereunder, saving and excepting those
that shall have theretofore vested and any right of the Issuer or the Trustee to
indemnification under Section 7.1 and payment of fees under Section 9.3, which
right shall survive the payment of all principal of, premium if any, and
interest on the Bonds and the termination of this Agreement. Reference is hereby
made to Article VIII of the Indenture.
Section 7.10. Assignments or Lease of Project. Subject to the provisions
of Section 7.4 and Section 7.6, the Company may assign its interest in this
Agreement and may sell or lease the Project, in whole or in part, without the
prior written consent of the Trustee or the Issuer; provided that no assignment,
lease or sale shall relieve the Company of primary liability for the
- 19 -
Loan Payments due hereunder and of the performance of all other obligations
required hereunder, and that the Company delivers to the Trustee and to the
Municipal Bond Insurer (unless a Municipal Bond Insurer Default shall have
occurred and be continuing), within thirty (30) days after the date of execution
and delivery thereof, a copy of such assignment, sales agreement or lease.
Section 7.11. Amendment of Agreement or Indenture. No amendment, change,
addition to, or waiver of any of the provisions of this Agreement or the
Indenture shall be binding upon the parties hereto unless in writing signed by
the Authorized Company Representative and a member of the Issuer or other
officer authorized by the governing body of the Issuer and such amendment,
change, addition to or waiver has been consented to in writing by the Municipal
Bond Insurer (unless a Municipal Bond Insurer Default shall have occurred and be
continuing) which consent shall not be unreasonably withheld.
Notwithstanding any of the foregoing, it is covenanted and agreed, for the
benefit of the Owners and the Trustee, that (without the concurrence of all of
the Owners and the Trustee) the provisions of this Agreement shall not be
amended, changed, added to or waived in any way which would relieve or abrogate
the obligations of the Company to make or pay, or cause to be made or paid, when
due, all Loan Payments and purchase price payments with respect to any then
Outstanding Bonds in the manner and under the terms and conditions provided
herein and the Bond Resolution or the Indenture, or which would materially
change or affect Sections 4.4 through 4.8, 7.1, 7.4, 7.6 and 9.3.
Section 7.12. Indemnification of the Trustee. The Company shall
compensate, reimburse for expenses and indemnify and hold harmless the Trustee,
the Paying Agent and the Registrar to the extent and in the manner provided by
the Indenture.
ARTICLE VIII
ASSIGNMENT
Section 8.1. Assignment by the Company. The Company may transfer or assign
this Agreement or transfer or assign any or all of its rights and delegate any
or all of its duties hereunder without the necessity of obtaining the consent of
the Issuer, the Trustee, the Provider, if any, the Municipal Bond Insurer or the
Owners of the Bonds, but no such transfer, assignment or delegation shall
relieve the Company or any successor Company of its liability for the payment of
the Loan Payments or for the payment of any other amounts to be paid by it under
this Agreement and for the full observance and performance of all of the
covenants and conditions to be observed and performed by it which are contained
in this Agreement, unless the Company has received the express prior written
consent of the Issuer, the Municipal Bond Insurer (unless a Municipal Bond
Insurer Default shall have occurred and be continuing), the Provider, if any
(unless a Provider Default shall have occurred and be continuing), and of the
Owners of not less than 60% in the aggregate principal amount of the Bonds then
Outstanding.
- 20 -
Section 8.2. Issuer's Rights of Assignment. The Issuer may, only in
accordance with the Indenture, assign this Agreement and the Loan Payments
thereunder and pledge the moneys receivable hereunder to the Trustee as security
for payment of principal of, and premium, if any, and interest on, the Bonds.
The Company hereby assents to such assignment and agrees that the Trustee may
exercise and enforce in accordance with the Indenture any of such rights of the
Issuer under this Agreement. Any such assignment, however, shall be subject to
all of the rights and privileges of the Company as provided in this Agreement.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Trustee and Remedies. (a) The Company is advised and
recognizes that the Issuer will assign all of its right, title, and interest in
and to all of the Loan Payments required to be made pursuant to this Agreement,
and the right to receive and collect same, to the Trustee under the Indenture.
All rights of the Issuer against the Company arising under this Agreement, the
Bond Resolution or the Indenture may be enforced by the Issuer; or such rights
may be enforced by the Trustee, or the Owners of the Bonds, to the extent
provided in the Indenture, without making the Issuer a party.
(b) The following shall be "Events of Default" under this Agreement, and
the term "Events of Default" shall mean, whenever used in this Agreement, any
one or more of the following events:
(i) Failure by the Company to pay the Loan Payments in the amounts
and at the times provided in this Agreement.
(ii) Any misrepresentation or breach of a warranty made by the
Company in the Agreement which impairs the exclusion of interest on the
Bonds or any portion thereof from gross income for Federal income tax
purposes.
(iii) Failure by the Company to perform any obligation or observe
any condition on its part to be performed or observed pursuant to this
Agreement for a period of 90 days after receipt of written notice
specifying such failure and requesting that it be remedied, given to the
Company by the Issuer, the Municipal Bond Insurer (unless a Municipal Bond
Insurer Default shall have occurred and be continuing) or the Trustee;
provided, however, that if said failure shall be such that it cannot be
corrected within such period, it shall not constitute an Event of Default
if the failure, in the judgment of the Trustee in reliance upon advice of
counsel, is correctable without material adverse effect on the Bonds and
if corrective action is instituted by the Company within such period and
diligently pursued until corrected.
(iv) The dissolution or liquidation of the Company except as
permitted under this Agreement; or failure by the Company promptly to lift
any execution, garnishment or attachment of such consequence as will
impair its ability to carry out its obligations under
- 21 -
this Agreement; or if the Company becomes insolvent or bankrupt, or makes
an assignment for the benefit of creditors or consents to the appointment
of a trustee or receiver for the Company or for the greater part of its
properties; or a trustee or receiver is appointed for the Company or for
the greater part of its properties without its consent and is not
discharged within 90 days; or bankruptcy, reorganization or liquidation
proceedings are commenced by or against the Company, and if commenced
against the Company are consented to by it or remain undismissed for 90
days; or if an order for relief is entered against the Company in a
bankruptcy or similar proceeding and remains undismissed for 90 days.
(v) The occurrence and continuance of an Event of Default under the
Indenture.
(c) Upon the occurrence of an Event of Default, the Trustee shall have the
power to proceed with any right or remedy granted by the Constitution and laws
of the State, as it may deem best, including any suit, action or special
proceeding in equity or at law, including mandamus proceedings, for the specific
performance of any agreement, obligation or covenant contained herein or for the
enforcement of any proper legal or equitable remedy as the Trustee shall deem
most effectual to protect the rights of the Owners; provided, however, any such
proceedings shall be subject to the provisions of Section 15.14 of the Indenture
relating to Force Majeure. Upon the occurrence of an Event of Default under the
Indenture pursuant to the terms of which the Trustee shall have declared the
Bonds immediately due and payable, then all payments required to be made by the
Company under Section 4.4(b) (other than interest not yet accrued) shall become
immediately due and payable, as directed by the Municipal Bond Insurer (unless a
Municipal Bond Insurer Default shall have occurred and be continuing).
(d) Any amounts collected pursuant to actions taken under this Section
shall be paid into the Bond Fund and applied in accordance with the provisions
of the Indenture.
Section 9.2. Annulment of Acceleration. If, in compliance with the
requirements of Section 9.02 of the Indenture, the Trustee shall annul an
acceleration declared due to any Event of Default under the Indenture such
annulment shall be deemed to also rescind any acceleration of all payments
required under Section 4.4. In case of any such annulment, or in case any
proceeding taken by the Trustee on account of any such Event of Default shall
have been discontinued or abandoned or determined adversely, then and in every
such case the Issuer, the Company, the Trustee and the Owners shall be restored
to their former positions and rights hereunder, but no such annulment shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon.
Section 9.3. Agreement to Pay Attorneys' Fees and Expenses. In the event
the Company should default under any of the provisions of this Agreement and the
Issuer or the Trustee should employ attorneys or incur other expenses for the
collection of payments required hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that it will upon demand therefor pay to the
Issuer or the Trustee the reasonable fees of such attorneys and such other
reasonable expenses so incurred by the Issuer or the Trustee.
- 22 -
Section 9.4. General Enforcement Provisions. (a) The terms of this
Agreement may be enforced as to one or more breaches either separately or
cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, the Trustee, or
the Owners of the Bonds in this Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon any default, omission, or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In the event any provision contained in
this Agreement should be breached by the Company and thereafter duly waived,
such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach of this Agreement. No waiver by any party of
any breach by any other party of any of the provisions of this Agreement shall
be construed as a waiver of any subsequent breach, whether of the same or of a
different provision of this Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. Force Majeure. If, by reason of Force Majeure, either the
Issuer or the Company shall be rendered unable wholly or in part to carry out
its obligations under this Agreement, and if such party gives notice and full
particulars of such Force Majeure in writing to the other party within a
reasonable time after failure to carry out its obligations under this Agreement,
such obligations (other than the obligations of the Company specified in the
last sentence of this Section) of the party giving such notice, so far as they
are affected by such Force Majeure, shall be suspended during the continuance of
the inability then claimed, including a reasonable time for removal of the
effect thereof. The requirement that any Force Majeure shall be reasonably
beyond the control of the party shall be deemed to be fulfilled even though any
existing or impending strike, lockout or other industrial disturbance may not be
settled but could have been settled by acceding to the demand of the opposing
person or persons. The occurrence of any Force Majeure shall not suspend or
otherwise xxxxx, and the Company shall not be relieved from, the obligation to
pay the Loan Payments and to pay any other payments required to be made by it
under this Agreement at the times required.
Section 10.2. Third Party Beneficiaries. This Agreement is entered into in
part to induce the purchase of the Bonds, and accordingly, so long as any Bonds
are Outstanding, all respective covenants and agreements of the parties herein
contained are hereby declared to be for the benefit of any and all Owners and
may be enforced by or on behalf of the Owners only by the Trustee in accordance
with the provisions of the Indenture. This Agreement shall not be deemed to
create any right of subrogation or otherwise in any person who is not a party
hereto (other than the permitted successors and assigns of a party) and shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any third party (other than the permitted successors
- 23 -
or assigns of a party hereto), except in each case the Owners, the Trustee, the
Municipal Bond Insurer and the Indemnified Persons.
Section 10.3. Notices; Communications. All notices, approvals, consents,
requests and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered or mailed by first class registered or
certified mail, return receipt requested, or overnight mail, postage prepaid,
and addressed as follows:
(a) If to the Issuer:
Michigan Strategic Fund
000 X. Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: President
(b) If to the Company:
The Detroit Edison Company
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Vice President and Treasurer
(c) If to the Trustee, Registrar or the Paying Agent:
X.X. Xxxxxx Trust Company, National Association
000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate and Municipal Trust Services
A duplicate copy of each notice, approval, consent, request or other
communication given hereunder by the Issuer, the Company, the Trustee, the
Registrar or the Paying Agent to any one of the others shall also be given to
all of the others. The Issuer, the Company, the Trustee, the Registrar and the
Paying Agent may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, approvals, consents, requests or other
communications shall be sent or persons to whose attention the same shall be
directed.
Section 10.4. Amendments, Governing Law, Etc. This Agreement (a) may be
modified or amended only as provided in the Indenture and in Section 7.11
hereof; and (b) shall be governed in all respects including validity,
interpretation and effect by, and shall be enforceable in accordance with, the
laws of the United States of America and the State. The parties agree that, in
accordance with the Act and subject to the limitations of Section 4.4(e), they
will amend this Agreement to increase the payments to be made by the Company
hereunder if for any reason such payments, if made, are not sufficient to pay
the principal of, and premium, if any, and interest on, the Bonds as the same
become due.
- 24 -
Section 10.5. Severability. In the event that any clause or provision of
this Agreement shall be held to be invalid by any court of competent
jurisdiction, the invalidity of such clause or provision shall not affect any of
the remaining provisions of this Agreement.
Section 10.6. Term of Agreement. This Agreement shall remain in full force
and effect from the date of execution and delivery hereof until the Indenture
has been discharged in accordance with the provisions thereof; provided,
however, that the provisions of Sections 4.6 and 7.1 of this Agreement shall
survive any expiration or termination of this Agreement.
Section 10.7. Company's Approval of Bond Documents. The Bond Documents
have been submitted to the Company for examination, and the Company acknowledges
that, by execution of this Agreement, it has approved the Bond Documents and
will perform the obligations imposed upon it thereunder.
Section 10.8. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
Section 10.9. Captions. The captions and headings herein are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions hereof.
Section 10.10. Payments on Non-Business Days. If any payment required
hereunder is due on a date not a Business Day, payment shall be made on the next
succeeding Business Day with the same force and effect as if made on the date
fixed for such payment, and no interest shall accrue on such amount for the
period after such date.
[the rest of this page intentionally left blank]
- 25 -
IN WITNESS WHEREOF, the Issuer and the Company have signed this Agreement
by their duly authorized representatives as of the date set forth above.
MICHIGAN STRATEGIC FUND
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Its Authorized Officer
THE DETROIT EDISON COMPANY
By /s/ X.X. Xxxxxx
--------------------------------
X.X. Xxxxxx
Its Vice President and Treasurer
- 26 -
